“Family life! The United Nations is child’s play compared to the tugs and splits and need to understand and forgive in any family.”
– Mary Sarton

In a recent article I talked about how the strengths and weaknesses of individual family members affect the overall success of the business. The converse is also true: the changing fortunes of the business can also affect the family. There’s no question that building a successful business can bring family members closer together and strengthen family bonds. It is equally true that problems in the business can create discord in the family.

I recently worked with a fourth generation family owned business that learned (and continue to learn) how painful this situation can be. The current leaders were a divorced couple in their mid-fifties. Knowing that they wanted to retire within seven to ten years, they identified the wife’s daughter from her first marriage as their successor and started grooming her to take over management of the business. While I was deeply involved in the developmental process, I was never convinced that Barb was the right person for the job.

Despite an honest effort on Barb’s part to acquire the knowledge and skills necessary to run the business, she had not been successful. The employees did not respect her and would not follow her lead, questioning her commitment and judgment time and time again. After reconvening with the parents and talking with several senior employees, it was obvious to me that, not only was Barb not cut out to manage the business; she had no passion for it and didn’t belong in the company. Her path simply had to take her elsewhere if the business was to make a successful transition from one generation to another.

This was a perilous point for the business. The prospect of working for the daughter had damaged staff morale and productivity. Some employees had already “jumped ship” and more were contemplating leaving. I knew that a new successor had to be selected quickly to stop the bleeding and get the company back on track. I helped the parents identify a non-family employee who has the proven capacity to run the company, as well as the respect of his peers and subordinates. Fortunately, there was still time to prepare this employee to take over the business before the current leaders retire (ownership will stay with the family but the tradition of a family-member CEO will be broken).

This situation was also a tremendous challenge for the family. When the decision was made that Barb didn’t belong in the business, both were deeply disappointed that the leadership role would not be passed down to the next generation. They were also concerned about terminating her and leaving her with no means to support her and her child. She was a single mother and could not count on her ex-husband for much support. The situation put increased strain on their already rocky relationship. In addition, divorces among the parents had led to emotional cutoffs between numerous family members and Barb’s termination added to the complexity of the process. We gathered the entire clan together, two grandmothers, brothers, sisters, in-laws (and even a nursing baby) to explain the situation calmly and explain the logic and the plan for Barb to find another path. Several relatives objected to giving management responsibility to someone outside the family. There was no consensus on the best way to handle the situation. Tears were mixed with blame and angry outbursts and it took several meetings to quiet things down enough to find a least disagreeable solution and to stop the dysfunctional communication between historically warring family members. It was difficult to separate the business issues from the family issues and our meetings often felt more like family counseling sessions than business consulting, something that actually happens more often than one would think. Over time we worked out an exit strategy that would help Barb find her passion and get the necessary training to pursue it.

Fortunately, the outlook for the business is positive. The family will also survive, of course, but I expect the impact of these events will be felt for a long time. If the family can continue to dialogue in less-emotional ways and work on understanding versus blaming, the emotional cut-offs should be minimized. It is a good reminder to be careful when bringing family and friends into a closely held business.