Family Systems Versus Business Systems

We all know that men are from Mars and women are from Venus. Or is it women are from Mars and men are from Venus? Whatever is the case, it’s pretty clear that men and women are from different planets. If we are clear on that fact, then it probably would be fair to say that family and business systems are from opposite universes. A little exaggeration perhaps, but many family business owners I know would agree with that statement. Business systems exist to further the business with systems that are clear in definition and strictly followed, while family systems exist to help individual family members with many dimensions that are vague, and require compromise. When you bring these two systems together—Bingo—you create a challenging environment.

What are some of the comparisons between an effective business system and a healthy family system that need to be clearly understood in order for families in business to overcome many of the challenges they face?

1. Membership. In a business system, individuals are included because there is a need and they are accountable for performance, while in a family system, membership is automatic and lasts forever.
2. Who's in charge? In a business system, there's a CEO and possibly a board who have final authority, while in a family system, leadership shifts among family members, and there's no overwhelming need for any one person to be in charge.
3. Decision making. In a business system, decision-making authority is clearly defined and is consistent, while in a family system, decision-making authority shifts according to the circumstances.
4. Reporting relationships. In a business system, reporting relationships are clear and consistent, while in a family system, expectations regarding authority and accountability may shift according to specific situations. An example may be that aging parents become more accountable to their children for certain care.
5. Job definition. In an effective business system, jobs are clearly defined based on the needs of the overall organization, and the relationship between each job is clear, while in a healthy family system, there are no real titles, but rather, roles are taken in accordance with each person's capabilities.
6. Priorities. In an effective business system, long-range goals are established, and all individuals of the business work to achieve those goals and subjugate their own needs, while in a healthy family, each person’s long-range goals have precedence as long as they do not undermine the needs or interests of other family members.
7. Goals and performance evaluation. In an effective business system, goals are clearly defined, accountability is present, evaluation takes place, and rewards or lack thereof are established, while in a healthy family system, goals may be informal or even if they are explicit, no rigid performance evaluation takes place. Usually, family goals focus on individual and collective growth, rather than subserviently serving the family unit.
8. Rewards. In a business system, rewards are related to greater compensation and/or authority, while in a healthy family system, rewards emphasize love, nurturing and self actualization.
9. Longevity. In an effective business system, the organization exists only as long as the business exists, and the goal is usually to keep it going indefinitely, while in a healthy family system, the family will always exist as family, but the goal is to separate and have the children start their own nuclear family.

It becomes apparent from these nine comparisons that the gap between an effective business system and a healthy family is very wide. When you blend the two into a family business or business family, you most certainly deal with family relationships, roles, issues, emotions and history that impact the business’ activities, while at the same time, participation in and/or ownership of a business by family members impacts the family relations. You simply cannot escape this reality. Healthy family systems and effective business systems learn to separate the two.

This article is reprinted with permission from The Family Business Report sponsored by the Goering Center at the University of Cincinnati College of Business Administration.