Prince Harry and the Duchess of Sussex, Meghan Markle, described in heart-wrenching detail the feeling of being trapped as a member of the Royal Family. What should have been a grand story of prince and princesses was breath-taking and sad. But it’s an all too familiar feeling for those involved in family businesses, often being pulled in different directions, with their loyalties constantly tested. Their revelations reveal an important truth: there‘s a difference between a “family business” and a “business family,” and what makes being in either a fairy tale or an utter nightmare.
The difference, like the placement of the terms, boils down to what comes first. What is the priority?
In a “business family,” the business is placed at higher priority than any one individual or the care of the family itself. The Royal Family is the prime example of a “business family” on steroids. Decisions are made for the good of the “Firm” or the “Institution,” as Prince Harry and the Duchess noted. Despite their reported requests for support as members of the family and the business, the optics ruled actions, policies, and decisions. Decisions were driven by how these sensitive matters reflected on the institution and nothing else. While others in the family were sympathetic, there was nothing to be done. It was what it was. They had all been there, done that and soldiered through it. It’s simply expected that everyone falls in line.
At the other end of the spectrum, a “family business” is one when the needs of the family and its members take priority over the needs of the business. In its most extreme form, family members have jobs without any regard to qualifications, experience, or performance. Policies for the rank-and-file employees don’t apply to family members. Liberties with the assets of the company, such as borrowing equipment to move a kid to college or asking employees to handle personal tasks for the family go unchecked. In this extreme, the “family business” serves the pleasures of the family first.
Most family-owned businesses fortunately operate somewhere between these extremes. The ideal would be to operate squarely in the middle, but, given differing needs, goals, and opinions, that is a delicate balancing act to maintain.
For example, the family, by virtue of ownership, absorbs the risks and liabilities associated with owning a running a company. Like any investor, the higher the risk you take, the better your reward should be. Otherwise, why take the risk? Yet the more the family uses the company as its personal piggy bank, the more likely the viability of the company is unwittingly placed at risk. Placing personal needs ahead of sound business practices truly kills the goose that lays the golden eggs.
On the flip side, a family’s largest asset should be managed well, utilizing sound best practices and strategies for growth. Disciplined decision making and policy enforcement are crucial. Yet when the good of the family and relationships are shoved too far to the back, the very foundation for the business’s success - the family - shatters. Again, viability of the family and the business are threatened. People are forced into corners like Prince Harry and the Duchess described in their interview. They had no other choice but to step back, assess, and take actions to preserve their own well-being over the broader family and the business. The goose is no better off.
What should a family-owned business do to strike this elusive balance?
The right answer to the question is unique to every family and only discovered when they:
Conversations like this warrant bringing in a family-business advisor to facilitate the discussions. We know that individuals’ past history impacts perspectives and fuels emotions. Consider Prince Harry’s fears of history repeating itself. In this situation, he is a member of the Royal Family with official duties as well as a grandson to the Queen, a son who lost his mother, a stepson, a loving husband, a father, and a brother. That’s a lot to unpack in any given conversation, let alone one as emotionally charged as the wellbeing of his own growing family. An experienced, independent coach and facilitator may have helped and relieved the isolation each family member wrestled with throughout this time. (OK – maybe a skilled facilitator wouldn’t have made a hill of beans of difference in the Royal Family, but I’ve seen it work wonders for us mere mortals.)
It’s challenging work because, let’s face it, families are challenging. So is running a company or an institution. I can tell you from experience that harmonizing families and family-owned businesses demands patience, love, vulnerability, important conversations, and critical thinking.
And the investment is worth it. According to the U.S. Census Bureau, 90% of American businesses are family-owned or controlled. When these families achieve this balance, not only does the family prosper, but our communities, their customers and their employees do as well. Unlike the Royal Family, few of us are stuck in the rigidity of a monarchy that has endured for 1,200 years. Family-owned companies can do this work. And ultimately, we all share in the joy of the fairy tale’s happy ending.
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