Prisoners of the Family Business

Prisoner of His Family's Business

Kenneth Kaye, Ph.D.

"He's always got an excuse, it's always somebody else's fault."

"The problem is, my parents spoiled him."

"He's the smartest one of the four of us, if he would only apply himself. But he ambles in an hour after we open, he's on the phone with his friends more than he is with customers, and often he's gone by mid-afternoon."

Although the speakers could be describing the same person, each is complaining about his or her own youngest brother in their family business. They see him as unmotivated, or irresponsible, or incompetent. He may be abusing alcohol or other drugs, or pursuing a playboy life style; but not necessarily. Only a few kid brothers make the kind of public spectacles that garner embarrassing headlines--for the Hanson family of Winnebago fame, for example. The common denominator they share with less spectacular failures is that other family members have little respect for their contributions to the business, yet keep them employed there anyway--for years, while complaining about them. As time goes by, it becomes too late for other career choices. They are prisoners of the family business.

With variations, it is an astonishingly widespread problem among business-owning American families. When I speak to audiences on preparing the next generation, invariably someone will stand up and say, "One of my sons..." or "I have a brother who..." In the 1989 film Parenthood, Jason Robards catches his youngest son (Tom Hulce) trying to sell Dad's prized classic car in order to pay his own gambling debts. In a perfect example of failure to hold a son accountable, the Robards character offers to pay off the bookies on condition that his son come to work in his plumbing supply business.

It seems to be a male phenomenon, probably because daughters can opt out of involvement in the business simply by default. A son is expected to work for his father or find equally gainful employment that suits him better.

Why is it so often (not always, of course) the youngest son? And what can a family do?

One explanation may be that entrepreneurs' older children acquire the parent's work ethic as they see Mom and Dad struggling to make their enterprise succeed; and coming to work in the family business is a way to get closer to the parent who was absent from their childhood lives. Later-born children may have grown up when the family enjoys more affluence. They may also see older brothers and sisters as having already claimed the loyal, responsible roles. They feel (or act) as though entitled to the family money, even while rejecting the other's shared values.

At work, senior managers and junior employees alike contribute to the problem by their attitudes toward Sonny: He stimulates resentment toward the family for whose wealth they are toiling, provides occasions to waste time whenever he is around, and justifies their privately expressed opinion that this family doesn't know how to run a business.

If ever there were a situation where an ounce of prevention is worth a pound of cure, the kid brother syndrome is it. Three pieces of advice are paramount for business owners: (1) give as much attention to raising responsible children as you do to your business, (2) set clear expectations including job descriptions and performance reviews from the first day the next generation starts to work in the company, and (3) create liquidity in the family's assets to provide other business opportunities for sons and daughters outside the parent's business, without their having to wait for an inheritance.

For many owners, unfortunately, that advice comes too late by the time they get around to thinking about transition. These parents are convinced that their son would fall upon his face if they were to stop propping him up. Usually they are wrong.

Recapturing the kid brother's potential contribution requires changing his habits and the way he is treated and the way his family members and others in the business perceive him--a tall order. In any case, the family may need professional help to candidly face the fact that the relationship is not working. Each member must be coached to examine how he or she has contributed to the problem. Only after they stop blaming the principal victim--the kid brother --can they (and their tax and financial advisors) address the problem of how to use the family's total assets more productively for the benefit of all members.