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  • Writer's pictureTrevor Dickinson


When a shared business retards the life-cycle development of both generations, it may not be possible to “restore” their system to health as a family business, because it is unhealthy for such families to be in business together at all. Fantasies of saving their family business, or “succeeding” in passing to the next generation, are misguided at best.

Most of the rhetoric about family business assumes that the desire of the next generation to enter and eventually take over their parents’ business is a good thing. Their firms and their families are described as suffering from various internal and external sources of stress, which unfortunately often interfere with their “success.”

The mantra of the family business industry is that “…only about one third of family firms survive to the second generation; at least two thirds fail to make it that far, and five sixths fail to make it to the third generation.” Note the value laden assumptions we reinforce every time we use those words succeed, survive, and fail. No one has calculated how many of the “failures” were actually terrific success stories, creating liquidity that opened new paths of opportunity for the next generation; or conversely, how many that “made it” through a transition trapped their successors in misery.

When serious problems arise, the family business is treated, for all practical purposes, as a patient. Accountants, attorneys, financial planners, therapists and business consultants come to the bedside like a team of doctors, attributing the patient’s condition to a combination of unfortunate causes and working heroically to restore the patient’s health. The prescribed treatment is to improve decision-making processes and long-range commitments by all concerned parties, with the help of experts in succession planning. The experts, regardless of professional discipline, tend to assume the patient, the family’s continuity in their business, must be saved. Because a family business is intrinsically good for its owners, its employees, its customers, and its community, it must be made health enough to survive.

That rhetorical picture may be consistent with the clients’ dreams, but it isn’t always true. On the contrary, in many cases the family business is not the patient, but an illness afflicting the family. There are cases in which keeping it going means keeping the family sick. These business owners use their business to retard normal development of their children and themselves. Their health as a family business cannot be “restored” because it isn’t healthy for them to be a family business.

Because such cases are far from rare, on the advisor’s primary roles is to be able to recognize them, diagnose the problem, and intervene to encourage exploring a wider range of options for the next generation. Otherwise, a family-owned business can enable a dysfunctional family to maintain its dysfunction over decades, for generations, resisting individuals’ efforts to achieve healthier roles and relationships, denying and distorting chemical and process addictions (for example, gambling); perpetuating conflict; justifying exploitation; and excusing incompetence.

Foolish parents and spoiled children can use a family business to cover a multitude of sins, especially the sin of claiming helplessness and victimization in the face of what is really their own destructive behaviour. And because, like an addictive drug, the family business creates a “high” with delusions of grandeur and power, it creates a market for the services that exploit those delusions, and thereby, unfortunately, feeds, the addiction.

Astonishingly there is a high incidence of substance abuse among family business clients. As stated by a family business consultant, virtually all her clients had one or more substance-abusing members. If not alcohol or drugs, then gambling or some other addiction. Regardless, when a business family does have a substance-abusing member, is the substance addiction a cause or a symptomatic result of family and business problems? In many cases, the business itself is usually that family’s primary drug, and various other dependencies follow.

Many family members enter the business as a means to restore family issues of power, control, conflict and intimacy. These may include father-son conflicts, unresolved sibling rivalry or marital issues, and several other challenges plaguing the family. So, the family business becomes the arena for desperately expected change, for repeated patterns of behaviour and for acting out unspoken family conflict. Family businesses are most often formed by people trying to resolve a problem in their relationship with a particular relative, or to fix a dysfunction in their whole family. Tragically, it doesn’t work. It only perpetuates the problem, and some times make it worse.

Over identification with a business is an example of a process addiction. What begins as a desperately sought solution, becomes an even bigger problem; the family business itself becomes the drug of choice, with the whole family addicted to keeping some members in business together at all costs. In some family business cases there is an addiction-like overidentification with a business, both generations clinging to it as if they were chemically dependent on it, even as it tears them apart.


  1. Progressive dependency and tolerance.

  2. Denial.

  3. Defensiveness, projection, judgmental, invalidation of others’ perceptions or ideas, dualistic (black-white) thinking, self-centeredness, isolation, tunnel vision, forgetfulness.

  4. Perfectionism and obsessiveness.

  5. Dishonesty, secrets, ethical deterioration, spiritual bankruptcy.

  6. Grandiosity, seduction, manipulative disinformation.

  7. Chronic stress, chronic depression, crisis orientation, negativism, fear, frozen feelings, external referencing (no feelings or perceptions of one’s own).

1. Progressive dependency and tolerance are the defining characteristics of any addiction. People are addicted to a substance or to a process when they will not give it up even though it is ruining their lives. Tolerance means that they are tolerate more of it than the average person would – not that it doesn’t affect them. Dependency is a central issue in many family firms. Inability to leave is the surest sign that a business is an addiction rather than a healthy shared enterprise. Just as a person is an alcoholic when drinking is no longer a pleasure, but a necessity, someone is addicted to the family business when, without joy or fulfillment, they persist in spite of paid. The way out seems more terrifying than the dependency is crippling. Some entrepreneurs’ children can be described as “prisoners of the family business”, but in truth their parents, siblings, or spouses are equally trapped.

2. Denial is among the most human mechanisms of mental life, used by normal, healthy, optimistic people every day. In the addictive personality, it predominates over realistic judgement, not only protecting the illness, but guaranteeing its progression. The force of denial leads to the confused thinking and illogic faced by anyone who tries to confront addicts rationally. Whole families engage in denial in many ways. Families of workaholics can deny their disease easily, because workaholism carries no shame in our society. But their disease progresses, and until the organisation faces reality, the individual cannot begin to recover.

3. Addicts and any codependent family members or coworkers are as quick to blame, criticize, and judge others as they are to defend vigilantly and proactively against criticism from themselves. Often, in a family business, it is the norm to attribute interpersonal problems to “personality conflicts,” implying that nothing is fundamentally wrong with the system. Thus, its members cannot benefit from conflicting views as opportunities to challenge themselves and promote continual adaptive growth.

Self-centeredness, isolation, and tunnel vision are common in addicts as they tune out possible threats to their status quo and as their chosen drugs subsumes their world. Similarly, many business founders and successors have a remarkably narrow world view. The constant pressures of competition in a market economy naturally incline them to see government and unions as their enemies, inheritance as the only legitimate entitlement, and wealth itself as proof of predestination.

4. Perfectionism and obsessiveness result from a felt shortage if love, respect, or money (a surrogate for love and respect). The young child thinks, “If only I were more perfect, my parents would be happy and would value me.” The grown-up child thinks, “If a achieve perfection (in my weight, my work, my social status, the cleanliness of my home, or whatever), then I’ll be worthy of love.” Many adults who are not addicts themselves, but were children of alcoholics, suffer from perfectionism, excessive self-criticism, workaholism, and rigidity.

Again, there is a parallel with family business: Scarcity of their father’s attention and approval leads some adult children of entrepreneurs to workaholism and perpetual dissatisfaction with themselves. This underlies many sibling conflicts in family firms. Too little of what they need from either or both their parents in childhood creates siblings who, as adults, will be chronically distrustful and jealous of one another. (“You were always the favorite.”). This may explain why even some extraordinarily wealth adults, squabble like children over matters involving relatively insignificant amounts of money.

Adult children of alcoholics make poor team members, because they are poor listeners, having difficultly giving and receiving criticism, and have an excessive need to control. Carrying the baggage of painful childhood experience into business relationships, their anxiety around authority figures takes the form of resistance or defiance, often passive-aggressive.

5. Dishonesty and ethical deterioration as well as the addicts’ spiritual bankruptcy are other characteristics. Religious faith is not equivalent to spiritual strength. Quite the contrary: Religion can be a process addiction in itself, especially if parents are dogmatic and authoritarian instead of supporting their child’s individualized growth in spirit and character. The illusion of control through secrets in some business families is also a characteristic of addicts and their families.

6. Grandiosity is frequently a characteristic of addicts. As they live on the verge of greatness, the promise of spectacular achievement or fortune keeps them from seeing how they are wasting their lives. The promise of the future takes attention away from the current problems, denies current feelings, and devalues the ordinary self. The loftier and more unattainable the promise, the more probable that the organisation becomes a rigidly grandiose denial system.

Loyalty to the organisation becomes a fix when individuals become preoccupied with maintaining the organisation. When loyalty to the organisation becomes a substitute for living one’s own life, then the company has become the addictive substance of choice.

7. Finally, all of the combined with desperation and unrealistic expectations naturally lead to chronic stress, depression etc. The person has no boundaries, no self, and consequently no true recognition of others as selves with distinct feelings, perceptions, and desires.

Most of these people want to be doing something else. When they are challenged to explore other opportunities, they respond that they cannot afford it. They are in fact missing the real message here…they cannot afford to take the risk of being fully alive!

Dr Kenneth Kaye, leading psychologist specialising in the field of family business dynamics.


Family Legacies is a multidisciplinary family business consulting company. Our consultants are leaders in their respective fields including; Family Business Consulting, Strategic Planning, Financial Planning, Wealth & Risk Management, Corporate Finance, Business Transitions & Exit Planning - Buy, Improve, Grow & Sell Businesses, Commercial & Family Law, Executive Coaching, Leadership Development & Facilitation, providing our clients with a professional and integrated multi-disciplinary service.

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