Businessman giving a presentation to a group of people in a meeting room.

The perils of working in a family-owned business – Mary T. O’Sullivan

By Mary T. O’Sullivan, MSOL

“The employment of relatives in the same area of an organization can cause serious conflicts and problems with favoritism and employee morale.” – The HR Specialist

The operations manager of a large family-owned bakery sends out cookies for Christmas with cracked and crumb filled trays. A salesman hired from the outside is fired from a family-owned business because a relative needed a job. A director is fired, only to have his wife, the owner’s sister demand that he be rehired. A sibling in a family partnership is put on a Performance Improvement Plan (PIP) that lasts for five years. Three siblings start a business, but only one is willing to do the work, while the others either work “teachers’ hours” or retreat to the Jersey Shore three days of the work week.

These are some of the stories I’ve heard in my 10 years of coaching people working in family businesses. Both family members and outside employees sought coaching to find some resolution to their toxic workplace issues. While any workplace can have its headaches, typical work issues are only exacerbated when the people working together are family members. What could be worse than disagreeing at work, and then having to pretend all is well when family events roll around? What is it like when the original founders, the parents, die and plan their estate so that the business is left to all the siblings, whether there are five of them or three, is a great idea? Who decides who the board members are? What if all the board members are the same family members who disagree while working together? What if one sibling dislikes what another does in the business, even when all the siblings are equal partners? And then that sibling takes revenge by cutting pay and authority, icing the person out of the business, making them a non-entity and a persona non grata.

And then we add the in-laws into the mix. So, if a company president is a sibling and has a problem with the spouse of one of the other siblings, the two siblings are torn between family loyalty and loyalty to the spouse, and the offended sibling just so happens to be the HR and payroll manager. It’s not hard to see how quickly tempers flare and feelings, all the way around, are deeply wounded. In one case, tensions were so high for so many. years, the family stopped celebrating holidays together.

Family business crisis can take physical altercation form as well. When two brothers-in-law broke out into a fist fight, it was the culmination of a legacy of trouble. The owner had to fire his brother-in-law because of sagging sales and harassment and swearing and cursing on the job, none of which would be tolerated in any other company. The brother-in-law complained to the owner’s wife, the owner’s sister, claiming he couldn’t find another job and couldn’t pay his bills. The wife put pressure on her husband to bring her brother back to the office. Reluctantly, the owner re-hired his brother-in-law, but it wasn’t a smooth transition back on the job. The brother-in-law was rehired with a lower pay grade and lower level and wasn’t happy about it. He angrily confronted the business owner, who was not to be moved.  Push came to shove, and the brother-in-law punched the owner, resulting in a fight. The owner’s wife broke it up, but the owner remained under pressure not to take any further action. I pointed out to my client, the owner, that his brother-in-law should have been arrested for throwing the first punch. But that was never going to happen, because he was punched by his wife’s brother, he was just going to have to live with this toxic situation to keep the peace at home. Furthermore, his father, a retired engineer, regularly injected himself into the business, not always for the better. In addition, the owner’s son, a millennial, refused to use the phone to call clients, preferring to text or email, and promptly closed his laptop and left the office precisely at 5:00PM!

It’s easy to see how the environment in that family business was negative, and many people were unhappy. My client, the owner, knew he was trapped, but the business was so successful, he had to accept the situation, even though the situation forced him to be in the office every day to ensure the smooth operations of the business.

Family businesses can be a good idea when everyone gets along, but when one or more family members is out of step, and disregards the mission, vision, values and goals of the company, nothing good can come of it. Maybe a more structured company organization would help, but structure is often what independently owned businesses chafe against and is often the reason people strike out on their own. But no one can predict the future, and as much as the founders want to preserve their legacy for future generations, maybe the best idea is to sell the business upon their death, split the profits and let the heirs use the money for the own, independent endeavors. No one has a crystal ball, and trust preparers and lawyers can’t force good sense into their clients.  But it seems from my experience that only disharmony and bad feelings result from family. Members working together, and woe is the outsider who tries to move up in the company. It’s best to avoid the family business, and move on to a more anonymous, large corporation which has a standard set of rules and behaviors that keep the organization afloat.

“If you’re planning to start a business with family members, be they a spouse, parents, siblings, or children, think it through before you leap. You can’t just assume that a family-owned enterprise is a sure thing…” Rhino7


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Mary T. O’Sullivan, Master of Science, Organizational Leadership, International Coaching Federation Professional Certified Coach, Society of Human Resource Management, “Senior Certified Professional. Graduate Certificate in Executive and Professional Career Coaching, University of Texas at Dallas. Member, Beta Gamma Sigma, the International Honor Society. Advanced Studies in Education from Montclair University, SUNY Oswego and Syracuse University. Mary is also a certified Six Sigma Specialist, Contract Specialist, IPT Leader and holds a Certificate in Essentials of Human Resource Management from SHRM.