The Risks posed by Family Dynamics

The Risks posed by Family Dynamics

We may like to think of them as separate entities, but family and business are inextricably linked. Like it or not, how different members of your family interact can help or hinder the family business.

Partner, Global Head of Family Business

KPMG in France


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That’s why understanding and managing family dynamics is a key role for any family business leader. What are family dynamics? At its most basic, family dynamics are the inter-relationships between family members and of the family group as a whole.

Factors influencing family dynamics

  • Family structure – for example, whether the family is a nuclear or single-parent family
  • Family stability – can be influenced by factors such as finances; relocations; divorce; illness or death of a family member etc.
  • Parenting style – for example, whether parents hold an authoritarian approach or, conversely, a laissez-faire attitude; whether they’re involved or absent parents, etc.
  • Family communication patterns – for example, whether talking about issues and raising concerns openly is encouraged or whether a ‘stiff-upper-lip’ approach to life is favoured
  • Gender – duties and roles may be assigned based on whether we’re male or female
Important factors influencing the dynamics at play between family members who work together include birth order, sibling rivalry, family alignment, and family roles.

Birth order and the family business

In many cultures, the first-born is held in particularly high esteem and is often expected to assume the mantle of leadership (known as the law or custom of primogeniture). Many family businesses continue to base succession planning on primogeniture, regardless of the unique talents or experiences of other family members.

Imagine the eldest isn’t suited to, or lacks the inclination for, the leadership position, or that a younger family member is more qualified and has designs on the role. The resulting discontent and distrust between family members can destroy the family business, if not resolved.

Sibling rivalry and the family business

Not only do siblings share 50% of their genes, but an enduring relationship unlike any other. For siblings in business, the relationship can become all the more intense – they can become bonded all the more strongly by common purpose, defending the business from outsiders; or the schism between them can widen as the jealousy, envy and competition between them grows fiercer.

Such relentless jockeying for position and favour can ultimately tear the family business apart.

Family alignments can work against the business

Certain family members may tend to group together, based on superficial factors such as who bears a stronger physical resemblance to whom, because they share common personality traits or, more complexly, because it serves a personal agenda.

While it’s natural for families to form alignments (and the strong friendships between members can prove to be beneficial in working relationships), factions in families can be disruptive and dangerous, too.

Family roles can be limiting

All families assign roles to family members and these influence both others’ expectations of us and how we behave – for example, a family may say that ‘Joe is the funny one’, ‘Jack is the clever one’ or that Jill is the ‘black sheep of the family’.

Over time, these roles can become self-fulfilling prophecies and so firmly entrenched that they exclude certain family members from senior positions or from playing any meaningful part in the family business, regardless of true talents and skills.

How to manage family dynamics

Successful business people appreciate the importance of building and maintaining relationships. Family business owners need to ensure that nurturing family relationships – which are sometimes taken for granted – are prioritised, lest they crumble and become malignant.

Remember to:

  • Acknowledge that family psychology has a place in business!
  • Recognise that every family member is different – this means recognising and respecting the different talents, skills, interests and expertise that each member can bring to the business
  • Foster a sense of inclusivity, responsibility and ownership across different generations and branches of the family
  • Manage egos carefully – praise and reward each family member for their unique contributions and efforts
  • Ensure that a formal, objective and workable conflict management system is in place to properly address family grievances, disputes and conflicts and to help prevent family members from acting out in harmful ways (which can attract negative and unwanted attention to the business).

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