By Dr. David Tate & Dr. Krister Lowe

(Note: This Post is also available on LinkedIn here)

Idea in Brief: Family-owned businesses are the backbone of the U.S. economy, responsible for 65 percent of wages paid, adding 78 percent of all new jobs, and contributing over half of the nation’s GDP. Unfortunately, less than one-third survive the transition from first to second generation of family ownership. Understanding the “Crouching Tigers” and “Hidden Dragons” that are part of family enterprise teams and systems may help leaders and coaches of such teams increase that survival rate and contribute to further strengthening this vital part of the economy. 

Teams in business take on many forms: leadership teams, management teams, cross-functional teams, virtual teams, and so on. Within family enterprise systems there are additional teams in the mix because such enterprises are comprised of three subsystems—the business system, the ownership system, and the family system. In the business system, there are the teams that may appear in any business, as described above. In the ownership, there may be teams of shareholders, and boards of directors, advisory teams, and wealth management teams. And within the family system, there may be teams of family members (e.g., in a family council or family assembly) who are working together to optimize the relationship between the family and the business or shareholder group.

The family and ownership systems add layers of complexity that can be both a source of competitive advantage (Crouching Tigers) and can also create fault lines (Hidden Dragons) that lead to conflict and dysfunction.

Crouching Tigers: Sources of Competitive Advantage

  • Family teams and groups of owners/partners with longstanding relationships have a lot of shared history, which is a source of cohesion and trust. Such trust, a by-product of safety, has been found to be a key ingredient that contributes to high performance in teams*.
  • Family teams can have the advantage of a deep knowledge of one another that makes it easier to “read” and understand one another, to appreciate each other’s strengths and weaknesses, and to use a shared vocabulary and ways of communicating.
  • Ability to have a long-term view: families that have been in business together for decades or generations may have the ability to have a longer term view than other businesses, which may be more focused on quarterly performance, stock price, and faster shareholder return.

Hidden Dragons: Unseen Fault Lines

  • Non-managing owners versus managing owners: Shareholders that do not work in the business may become less in touch with the needs of the business and more motivated by personal gain (e.g. return on investment, dividends) rather than re-investing profits in the business. These divergent needs can be a source of friction within an ownership team.
  • Family versus non-family: Some non-family employees may perceive a “glass ceiling” (e.g. they will never have a spot in the highest management seats) or believe that family members are not held to the same standard as others (e.g., the boss’s son can never be fired). These often unspoken perceptions and feelings can create a divisive spirit that have a negative effect within teams.
  • Family dynamics: Tensions and “baggage” in the family–including sibling rivalry, generational differences, “blood” versus in-laws, and different interests among family branches—may simmer below the surface with the risk of blowing up and fracturing family and owner teams.

Knowing about both the tigers and the dragons can help leaders and team coaches who work with family enterprise teams capitalize on their strengths and opportunities, while raising their awareness of the ways that the fault lines built into these systems can become sources of strife that may undermine a team’s ability to function well.

Readers who wish to go deeper can check out this week’s episode of The Team Coaching Zone Podcast –“Episode 015: Coaching Family Business Teams with Dr. David Tate”—available here on iTunes, here on Stitcher Radio and here at the Team Coaching Zone website. In the episode Dr. Lowe and Dr. Tate explore some stories, tips and lessons learned from David’s experience coaching family enterprise teams. Leaders of such teams as well as coaches working with such teams may find this episode useful. Show Notes for the podcast are also available here. In addition, readers may also appreciate David’s book co-authored with Priscilla Cale: Sink or Swim: How Lessons from the Titanic Can Save Your Family Business.

*Reference: Peters, J. & Carr, C. (2013). High Performance Team Coaching: A Comprehensive System for Leaders and coaches.

About the Bloggers:

Dr. David Tate is a Principal at the Tate Consulting Group, a Licensed Clinical Psychologist, Executive Coach and Organizational Consultant as well an Assistant Professor of Psychiatry at Yale University and an Author. Learn more at: http://www.tate-consulting.com

Dr. Krister Lowe is an Organizational Psychologist and Host of the Team Coaching Zone Podcast as well as an Adjunct Professor at New York University’s Center for Global Affairs. Learn more at: http://www.TeamCoachingZone.com

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