Navigating the Dynamics: Success Strategies for Working in a Family Business

By Dan Jeppson
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“Never do business with family!” is a common trope that I’ve heard many times.  Although there are valid reasons for the popularity of this phrase, it ignores many advantages that a family business can offer.  When speaking with those who have worked in successful family businesses, this phrase is spoken with a twinkle in the eye and knowing laughter—there is magic in a family business if it’s done correctly.

Family businesses form a critical pillar of the global economy. According to a study by the Family Firm Institute (https://www.ffi.org/research/), family-owned businesses account for an estimated 70%-90% of global GDP, providing jobs for millions of people across sectors. Because families have a built-in potential for legacies and traditions (and also a deep-rooted sense of loyalty), they provide natural motivation that non-family businesses struggle to create. Regardless of how rewarding it can be working within a family-owned business, it can also present unique challenges (these issues can range from interpersonal conflicts to succession planning). Because of the added variables (vs hiring employees directly), special care must be taken to ensure that everybody stays together. 

This article explores the key success strategies for making a family business work well and offers insights on how to navigate these complex dynamics—all while maintaining both professional and personal relationships. 

Before starting the discussion, it’s important to understand how family businesses differ from companies not rooted in family relationships. Personal relationships can either strengthen or strain a company’s operations because of the complicated dynamic. While non-family businesses typically rely on mostly-professional relationships with legal regulations, family-owned businesses are usually supported/challenged by emotional ties, generational gaps, and informal decision-making processes.  (And it is IMPORTANT to nurture these relationships even more than a normal family might!  This mood may be one of the most important aspects of success.) 

Key characteristics (and offsetting challenges) of the unique nature of a family business include: 

• Legacy and Tradition: The multi-generational nature of family businesses creates “legacy” having an emphasis on sustaining and growing the company for future generations. This long-term outlook can lead to more sustainable decision-making (and the challenge is to ensure that change management happens gracefully…) 

• Shared Values: Family businesses often emphasize shared values and have a unique culture based on trust, loyalty, and common goals. These values can serve as a strong foundation (with the corresponding challenge being the blurred lines between personal and professional matters.) 

• Informal Hierarchies: Family dynamics often confuse conventional organizational chart structures because of the entrepreneurial hats that must be traded and shared.  This personal buy-in factor is powerful (but out-of-control egos that can be subdued through formal reporting structures can often sabotage a business’s flow if not checked.) 

• Complex Succession Planning: Succession planning in a family business isn’t just about choosing the most competent candidate—it’s about building a structure and culture that balances familial relationships and expectations with long-term business success.  When done correctly, this creates a shared vision (and when the wrong kinds of personalities are in play, this can create extra trouble.) 

Even though the closeness of a family business offers many measurable benefits, it also has the potential for unique challenges. Understanding and leveraging the balance between the benefits and challenges is crucial for developing healthy business strategies.

1. Job Security and Loyalty: Family members often enjoy a higher level of job security than non-family employees. Loyalty is built-into the business structure (assuming cooperative parties) and individuals are more willing to go the extra mile for the company.
2. Shared Vision: Successful family businesses tend to share a long-term vision.  This can naturally create alignment in goals and reduces internal conflict around the company’s direction. 
3. Close-Knit Relationships: The family bond can create a unique workplace culture where trust and understanding are the foundational mood of the entire operation. Non-related employees can also feel valued not only as workers but as integral parts of the family if the culture is properly established. 
4. Flexibility: Family businesses often allow more flexibility for family members to balance personal commitments and work responsibilities.  This type of personal satisfaction and flexibility can allow for additional loyalty and efficiency. 

1. Blurred Boundaries: When personal conflicts spill over into the workplace, professional disagreements become much harder to navigate.  The best of intentions cannot survive unhealthy communication or out-of-balance issues. 
2. Resistance to Change: Deep-rooted traditions and legacy focus in family businesses can make them more resistant to change and innovation.  This is particularly challenging when technology or environmental changes are difficult for older generations (who might be key decision makers) to digest. 
3. Favoritism: When promotions or roles aren’t based on merit, favoritism usually leads to resentment among both family and non-family employees.  This can be extra challenging when rogue egos at the family level cause unchecked chaos. 
4. Succession Disputes: Family members can struggle with deciding who will take over leadership roles—especially when some family members aren’t pulling their weight. The process can be even more challenging when non-family employees aspire to leadership positions. 

Keeping in mind the challenges and advantages of a family business, there are practical strategies that can help a family business succeed in the modern environment. 

1. Establish Clear Boundaries

The blurring of personal and professional boundaries is one of the most common challenges in a family business. Family members often take work home and external family discussions (often with family members not involved with the business operation) might influence business decisions. To proactively mitigate potential challenges, it is essential to establish clear boundaries between work and home life: 

• Set Clearly Defined Roles and Responsibilities: Each family member should have a role within the company—this should be formally and periodically defined and reviewed. This not only clarifies expectations but also prevents overlap or unnecessary conflict.  (Although it is helpful to create a flexible environment where entrepreneurs can grow it’s also important that key responsibilities are covered, and workflows are standardized where possible.) 

• Designate Time for Family Matters: Family discussions (unrelated to business operations) should be reserved for specific times outside of work times and locations. It’s important to prevent personal matters from seeping into business meetings by ensuring that both family and business issues are handled in the appropriate settings.

2. Professionalize the Business

Professionalizing the business is one way to eliminate favoritism and ensure the company operates as smoothly as possible. This means governance, policies, and decision-making are all managed as if the company is run like a non-family enterprise: 

• Formal Governance Structures: Establish a formal board of directors with both family and non-family members to oversee key decisions. When 3rd-party perspectives are included during decision-making, the results tend to be in the company’s best interest.  It also allows non-family employees to be part of the company’s direction. 

• Create Clear Career Pathways: Implement transparent policies for promotion and performance evaluation. This ensures that all employees, family or not, are held to the same standards and opportunities are merit-based.  (Non-family employees are sensitive to family dynamics, but they can also play a strong part in the multi-generational stability of an organization.  Many family businesses morph to include multi-generational “other-family” groups as well.) 

3. Establish and Foster Open Communication

Communication is deeply critical in any organization, but it’s even more important in a family business. Poor communication can lead to misunderstandings that create sabotage opportunities for both professional and personal relationships: 

• Regular Meetings:  Regularly-scheduled meetings provide an opportunity to address any issues before they escalate into out-of-control situations.  These help maintain family relationships and help non-family employees join in the overall vision. 

• Encourage Feedback: When family members feel comfortable providing and receiving feedback, constructive criticism (when communicated properly) can lead to positive changes within the company.  When this is a cultural norm, people feel safe and can be positive agents for growth. 

4. Prioritize Succession Planning Early

Succession planning is one of the most (potentially) contentious aspects of working in a family business. Involving the next generation in leadership roles gradually can help ease the transition when the time comes: 

• Create a Succession Plan: Involve all key stakeholders in discussions to ensure transparency and fairness when building a succession plan.  Clearly outline the process for choosing future leaders within the family, and for ownership and responsibility paths in advance. 

• Mentorship and Development: Mentorship and leadership development opportunities should be planned, executed, and nurtured. This ensures the upcoming generation are well-prepared to take over operations when the time comes.  This often involves formal and informal cross-training in technology and business management areas. 

5. Maintain Work-Life Balance

A healthy work-life balance should be a key foundational principle to mitigate the most challenging aspects of working in a family business. To avoid burnout or family tension, it’s important to understand and mitigate the pressures of running a family business and strive to unblur lines between personal time and work: 

• Delegate Responsibilities: Avoid overloading any one person with too many responsibilities. Delegation not only helps maintain balance but also empowers others within the business—this delegation can be a key tool for mentoring the next generation. 

• Set Time for Personal Life: Make sure each family member is taking time for personal activities, hobbies, and non-work-related interactions with others in the family. This can strengthen relationships and help prevent business stress from taking over lives. 

6. Address Conflict Head-On

Inevitable conflict is mitigated by how it’s managed—this can make or break the company’s long-term success. Avoiding conflicts (instead of implementing proactive measures and by creating the proper cultural environment) can cause issues to fester and grow: 

• Address Issues Early: When conflicts arise, address them head-on before escalation happens. Avoiding or waiting too long to resolve issues can damage family relationships and the business’ future. 

• Use Mediation if Necessary: Sometimes family conflicts may require the help of a neutral third party to mediate—this can help ensure that issues are resolved fairly and impartially.  This can happen between generations within the family, between family members of the same generation, or between family members and employees.  A 3rd party can help to break through issues that prove difficult to negotiate. 

7. Respect for Non-Family Employees

Non-family employees feeling marginalized in family businesses is predictable, especially when they perceive favoritism toward family members withing the organization. It’s crucial to create an environment where non-family employees feel valued and included—their loyalty is a powerful asset to the business. 

• Foster Inclusion: Encourage input and ideas from non-family employees, even if they don’t align with the family members’ goals. The outside perspective of non-family members can provide valuable insights that family members may not have considered (often because of narrow focused egos.) 

• Offer Equal Opportunities: Ensure that non-family employees have equal access to promotions, raises, and leadership opportunities. If non-family members have merit-based opportunities for growth that can put them in places of responsibility over family members, it creates a foundational mood of fairness and trust.  (Of course, care must be taken to ensure that non-family employees have the proper amount of power and responsibility—even related to family members.  This is a sacred balance that requires integrity and ethical roots.) 

8. Preparing for Change and Innovation

While family businesses tend to rely on traditions and common/shared values, preparing for change and innovation is essential for long-term success today. Technology and emerging opportunities are key change variables for most companies: 

• Encouraging New Ideas: It is empowering (whether the new ideas come from family members or non-family employees) to foster a culture that encourages innovation and is open to new workflows or efficiencies. 

• Invest in Technology: Stay competitive by proactively investing in technology and other advancements–these can help the business operate more efficiently.  Balancing cost/benefit variable is an important key strategy, but the benefits must often be proactively investigated to maintain a competitive edge. 

Working in a family business comes with many potential rewards and challenges. In this unique environment, clear boundaries, professional governance, open communication are all key aspects of nurturing both sides of family and business relationships. Family businesses can thrive for generations by effectively fostering a culture of inclusivity, addressing conflicts early, and planning for the future. 

Family businesses SHOULD BE more than just money-making entities—they can be legacies built on shared values and trust. With the right strategies in place, it is possible to navigate the complex dynamics of family business and achieve long-term success.