Family businesses need shared values and effective communication

Special to MassMutual

By Special to MassMutual

Posted on Mar 8, 2023

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Identify two types of family business cultures and which one tends to be more successful.

Note how important emotionally intelligent communication is to a family business.

Explain why it is critically important that owners and employees have an open channel of communication.

Family businesses may differ in terms of size and industry, but they actually have a great deal in common, according to Paul Sessions, family business advisor and retired director of the Center for Family Business at the University of New Haven.

After studying and working with hundreds of family businesses, Sessions believes those that function best possess a common set of values. Whether it’s a commitment to integrity and quality or a commitment to environmental sustainability, there’s a certain glue that holds the family and business together and unites the generations. The values that children in the family were raised with follow them into adulthood and distinguish their business dealings. As a result, it’s usually not generational differences that disrupt family businesses, it’s individual differences in personality and temperament, irrespective of age.

When pressed on the differences between family businesses, Sessions said he’s seen two types:

· The “you’ll always have a job here” type.

· The “perform or you won’t work here” type.

It’s the latter that’s likely to be more successful.

Of course, the former philosophy may explain why so few businesses survive after two generations. However, the “perform or you won’t work here” philosophy can require a good deal of emotional intelligence to ensure everyone stays on friendly terms. Often times to maintain family harmony while at the same time run a successful business, it’s important to ask: “Are we a business first family, or a family first business?”

Determining whether a member of the younger generation should take over the family business is a common challenge. Sessions described one parent who had a creative solution. The father had a checklist of 15 things his daughter had to master before she could take the reins of the company. The checklist covered everything from financial management to the technical side of the business. The father was extremely honest about the high bar he had set, yet he was empathic about the pressure his daughter felt to excel. She freely voiced her concerns about the success of the business and was open-minded about her need for more training. Ultimately, both parties were happy with the process and the outcome. (Related: 3 rules for female small business leaders)

This anecdote illustrates just how important emotionally intelligent communication is to a family business. Words must be chosen carefully. For example, the adult children who are inheriting a business often cringe when a parent refers to them as “the kids.” At the same time, employees bristle when adult children call the boss “Mom,” “Dad,” or “Uncle Harry” on the shop floor or in the office. These terms only accentuate the distinction between family and staff.

Generally, employees are keenly aware that they aren’t family, but families aren’t always aware of how their decisions impact employees. According to Sessions, it all comes back to communication. It’s critically important that owners and employees have an open channel of communication where employees can express what they’re thinking and feeling, and owners can listen. (Related: A strong team: At the intersection of strategy & tactics)

“Many bosses are accustomed to talking rather than listening,” he said. “They have to learn how to have a dialogue.”

Sessions told the story of one multi-generation family-owned company, where a former president was a great listener. He held the top position for decades and was genuinely interested in his employees’ thoughts and opinions during his tenure. As a result, people opened up to him, and a great deal of trust existed between the family and the staff.

“The next generation of leaders either weren’t very interested in listening or weren’t very good at it, and the trust was weakened,” Sessions explained. “To resolve the matter, the family hired a family business advisor to teach critical skills to the next generation in key areas such as communication, rebuilding employee trust and sustainable processes.”

Another characteristic of family businesses is the propensity of owners to hold on to the reins for too long. It’s difficult to give up control to the next generation no matter how obvious the need may be. And it’s easy for adult children to become resentful of waiting in the wings.

Like all businesses, family-owned businesses face challenges. But when family members share values, communicate honestly, and display emotional intelligence, they can build a resilient business that offers long-term sustainable value for generations to come.

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This article was originally published in February 2021. It has been updated.


The information provided is not written or intended as specific tax or legal advice. MassMutual and its subsidiaries, employees, and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own, and do not necessarily represent the views of MassMutual.

Paul Sessions and the Center For Family Business at the University of New Haven is not affiliated with Massachusetts Mutual Life Insurance Company (MassMutual) or its affiliated companies. This article was sponsored by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001. All opinions are those of the author. MassMutual offers this as educational information only.