Economic slowdowns stress the family business in unique ways. These challenging times test the family’s ability to distinguish between family and business issues. Failing this test may not only elevate tensions in the family, but may also hurt the business.
The family business is a unique vehicle for conducting business. It combines business and family models of organization. While successful businesses are based on some form of meritocracy, where the best rise to the top, successful family models all emphasize the value of nurturing and protecting the weakest family members. While successful businesses separate between the business and private lives and promote the concept of not bringing one’s personal problems into the workplace, the family business often has a kind of transparency, which blurs the line between these two worlds.
But recognizing that these two worlds, the family and the business environments, are and should remain separate is critical to the proper functioning of the family business. Just because you know the intimate details of your partner’s lifestyle doesn’t mean that these items should be placed on the corporate agenda.
How the business’ shareholders and managers spend their money have no impact on the performance of the business. And the financial needs or desires of its executives should not impact compensation and other remuneration decisions. If family members focus on the business needs and on the contributions of its managers and owners, they will enhance their abilities to guide the business through tough times.
