Power and control impact family businesses, just like any other enterprise. What makes the inevitable power and control struggles even more complex in a family business are the family dynamics that play a significant role in decision-making and succession planning. If family dynamics are not centered on a shared purpose, the result is often organizational friction and low performance. A common mission, high-trust relationships, and effective decision-making can help to bolster family-business performance, especially in today’s uncertain business climate.
4 Tensions in Family Businesses — and How to Work Through Them
Only 30% of family businesses survive into the second generation. This means that in 70% of family businesses, the family loses control of the assets, and relationships are potentially destroyed. Family businesses can go under for many reasons, including conflicts over money, poor management, and fighting about the succession of power from one generation to the next. But there are typically some common fault lines that lead to family business breakdowns. A lack of trust and communication are responsible for 60% of family business failures. Many family businesses lack a sense of shared purpose. Family members too often avoid tough issues by avoiding meaningful conversations. Left unaddressed, these tensions increase distrust in families and obstruct performance in their organizations. But with the right skills, high-trust relationships and structures in place, such breakdowns can be overcome. This article discusses some practical suggestions for aligning a family business’s shared purpose, mutual trust, and collective decision making.