Does Money Really Solve Family Business Conflicts?

7 Dec 2001

It would be wonderful if money solved family business conflicts, but it just doesn’t get to the heart of the problem.

As published in Dinero Magazine

At a recent Family Business Council Meeting several different family members commented on this topic. "The family conflicts are really severe when the business is not doing well. When the money is flowing in well we rarely have any problems in the family." Most of the family members sitting around the table quickly agreed - particularly the senior members of the family.

But is this really true? Is it the money that solves or eases the conflicting emotions present in most family members. Particularly when feelings of jealousy, inequity, financial pressure/or needs increase, does money solve the problem. One family business members lamented - whenever I talk to my dad about a problem, he always asks - how much money do I need?

Perhaps the money serves as a temporary salve to jealous or inequitable kinds of wounds. Worse maybe it serves as the drug Immodium - stopping the temporary discomfort but actually hiding the "problem" which makes the cure even more difficult.

Are most family business conflicts about money? The answer is "No". Most family business conflicts are about love, facing difficult life developmental tasks - such as aging, retirement or how little one really knows, separating family from business needs and learning to work as a Team both with siblings and between generations.

Most family business are run by the patriarch or matriarch. Similar to how they run their families - they see themselves as responsible for the welfare of their children and mediate between conflicting pressures and expectations put on them by themselves, their spouse, their children and the culture. In the face of the conflicting needs they prioritize and allocate funds for business development and at home for college, marriage, as well as lifestyle needs for all of their children. Sadly, children's unhappiness in the mind of the patriarch/matriarch too often becomes - how can I help them financially.

Of course there are numerous real financial needs for college, grandchildren and lifestyle. The questions is how can the parent best serve their adult children? The answer is by helping them face their developmental tasks well - whether that's learning how to save, or how to take wise financial risks. The effective parent and business leader must find a way that is neither overly directive and controlling nor lacking of any help or direction.

"Miguel" is 45 years old, married with 2 children and is having trouble paying his bills. He has a history of overspending. In his parents eyes he lives an overly lavish lifestyle. Miguel' s youngest child is showing some difficulty in school and Miguel and his wife would like to send this child to private school but cannot afford it. At the conclusion of a business meeting with a customer, Miguel turns to his Dad and says "Now that we've got this account I want to talk to you about a raise. You know, my youngest child is having trouble in school and we can't afford to send him to the kind of private school he needs."

Will money solve this problem? What is the problem? Is the problem Miguel's need for money? Is it that Miguel spends his money foolishly? Or is the problem that whenever Miguel needs money, regardless of business realities, Dad gives it to him. This is a classic family business problem.

Dad wants the best for his grandchildren and knows Miguel cannot afford it. If he “gives” Miguel the funds for his children’s school he may be reinforcing to Miguel that Miguel does not need to learn how to manage his money. If he refuses, he risks that Miguel, Miguel’s wife and maybe his own wife will become angry and distant towards him. It would be wonderful if money solved family business conflicts, but it just doesn’t get to the heart of the problem.

Marc A. Silverman, Ph.D. principal of Strategic Initiatives Inc. a consulting firm that specializes in Family Business in the USA and Latin America. He can be reached at marc@sii-inc.net.