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Family Relationships and the Family Business
Relationships within the family can have a profound impact on any family business. Some say that relationships between family members play the largest role in the success or failure of a family owned and operated business (Framework). Families must be sure they are managing the relationships between family members that are working in the business and those not involved to make the business as successful as possible (Poza). Relationships between siblings that result from growing up together as well as new relationships obtained through marriage have potential to cause conflict and threaten the success any family business tremendously. To make sure a family business survives and thrives past one generation, family members must be able to recognize and respect their differences while communicating effectively with each other (Merwe).

When family works together in a business environment, the relationships between the family members can make it extremely difficult. To combat this, the business owner must set boundaries in the business that everyone involved in the business understands (Lofton). Every employee must be treated equally as a major source of conflict can happen when there seems to be favoritism towards one family member over the others. The business owner must clearly communicate to all family members the expectations of how the family is expected to conduct themselves (Lofton). Everyone involved should be treated equally and if there is a difference in compensations, benefits, or responsibilities it should be based only on performance and not favoritism. This will help to minimize potential for conflict.

To build healthy relationships in the family business, family members need to recognize the importance of emotional intelligence. Emotional intelligence helps family members make decisions better because they know their feelings and can use them the right way when making decisions. Emotional intelligence also helps family members manage differences between certain family members which helps create more positive family relationships for the benefit of the business (Poza). Emotionally intelligent families will be able to manage differences and handle conflict well which will ultimately cause less potential for conflict. Emotional intelligence is critical to managing family relationships in the family business and families high on emotional intelligence are more likely to have better working relationships with other family members.

Relationships between family members can also cause major problems when succession comes into the picture. The majority of family businesses do not make it to the second generation and far less make it to the third. This is due to two things, finances and family relationships (Mirel). Family relationships make it very difficult for a business to thrive through generations. To assists in the difficulty of beating the odds and surviving through multiple generations, business owners need to carefully make a plan for successors (Mirel). They need to analyze what their successor’s strengths and personalities are and recognize the relationships between siblings that come into the picture. This will help to determine what each successors role will be in the future and help to minimize potential for conflict between family members that could destroy the business.

Communication is of utmost importance as all families experience problems with relationships at some point or another. Poor communication often leads to more conflict in family relationships (Merwe). A lot of families will go out of their way to avoid talking about issues that have potential to cause conflict. Ignoring these issues does nothing but harm the relationships more. Good communication between family members helps build healthy family relationships and makes it easier to minimize conflict. Families in business together that have poor communication should start off by discussing things about the family, then move on to discussing the business (Merwe). Communication helps maintain mutual trust between family members which benefits the business.

In family businesses, there is more potential for conflict because of the overlap of family relationships in the business (Lofton). Family members often disagree over issues for years and the conflict is never resolved or dealt with appropriately which causes larger issues in the long run. The difference between a family business that seems to have good relationships and ones that have bad relationships is not the lack of conflict; it is that the families manage conflict differently (Framework). Managing conflict in the family effectively is important to the success of all family owned and managed businesses.

In conclusion, many families avoid discussing family and business issues because they feel it may cause conflict and harm family relations. Avoiding the issues makes the issues bigger and causes more problems with family relationships. Family relationships are undoubtedly one of the most difficult aspects of any family business to manage. It is important for families that are in business together to make time to continually work on building healthy family relationships so their business will continue to thrive to the next generation instead of being destroyed by family conflict.


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Lofton, Lynn. "Relationships extra special when they're on the job and at home. " The

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Merwe, S., and S. Ellis. "An exploratory study of some of the determinants of harmonious family

relationships in small and medium-sized family businesses. " Management Dynamics

16.4 (2007): 24-35. ABI/INFORM Global, ProQuest. Web. 26 Feb. 2010

Mirel, Diana. "FAMILY TIES. " Journal of Property Management 1 Sep. 2006: ABI/INFORM

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Article Contributors:

Will Williford and Shawn Harriett