A family business can be a rewarding endeavour, allowing you and your loved ones to build a legacy that will benefit multiple generations in your clan.

If you have to work with the family’s black sheep, though, this can spoil the experience and may even put a wrench in your plans for the family’s future.

It’s not uncommon for family businesses to hit rough patches, especially when dealing with difficult members. Poor behaviour in a family business can take many forms, including disrespect, hostility, lack of accountability and failure to meet responsibilities. If left unchecked, these behaviours can lead to long-term conflicts that damage family relationships and business operations.

It’s important to address your family members’ poor behaviour to prevent conflicts and create a healthy work environment that promotes collaboration and productivity.

Managing a family business is similar to building and nurturing a multigenerational workplace. It’s important to implement strategies that will allow every member to work harmoniously together, despite generational differences. While multiple groups will have different values, having a shared purpose can motivate these groups to work together and build connections. 

Understanding the root causes of poor behaviour in a family business 

To effectively address poor behaviour in a family business, it’s important to understand the root causes. 

The most common sources of poor behaviour from family members in business include: 

• Family dynamics – There may be toxic personal relationships between family members that are impacting professional relationships in the workplace, affecting the way they work in business. 
• Personality clashes – Unlike in a regular business where an owner can choose employees to ensure they have similar values and work ethics, a family business may consist of opposing personalities that make it difficult to work together.
• Competing goals and priorities – Problematic family members may have personal agendas that go against the overall business objectives, which can hinder the entire team from achieving their goals.
• Disagreements over business strategy – Family members in the leadership team may have different ideas on the best way to achieve the business goals, and these disagreements can spark tension among the team.
• Unequal distribution of power or responsibilities – The distribution of power and responsibilities must be fairly assigned to individuals based on their experience, expertise and skills. Unequal distribution of power because of favouritism or familial relations can cause bitter rivalries and conflicts among family members.

It’s important to address the common fault lines that can cause family breakdowns in your business. can be problematic and how to resolve these issues. These fault lines can include a lack of trust or shared purpose, or even avoidance of addressing conflicts.

Strategies for addressing poor behaviour in a family business 

Establishing strategies and protocols within your family business can prevent future conflicts from arising in your ways of working and ensure your family can harmoniously operate the company together. 

1. Establish clear communication channels 

Effective communication is crucial in addressing poor behaviour in a family business. Establishing clear communication channels can help prevent misunderstandings and promote transparency to make sure everyone is getting the same message. 

You can set up communication channels on different platforms — such as emails, project management software like Asana, or text-based apps like Slack or WhatsApp — to encourage multigenerational connections among team members.

2. Set expectations and boundaries 

Setting clear expectations and boundaries can help prevent conflicts by providing a framework for acceptable behaviour. 

This can include setting performance targets, defining roles and responsibilities and establishing consequences for poor behaviour. This will also prevent personal conflicts and dynamics from affecting business working relationships.

3. Identify and address underlying issues 

Addressing underlying issues is crucial in managing poor behaviour in a family business. You can conduct open and honest conversations to understand the concerns of all parties involved. It’s also important to cultivate a safe space for all family members in the business to ensure that they feel comfortable openly discussing their (work-related) issues. 

4. Develop effective conflict-resolution skills 

As a business leader, one of the soft skills you must develop is conflict resolution skills, which is especially important in managing poor behaviour in a family business. Developing these skills can involve learning to listen actively, communicate clearly, and work towards finding mutually beneficial solutions. 

5. Seek professional help if necessary 

If conflicts in a family business become too complex or difficult to manage, seeking professional help from a mediator or counsellor can be a good option. These professionals can provide an objective perspective and help parties find common ground.

The role of leadership in managing poor behaviour in a family business

Leadership plays a critical role in managing poor behaviour in a family business. Leaders can set the tone for the organisation and establish clear expectations for acceptable behaviour. They can also work towards resolving conflicts and fostering a culture of respect and collaboration.

There are different factors that can contribute to leadership excellence in a family business, such as:

• Set clear boundaries to keep personal family conflicts outside of business
• Partner with a business coach that can give objective and unbiased advice
• Develop a high emotional intelligence among senior executives and managers
• Establish development programs for future leaders
• Be flexible in adapting and growing the business

Succession planning and dealing with difficult family members 

Succession planning is an important aspect of managing a family business, and it can also be a useful tool for addressing poor behaviour. Creating a clear succession plan can minimise conflicts and ensure a smooth transition of leadership. A vital part of a good succession plan is creating a family agreement or something that typically looks like a shareholders agreement. This addresses key family issues like decision-making responsibilities and the future intent of the business. 

Additionally, dealing with difficult family members can involve identifying their strengths and weaknesses and working towards finding solutions that are beneficial for the entire family.A family business can effectively approach succession planning by striking the right balance, whether it’s by employing or promoting non-family staff or allowing family members to inherit key positions.

According to Josh Baron in his article in Harvard Business Review, there are three ways to strike the right balance:

• Differentiate between compensation and dividends. Family members may receive money from both their daily work responsibilities (i.e. compensation) and their equity stake in the business (i.e. dividends). Developing systems that can calculate each member’s compensation and dividends can prevent feelings of resentment or even entitlement.
• Develop a “decision-authority” matrix. Categorising decision-making processes for those in management and in ownership can help the next generation to find the right balance between merit and inherit.
• Create a family culture that recognises both active involvement and passive shareholding. It’s important to realise that each family member brings something to the table, whether they’re actively involved in creating wealth for the business or if they’re quietly supporting in the background by keeping their money invested in the business.

These strategies can also help you prevent or even address any poor behaviour or conduct from different family members while ensuring that your business continues to grow.

By understanding the root causes of poor behaviour and developing effective strategies for addressing it, family businesses can maintain solid relationships and thrive. 

We understand how family businesses work so if you need some guidance in helping your family business thrive then contact us and we’ll help you build a strong family business that lasts generations.