Family businesses have long demonstrated that the close relationships, loyalty and commitment that bind families domestically can also account for their business success.
The model has certainly worked for Donald Trump. The US president-elect joined his father’s property company as a youngster and his three eldest children — Donald Jr, Ivanka and Eric — hold executive positions in what is now a multinational empire. He has announced that the two sons will take control of his business interests before he takes office on January 20. They, together with son-in-law Jared Kushner, have been leading players in his presidential campaign and transition team.
The varied fortunes of Mr Trump’s enterprises over the years, however, reflect another truth about family businesses. Statistics show that only 30 per cent of such companies survive beyond the next generation.
Manfred Kets de Vries, a psychoanalyst and professor of leadership development and organisational change at Insead business school, in Family Business on the Couch, says measuring performance alone does not explain so many business failures. Unresolved family disputes and individuals’ unconscious motivations often lead to communication breakdowns and escalating conflicts.
In my psychotherapy practice I have seen how repressed jealousies, sibling rivalries or longstanding resentment can wreak havoc in a family company. Typically, difficult conversations are avoided because they risk opening rifts but paradoxically this endangers relationships.
Tom Davidow is a family therapist and family business consultant based in Boston, Massachusetts. In more than 30 years he has witnessed the pitfalls awaiting family businesses where relationships go wrong.
“If you operate on good business practice your chances of having a good family are also very high,” he says.
But Dr Davidow has a stark warning for those straying from this path — and the stakes are high. “If you make family decisions in business, however, you contaminate the business and possibly also contaminate the family. And you risk losing both.”
He believes family businesses can function effectively for lengthy periods, but problems often arise when they move from the early entrepreneurial stage and face growth challenges. The ways family members communicate with each other are too long-established to allow pressing business issues to be discussed properly — it feels too dangerous and disruptive.
“They decide, ‘It’s not worth telling my brother that what he does bothers me’ because if they have to talk about that issue it’s going to open up all these other issues’,” says Dr Davidow. “They are fearful, they don’t want to have meetings because they are worried everything is going to blow up.”
Facing up to tensions in the family can leave people overwhelmed and fearing retaliation or rejection from others. The danger, however, is that crucial difficulties are ignored and the business will suffer.
In one family grappling with just such an issue, their manufacturing business managed to function but simmering jealousies, feelings of unfairness and inequalities took a terrible toll on their personal relationships.
The second son, who came to me for psychotherapy, eventually stopped talking to his father while conflicts with his brother intensified. Early emotional neglect from his parents, and then controlling and dominating behaviour by his father and brother at work, shattered his confidence.
“[The business] ruined me emotionally for many years,” he says. “I think they saw me as a charity case, as if ‘we’re taking him on because there’s nothing else he can do’. My brother saw [the company] as his baby and that I would be taking away from his inheritance.”
Such was the extent of inequality that the brothers were referred to as the “heir and the spare” within the family, replicating a historic theme. The grandfather, who had founded the company, had left the majority of his wealth to his son but very little to his daughter whom he valued less.
Later the father was to repeat this theme by paying his sons’ salary according to their needs rather than their worth, which would be unheard of in normal business practice.
“Because my brother was married with kids, his salary was multiples of my take-home pay, and that added to my resentment. At the time I was single, so my pay reflected that.”
His repressed rage over being excluded from the “hub” of the business was expressed passively by not talking to his father, or seeking his advice.
“It was a retaliatory thing,” he explains. “If you ignore me, I’m going to ignore you.”
On occasion, children may join the business primarily to repair a damaged relationship with a parent. A man who came to me for psychotherapy, for example, joined his father’s retail business to make up for the closeness and approval he missed when his parents divorced.
George Stalk, senior adviser and fellow at Boston Consulting Group, and Henry Foley, co-founder of Banyan Family Business Advisors, have identified one of the main traps families fall into as allowing the business to become a fallback option for individuals who cannot succeed elsewhere. Sometimes they are given a position in the company for which they are unqualified or unsuited.
One such problem arose in a UK property company run by the founding father and his two sons. The older son, who agreed to speak to me, explained that conflicts between himself and his sibling, who has learning difficulties, became intense.
Historically the family had rallied to the younger son’s every need and helped bolster his self-esteem. “My job was to protect him,” the older brother recalls.
In the business, however, the younger one interpreted his brother’s protection as intrusive and became hostile towards him. The feud intensified when the time to choose a successor arose, and the younger sibling demanded equal power in the company.
With professional help, the family were able to acknowledge they were wrongly protecting him — even allowing him to think his performance was good when it was not. And while they could maintain equality within the family, the business required a hierarchical structure with the best-qualified people at the top.
The older brother adds: “[Our] reaction was to give him what he wants to make him happy. I rolled over on some business decisions that were very wrong. What we were doing before was unfair, we were not [giving him] a role that suited his strengths.”
Confusing family matters with business objectives underlies many of these problems. While families are concerned with people’s emotional wellbeing, and issues of love and belonging, businesses are primarily concerned with economic success. Families are also more inward looking, often resisting change, while a business demands innovation and a focus on external events to succeed.
Such conflicting interests need to be untangled in any family enterprise that wants to survive into the next generation.
The writer is a psychotherapist, family therapist and business consultant
