Family Businesses : Finding The Right Balance

Power and control impact family businesses, just like any other enterprise. What makes the inevitable power and control struggles even more complex in a family business are the family dynamics that play a significant role in decision-making and succession planning. If family dynamics are not centred on a shared purpose, the result is often organizational friction and low performance. A common mission, high-trust relationships, and effective decision-making can help to bolster family-business performance, especially in today’s uncertain business climate.

Large family companies wield significant influence in their industries and on the global economy. The growth and sustainability of a family business and its impact on the economy lies in the fine balance between the business’s needs and family members’ expectations.

There are a number of fault lines that can upset the balance of the family business. Hereunder a few examples ;

  • Lack of trust: Only 30% of family businesses survive into the second generation. This means that in 70% of family businesses, the family loses control of the assets, and relationships are potentially destroyed. A lack of trust and communication are responsible for 60% of that failure rate.
  • Lack of a shared purpose: Although family members in different generations may have different values, a shared purpose can help employees to align their values and interests in support of a common mission.
  • Control vs. care: Family businesses can go under for many reasons, including conflicts over money, poor management, and fighting about the succession of power from one generation to the next.
  • Cordial hypocrisy: Family members too often avoid tough issues by avoiding meaningful conversations. Left unaddressed, these tensions increase distrust in families and obstruct performance in their organizations.

With the right skills, high-trust relationships and structures in place, such breakdowns can be overcome.So how can managers apply this information to their own family businesses? Here are some practical suggestions:

  • Build trust in concrete ways.
  • Inculcate the shared purpose of the family business.
  • Establish effective communication protocols.
  • Develop decision-making processes that take power, family dynamics, and business priorities into consideration.

Family businesses play a significant role in society and in the economy. Effectively aligning power and family dynamics bolsters business performance, family relationships, and the means to be a more effective force for positive social impact — which is especially crucial during these turbulent times.

( All factual and statistical information presented in this blog has been obtained from an extract of an article from the planning ) Follow us on our Facebook page and Family Business Office website at

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