Claudio Müller

Seed of Future and New Blood

Donald Levitt

Preventive Maintenance in Each Generation

In this month's Thought Leader Blog, James Olan Hutcheson makes a rather shocking claim:  "Alcohol addiction is virtually a plague affecting family enterprises. Abuse of alcohol, as well as other substances, is so commonly found at the root of or in addition to more conventional family business problems like inter-generational transfer and leadership development that it is almost to be expected."

Shocking, but true.

Alcohol abuse and substance abuse are almost always accompanied by another phenomenon -- denial.  The person abusing the alcohol or other substances simply lies about their use; or refuses to talk about it; or minimizes the impact of their abuse.  As the abuse gets worse, the denial increases.  And at the same time, as the abuse is worsening, the abuser's family, friends and co-workers are very often "covering" for the alcohol and substance abuser by doing their work, or following up on their unfulfilled promises, or making excuses for the problems they create.

As Jim Hutcheson notes in his blog:  "addiction... will not readily go away on its own."  It takes courage, on the part of family, friends, and/or the family business professional advisors, to take action and to do what is right -- not just what is easy.

Family Business Wiki is pleased to highlight this important issue for family businesses -- and welcomes others' comments and submissions on this critical topic.

Hidden Hurdles in Healing Families 

It's no secret that a family business advisor needs considerable skill at untangling complicated personal relationships in addition to expertise in business areas such as financial management, strategy, and succession planning. What's less widely appreciated is the fact that family business consulting also very often calls for the ability to identify and assist with issues related to addiction(s).

 

Simply put, alcohol addiction is virtually a plague affecting family enterprises. Abuse of alcohol, as well as other substances, is so commonly found at the root of or in addition to more conventional family business problems like inter-generational transfer and leadership development that it is almost to be expected.

 

In part, this is because both family business and addiction are such large parts of our society. For instance, in one study of over 43,000 thousand American adults, the National Institute of Alcohol Abuse and Alcoholism found that 3 in 10 drank at levels placing then at risk for alcoholism, liver disease, and other health and emotional problems.  (Read more from James Olan Hutcheson and add comments.) 

On Time and Timing 

In my family, whenever one of my 29 nieces and nephews acted up, my eldest sibling would advise the child's parents that "it is only a phase, give it time." The implication was that as children mature, behavior changes over time so there is no need to take too much action. The insinuation is that the interference could exacerbate the issue and some things are best left for a later time, or even no time. This is an approach which some family business owners would likely endorse. I have encountered senior generation owners and even some professional advisors, who in the face of seemingly intransigent conduct by family members, resort to the adage of time as the great healer and resolver of all things. They may make a couple of attempts at resolution, and in the face of ongoing opposition, let the matter drop and assert hopefully that time will bring reason.

For those who believe in taking the bull by the horns, this seemingly passive attitude and approach can be maddening. They view the inactivity as sweeping stuff under the carpet and caution that the bump in the carpet is likely to cause a serious accident soon enough. And is this always the case? Is it necessary to address every infraction or unhelpful attitude or unseemly behavior by a family member in the business? Are some situations successfully resolved merely by the passage of time? In seeking to answer this, it may be more useful to consider the circumstances in which time is likely to be a foe, not a friend. When is it necessary to act in a timely fashion with regard to family business issues?  (Read more from Annette Rahael and add comments.)

How Family Businesses Survive in the Long-Term with a Family Strategy

The Witten Institute for Family Business has studied the factors leading to success or downfall of a family-run enterprise in the course of generations. The result is stunningly clear: The major destroyer of values in family businesses is not owed to economic challenges. It is the quarrels and struggles in the family.

 

The prime motor of conflicts are problems with regard to succession: 90% of all firm owners in Germany wish to have a family-internal solution for succession, but 49% of the enterprises have no succession plan in place. However, family enterprises constantly have to make decisions that refer to questions of succession. Furthermore we revealed that only 27% have a family strategy or a family constitution in place.

 

Family strategy as management system

If a family enterprise wants to survive for many generations, it is necessary to have an internal frame of orientation and action. In an ideal situation this means that there is an individual system and a set of regulations that formulate the "family will", which is documented as a "family strategy". Summarizing our recent research on leading multi-generational Family Businesses in Germany, we developed a set of guidance rules for such a family constitution. The aim is a family internal management system that helps shareholder families to solve internal conflicts, especially in questions of succession, or even to prevent its emergence - and that should pertain for generations.  (Read more from Tom Rusen and add comments.)