Consulting to Family Businesses

Family businesses present a great opportunity for organizational development consultants to make a real difference. The problems are challenging, but the potential rewards are great.

Consider the merits: of an estimated 12 million family businesses in the United States, only about 30% will survive into the second generation. Only 10% will make it into the third. Fully l/3 of the Fortune 500 companies are family controlled. About 40% of the U.S. Gross National Product comes from family enterprises. It is not surprising that family businesses have become fertile ground for organizational development consultants.

The issues that come up in a family business are innumerable. Succession planning, sibling rivalries, substance abuse, and distribution of ownership/wealth are only some of the main issues family businesses face that may confront OD (Organizational Development) practitioners.

For example, when a family member perceives that he/she is being treated unfairly relative to others in the family business (small or large), resentment, anger and jealousy soon build. There is often quick and dramatic spillover between the family itself and the business. The OD practitioner can offer help to recognize situations where behaviors possibly acceptable in one domain are dysfunctional and clearly not acceptable in the other. A common example is where the development of the family group and its members may be hurt when the parent/owner works long hours. The OD practitioner will also see children who have reluctantly accepted a parent with a totally controlling personality when they were growing up may no longer be willing to tolerate that behavior in the business setting, causing seemingly intractable conflict.

The OD practitioner will soon recognize that the value systems of family members are critical in determining the overall health of the family business and the family itself. Family members at different stages of life tend to have highly different values with respect to business goals, personal goals, risk preference or aversion, theories of motivation, and philosophies of living. These seeds of conflict, created when family members value different things, need to be quickly addressed by the OD practitioner.

In such a family business dispute, the conflicting parties are often convinced they are 100% right. A highly skilled OD consultant practicing in the family business arena must navigate through numerous minefields. I have found it useful to help all parties understand what would happen if any party’s agenda was completely enacted at the expense of others. Consider two brothers, each fighting for total control of the business. Neither one is willing to share power. The OD consultant needs to remind both that this is a zero-sum game, in which their power struggle will probably end up both destroying their relationship and having a deleterious affect on the business. It is helpful to ask the brothers, too, if they would want their destructive behavior pattern to become the standard for others in the business and the family. Asking how the two can expect others in the family business to conduct themselves in an honorable fashion if they themselves are not setting the proper example appeals to family loyalty, as well as personal integrity.

When consulting with family businesses, the OD consultant can effectively help families identify superordinate goals that the family can agree on and strive to achieve. Examples of superordinate goals I have found helpful include the desire to carry on the legacy of the founder, preserving family wealth, maintaining family control over the business, and avoiding damaging conflicts that could tear the family apart. Without an OD focus on a set of goals and objectives that can bind the family together, division and strife are often the result.

-Dr. Tom Rogers