Family Business Mistake #2

In my last blog I shared that one of the most common mistakes that can cause problems in a family-owned business is the absence of clearly defined rules, roles and responsibilities. Today we will address another major mistake that can seriously damage both your business and your family – failure to treat adult children like grown adults.

Continuing to treat the second generation as children carries heavy consequences, such as:

Good ideas and opinions may be devalued or dismissed. If “Little Johnny” was the class cut-up in junior high, it’s easy to dismiss his suggestions, even once he’s in his 20’s, 30’s or even older. Not only does this have the potential to deprive the business of creative new opportunities or methods, it also decreases Johnny’s confidence. If his input is consistently devalued, why should he try? Both Johnny and the business lose out.

Decisions may be reversed or overruled. If the adult child has a position of responsibility and is required to make decisions, almost nothing will undermine their effectiveness like having the parents overrule those decisions. Let them lead or manage. If their decisions and actions are genuinely inappropriate or harmful to the business, then it’s critical to reassess whether they are in the right position based on their skills, interests and abilities, not just on their birth order.

Failure to delegate proper authority. This pattern indicates a lack of trust and fosters dependency on the owners/parents so when the time comes for the parent(s) to go on vacation or retire, the kids may still feel compelled to rely on them for “permission”. It often leads to anger and resentment, which is likely to create or exacerbate conflicts.

Undermines respect with other employees. When employees see the business owner treat their adult child as a child, it undermines respect for the son or daughter’s position and is damaging to morale. It’s not hard to imagine the break room jokes about how “the Vice President has to ask his mommy what to do”. If the adult child is an officer or leader in the business, the position must carry the appropriate authority and responsibility in order to maintain respect in the ranks. Any objections the owner has to the decisions the adult child makes or the method he uses in his job must be addressed behind closed doors as a business discussion, not a parental scolding.

Fosters competition between the parents and the children. Power struggles are an inevitable part of raising children as parents naturally try to control their children and children naturally try to establish their own value and identities. In an unhealthy family the struggles continue even after the child grows up, and when it becomes two (or more) adults vying for control, it creates a sense of competition rather than cooperation. This may result in parents staying on in the business long after their prime because they can’t let go of control, and the business often ages and dies with them.

In business and in life, a successful parent is one who raises their kids not to need them. Children who grow up confident and independent are more likely to enjoy their parents and appreciate their advice, while those who have to fight for their independence are more likely to keep fighting into adulthood. Parents who exercise too much control often create children who don’t make good decisions or take responsibility, which makes the parents feel like they have to stay in control… you can see where this cycle is a recipe for failure.

So, if this dynamic is so unhealthy, why do people function that way? For one thing, people who start their own businesses are often strong, driven people who like being in control as opposed to working for someone else. They can be so focused on the business that the soft art of relationships may be overlooked. They have high expectations and little patience for someone on the learning curve, which means they may not spend time developing their kids or other workers. Being “do-ers” they expect others to be as hardworking as they are and tend to overload their staff/kids with enough work to virtually guarantee their failure. And being competitive in nature, they tend to pit their team members against one another, e.g. “Why can’t you be more like your brother?”

The “elephant in the room” that many strong, creative, entrepreneurial people don’t like to think or talk about is this: Like it or not, they will grow old or get sick and die one day – the ultimate loss of control. When people cannot face this reality in a healthy manner, they are unwilling to admit when they need to pass along responsibility and may continue to treat their adult children as children because it’s just too threatening to admit that time has marched on. They subconsciously fear preparing their children to function independently and successfully because they would have to admit that they are older, too.

“Distancing” did not occur and therefore roles in the home are more likely to be played out in the business. In many businesses the child moves into the business right out of high school or even earlier. In this case, there is no clear event marking the transition from childhood to adulthood. The fact that they have always been a part of the family and business system makes it difficult to recognize that they have aged and matured. “The baby” is always “the baby”.

What can you do if your family and business are suffering because of failure to treat adult children as adults?

Awareness is the key. Family business leaders need to understand the underlying causes of this mistake and the destructive consequences of not overcoming it. They should work on cultivating a culture of open feedback and push-back, with everyone being treated with respect, regardless of their age or position. Adult children need to take responsibility for appropriately confronting bad behavior and for creating and maintaining healthy boundaries. Older family members should strive to serve as role models and mentors for the next generation and try to expose them to all areas of the business so they have a greater understanding of how it all works and how they fit in. Be willing to let younger members try new things and take responsibility for the outcome.

If it’s not too late, I highly recommend requiring family members to experience distancing – working somewhere else – before entering the family business. Kids who go away to college and/or start careers outside the family business and then join the family business 5, 10, or 20 years later are much easier to recognize as adults. The added benefit is that it allows the adult child to infuse the family business with knowledge, experience and skill developed from the outside, often bringing fresh ideas and perspectives that might not otherwise happen in a closed family system. With some confidence and independence under their belts, grown children are also much less likely to tolerate it if the parents fall into old familiar family patterns.

A difficult, but important process for the owners to initiate is an exit and succession plan. It forces the family to ask, answer and agree on the hard questions like how and when the transition should occur, who will assume what responsibilities, and what values and practices are important to continue when the business changes hands. I recommend that more responsibility and authority be gradually passed to the younger generation when they reach 35 or 40 years old so they will be experienced leaders by the time they take over. If you need an objective mediator to help you ask the right questions and guide you through the process, hire someone from outside. I can provide those services or you can find a consultant in your area.

Next time we will wrap up this series by discussing three other common mistakes family businesses often make. If you would like to read more on the topic of family business, I recommend Keep the Family Baggage Out of the Family Business by Quentin Fleming.

Live, Work and Relate Well!

Dr. Todd