Family Business on the Couch E-Book

Manfred F.R. Kets de Vries

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 471

Veröffentlichungsjahr: 2010

Beschreibung

The challenge faced by family businesses and their stakeholders, is to recognise the issues that they face, understand how to develop strategies to address them and more importantly, to create narratives, or family stories that explain the emotional dimension of the issues to the family. The most intractable family business issues are not the business problems the organisation faces, but the emotional issues that compound them. Applying psychodynamic concepts will help to explain behaviour and will enable the family to prepare for life cycle transitions and other issues that may arise. Here is a new understanding and a broader perspective on the human dynamics of family firms with two complementary frameworks, psychodynamic and family systematic, to help make sense of family-run organisations. Although this book includes a conceptual section, it is first and foremost a practical book about the real world issues faced by business families. The book begins by demonstrating that many years of achievement through generations can be destroyed by the next, if the family fails to address the psychological issues they face. By exploring cases from famous and less well known family businesses across the world, the authors discuss entrepreneurs, the entrepreneurial family and the lifecycles of the individual and the organisation. They go on to show how companies going through change and transition can avoid the pitfalls that endanger both family and company. The authors then apply tools that will help family businesses in transition and offer their analyses and conclusions. Readers should draw their own conclusions from careful examination of the cases, identifying the problems or dilemmas faced and the options for improved business performance and family relationships. They should ask what they might have done in the given situation and what new insight into individual or family behaviour each case offers. The goal is to avoid a bitter ending.

Leseprobe

Table of Contents

Title Page

Copyright Page

Dedication

PREFACE

A PSYCHOLOGICAL PERSPECTIVE ON FAMILY BUSINESS

THE PSYCHODYNAMIC PARADIGM

OUR INTENDED AUDIENCE

A ROADMAP

THE STRUCTURE OF THE BOOK

ENDNOTES

Acknowledgements

PART I - QUESTIONS AND OBSERVATIONS

INTRODUCTION

ENDNOTE

CHAPTER 1 - A PSYCHOLOGICAL PERSPECTIVE ON BUSINESS FAMILIES

PSYCHODYNAMIC AND FAMILY SYSTEMIC PERSPECTIVES

KEY IDEAS FROM THE PSYCHODYNAMIC APPROACH

THE ROLE OF TRANSFERENCE AND COUNTERTRANSFERENCE

THE FAMILY SYSTEMIC PERSPECTIVE

THE THERAPEUTIC ALLIANCE

A SUMMING-UP

ENDNOTES

CHAPTER 2 - THE CHALLENGES OF LOVE AND WORK

CONFLICTING GOALS IN THE FAMILY BUSINESS

THE THREE-CIRCLES MODEL

HOW CONFLICT CAN DEVELOP

ENDNOTES

CHAPTER 3 - FAMILY BUSINESS PRACTICES: ASSESSING STRENGTHS AND WEAKNESSES

THE INTERFACE OF BUSINESS AND FAMILY PRACTICES

ASSESSING THE HEALTH OF A FAMILY BUSINESS

ENDNOTES

PART II - REFLECTION AND LEARNING

CHAPTER 4 - THE LIFE CYCLE AS AN ORGANIZING CONSTRUCT

THE MULTIPLE LIFE CYCLES OF THE FAMILY BUSINESS

KEY MODELS OF HUMAN PSYCHOLOGICAL DEVELOPMENT

THE FAMILY LIFE CYCLE

CARTER AND MCGOLDRICK’S FAMILY-BASED LIFE CYCLE MODEL

APPLYING THE LIFE CYCLE IN FAMILY BUSINESSES

ENDNOTES

CHAPTER 5 - NARCISSISM, ENVY, AND MYTHS IN FAMILY FIRMS

PERSONALITY TYPES

MANAGERIAL IMPLICATIONS OF DYSFUNCTIONAL NARCISSISM

THE IMPORTANCE OF INDIVIDUATION

THE FAMILY FIRM AS TRANSITIONAL OBJECT

THE POWER OF ENVY

GAMES FAMILIES PLAY: THE ROLE OF FAMILY MYTHS

THE IMPACT OF FAMILY MYTHS ON THE FAMILY BUSINESS

SUMMARY

END NOTES

CHAPTER 6 - THE ENTREPRENEUR: ALONE AT THE TOP

COMMON PERSONALITY CHARACTERISTICS OF FOUNDER-ENTREPRENEURS

LARRY ELLISON AND ORACLE

DECIPHERING THE INNER THEATER OF THE ENTREPRENEUR

COMMON DEFENSIVE STRUCTURES IN FOUNDER-ENTREPRENEURS

MAINTAINING THE BALANCE

ENDNOTES

CHAPTER 7 - LEADERSHIP TRANSITION: REPLACING A PARENT AS CEO

OPTIONS FOR TACKLING THE SUCCESSION PROBLEM

THE INHERITANCE

PSYCHOLOGICAL PRESSURES ON NEW LEADERS

STAYING ON COURSE

ENDNOTES

CHAPTER 8 - A SYSTEMIC VIEW OF THE BUSINESS FAMILY

A TWO-WAY RELATIONSHIP

THE EVOLUTION OF SYSTEMS THEORY

THE DEVELOPMENT OF FAMILY SYSTEMS THEORY

THE FAMILY SYSTEMS PROPOSITION

FAMILY SCRIPTS AND RULES

FAMILY SCRIPTS IN THE FAMILY BUSINESS

A PRACTICAL EXAMPLE OF FAMILY SYSTEMS THINKING

ENDNOTES

CHAPTER 9 - DIAGNOSING FAMILY ENTANGLEMENTS

THE FAMILY GENOGRAM

THE CIRCUMPLEX MODEL OF MARRIAGE AND FAMILY SYSTEMS

DIFFERENTIATION OF SELF FROM FAMILY OF ORIGIN

TWO FAMILY STORIES

ENDNOTES

PART III - INTEGRATION AND ACTION

CHAPTER 10 - ADDRESSING TRANSITIONS AND CHANGE

LEWIN’S IDEAS ON CHANGE

A MODEL OF INDIVIDUAL CHANGE

MAJOR THEMES IN THE INDIVIDUAL JOURNEY TOWARD CHANGE

THE PROCESS OF CHANGE WITHIN ORGANIZATIONS

THE CHANGE PROCESS IN FAMILIES

FAMILY FOCUS OR ORGANIZATION FOCUS?

ENDNOTES

CHAPTER 11 - THE VICISSITUDES OF FAMILY BUSINESS

THE STEINBERGS: A STUDY IN SELF-DESTRUCTION

THE IMMIGRANT DREAM

HIS MOTHER’S SON

THE ENTREPRENEUR’S VISION

SAM AS A FAMILY BUSINESS LEADER

THE ENTREPRENEUR’S DILEMMA: PASSING THE BATON

THE NEXT GENERATION

IRVING LUDMER: PLAY IT AGAIN, SAM

A FAMILY SYSTEMS PERSPECTIVE ON THE STEINBERGS

THE EFFECTS OF SAM STEINBERG’S INNER WORLD ON THE FAMILY BUSINESS

THE INNER THEATER OF SAM’S DAUGHTERS

WHAT IF?

ENDNOTES

CHAPTER 12 - PUTTING FAMILY BUSINESS INTERVENTION INTO PRACTICE

THE FAMILY ACTION RESEARCH PROCESS

THE SUCCESSION CONUNDRUM

THE ROLE OF THE OUTSIDE ADVISER

ADVICE TO FAMILIES SEEKING HELP

THE BENEFITS OF A PSYCHODYNAMIC SYSTEMS PERSPECTIVE

FINAL WORDS

ENDNOTES

APPENDIX 1 - DEVELOPING A BUSINESS FAMILY GENOGRAM

APPENDIX 2 - THE CLINICAL RATING SCALES AND THE CIRCUMPLEX MODEL

INDEX

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Library of Congress Cataloging-in-Publication Data

Kets de Vries, Manfred F. R.

Family business on the couch: a psychological perspective / Manfred F. R. Kets de Vries and Randel S. Carlock with Elizabeth Florent-Treacy.

p. cm.

Includes bibliographical references and index.

eISBN : 978-0-470-68747-5

1. Family-owned business enterprises—Psychological aspects. 2. Family-owned business enterprises—Case studies. I. Carlock, Randel S., 1948- II. Florent-Treacy, Elizabeth, 1960- III. Title.

HD62.25.K485 2007

338.6′42—dc22

2007026418

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

Typeset in 11.5/13.5pt Bembo by SNP Best-set Typesetter Ltd., Hong KongPrinted and bound in Great Britain by TJ International Ltd, Padstow, Cornwall, UKThis book is printed on acid-free paper responsibly manufactured from sustainableforestry in which at least two trees are planted for each one used for paper production.

This book is dedicated to business families around the world:over the years we probably learned more from themthan they did from us.

PREFACE

As the twenty-first-century global economic model rapidly replaces the old industrial model, government policy makers, economists, and academics now recognize that entrepreneurial and family enterprises—the oldest form of commercial organizations—are a prime source of wealth creation and employment in both developed and emerging economies. Families control 95% of the businesses in Asia, the Middle East, Italy, and Spain. In mature industrial economies such as France and Germany, over 80% of the companies are family controlled. In the United States, with its strong public stock markets, families control 60-70% of the country’s commercial organizations. (These figures are based on the definition of a family business as being any business organization where decisions and leadership are influenced by a family or families.)

The rise in interest in family businesses has also been a result of many social and economic forces: generational transitions; downsizing in the large corporate world; a heavily mediatized anti-globalization movement; a search for a more balanced lifestyle through self-employment; and the dramatic growth of Asian and other developing markets. Family businesses also represent an important untapped market for private banking, mergers and acquisitions, and recapitalizations, as well as sources of funding (for example, the investment of assets from family holding companies) for private equity and hedge funds.

As the traditional psychological contract between individual and organization has been broken, corporate loyalty has become a relic of the past. The ‘organization man’, the one-time mainstay of the large corporation, is rapidly becoming extinct. As a reaction to the lack of security offered by large organizations, many individuals—among them potential employees and other stakeholders—are attracted by the corporate values espoused in family-controlled firms.

In this context, a growing number of younger members of business-owning families, concerned about their own careers, are taking a second look at the job options in their father’s (or mother’s) company. One obvious career path for someone from a business family is to join a firm he or she already has a stake in—thereby making a kind of emotional investment that is quite different than they would make in joining a public corporation.

The career options in family firms can be interesting, for both family and non-family professionals. One-third of the companies included in the US Fortune 500 list are family controlled [1], as are some of the world’s most successful firms, including Michelin, Peugeot, LVMH, Monoprix, Wendel and Carrefour in France; Tetrapak and IKEA in Sweden; Roche in Switzerland; BMW and Henkel in Germany; Barilla and Benetton in Italy; C&A, SHV, and Heineken in the Netherlands; Associated British Foods and Sainsbury in the United Kingdom; Power Corporation and Bombardier in Canada; Cargill, Koch Industries, GAP, Mars, Bechtel, and Wal-Mart in the United States; and Hutchinson Whampoa, Suntory, the Swire Group Toyota, and Hyundai in Asia. Even in large organizations such as these, the idea of family may be firmly anchored in the minds of key stakeholders, with a significant impact on prevailing leadership style and corporate culture.

Those working with family businesses in a financial or legal capacity—management consultants, bankers, accountants, lawyers, investment counselors, and other professionals—often realize that family businesses have certain unique qualities, problems, and challenges. In fact, most business issues facing family-controlled firms are similar to those faced by equivalent publicly or widely owned firms, but the challenge for the adviser working in this context lies in finding explanations for often seemingly irrational behaviour and decisions of the family about these issues. What makes many family business issues seem intractable is not the business aspects, but the emotional issues that compound them. In a family enterprise, issues like hiring, dividend payment, or succession—difficult though they may be—are really just ordinary business tasks, requiring planning and decision making. But this planning and decision-making process can be made extraordinarily complex by the dynamics of the controlling family. Personal differences in the values, motivations, and needs of different family members lead to conflict in the family’s business. The ability of family leaders to adapt to the changing needs and requirements of individual family members is therefore critical, particularly when dealing with succession or other transitions.

Interview any business family and they will explain that their family’s issues are particular to their family’s situation. They will give examples: the senior generation will not share power with their adult children; there are family members in management positions for which they are not qualified; the owners lack influence in the business; it is impossible to have a professional relationship with Dad/Mom/Uncle Bill/the cousins; and so on. Or they’ll mention the vexing issue of differences in intergenerational goals: ‘They don’t trust us, understand our thinking, or recognize how the world is changing.’ ‘They don’t seem to value our experience; they want to change everything too quickly.’

So, what factors enable certain family businesses to succeed while others fail? And why are family businesses so different from other businesses? We believe in large part it is because, in a family enterprise, there is a coming together of two different systems—the business and the family. For this reason we believe it is necessary to use both economic and psychological approaches to understanding the workings of family businesses. Established means of measuring and understanding business performance can only explain so much in the family business. The rest of the story can only be uncovered by exploring the conscious or unconscious motivations that drive individuals in the business family. However, since these individuals’ motivations are being acted out within a family context, it is also necessary to understand more than just the personal psychology of each family member: the way the family works as a system, and how this affects the individual psychology of each of its members, must also be looked at.

A PSYCHOLOGICAL PERSPECTIVE ON FAMILY BUSINESS

Along with using established means of measuring and understanding business performance, there is a powerful rationale for using a psychological perspective, taken from both a psychodynamic and family systemic orientation, to explore and understand business families. The motivations and drives that shape individual behaviour tell part of the story. The way a family interacts around the dinner table tells another. When insight into individual behaviour is combined with a family systemic view, we arrive at a rich understanding of what makes business families such powerful creative and destructive forces. It has been said—and we agree—that a study of the family should be included in organizational research because families ‘influence behaviour at the individual, group and organizational levels of analysis’ [2].

Love and Work

Sigmund Freud, the founder of psychoanalysis, argued that lieben und arbeiten (love and work), are ‘the cornerstones of our human-ness’. By this he meant that love (a feeling of affinity and connectedness) and work (a sense that one’s efforts are useful) are the main sources of self-esteem and pleasure in life, and only when both are balanced do we achieve satisfaction [3].

Many family businesses experience a conflict between love (family) and work (the business) because the business is not adequately separated from the family. It has often become an extension of the family system, assuming its rules and behaviour patterns. If a family’s pattern of functioning encourages clear boundaries and effective decision-making practices, it will foster sound business processes. Equally, if the family-business boundaries are blurred and family functioning is ineffective or conflicted, management processes will be adversely affected—often for no easily discernible reasons. On an individual level, the strong identification of family members with the business itself, and the intensity of emotions among the participants because of what the business represents to each one of them, may be additional sources of interpersonal conflict.

Sustaining a business over time is not an easy task even for large publicly traded companies. A simple check of the US Fortune 500 list demonstrates the point: only 77 companies have stayed on the list in their original form since 1955. More than 80% have gone bankrupt, or have been sold or acquired over the past 50 years [4]. Family business statistics offer a similar picture, with only 3 out of 10 family businesses surviving into the second generation, and only 1 out of 10 handed down to a third. The average life span of family firms (after a successful start-up) is 24 years, which coincides with the average time the founder is associated with the company [5].

What explains these rather discouraging statistics? Family enterprises face serious challenges on two fronts. There are the business issues all companies face and then there are the complex emotional and relationship issues mentioned earlier. Although they are usually experienced on the business side, many executives and family business owners need help, often in the form of outside intervention, to break ongoing stalemates in the business caused by interpersonal conflict. All too often they fail to recognize that these problems stem from the family side, or, if they do understand this, may not know where to turn for appropriate help. However, if the family can, nonetheless, survive the difficult transition to the fourth generation of family ownership, the chances are far higher that the family will continue to remain involved with the business in some form.

THE PSYCHODYNAMIC PARADIGM

The family business is pulled in several directions. Individual family members involved with it will strive to create opportunities for themselves, as well as financial gain and rewarding relationships. Their desires and motivations will affect the company. Then there are structural conflicts between the operating principles of a family and their business. However, the two systems are interdependent: the family’s values and behavior affect the company’s policies and decisions; and the company influences family members’ careers, relationships, and finances. The mingling of family and business systems in a family enterprise explains why drawing on both psychodynamic and family systems concepts has proved to be extremely helpful in addressing family business issues that fall outside the boundaries of traditional management theory.

The psychodynamic perspective focuses on how present individual thinking and behaviour are shaped by experience and past events. The individual works towards answering some basic questions: How do I see myself? How do I see the world around me? Is it a safe or a threatening place? How can I build on my past experience to create a better future? How can I avoid repeating past mistakes? Because we are products of our experiences and our origins, the psychoanalyst or psychotherapist seeks to discover how these early influences affect the way we interact with others as adults. Clinical insights can help to provide a rational explanation for seemingly irrational behaviour. These insights become the building blocks for new beginnings.

The family systemic approach (which partially evolved from psychoanalytic insights, and in particular object relations theory) looks at how the family interacts now, and emphasizes the process of changing behaviour to create more effective relationships. The family systemic model recognizes the importance of past experiences, but focuses its intervention more on the requirements of the present situation, paying great attention to all the significant players. This is particularly useful in situations in which people must interact on emotional and cognitive levels in both family and business systems.

The advantage of these two psychological perspectives in a family business context is that they consider both the behavioral problems and the more enduring belief systems that underpin behavior at individual, interpersonal and family levels. Using these two perspectives will provide insights into the cognitive, emotional, interpersonal, and social spheres. Using these two perspectives as conceptual tools, academics, consultants, coaches, and therapists are able to address the unique human and organizational challenges experienced by family businesses. To illustrate with a business metaphor: companies use income statements to show the firm’s financial trends and patterns over time, and balance sheets to show assets controlled on a certain date. The family systemic model is like a balance sheet: This is where we are today, and here is the way we will deal with what we have. The psychodynamic model is more like an income statement: Here’s the overview of the last 10 years; it shows where we’re coming from and helps us to be more effective in predicting future trends.

The challenge for business families, and their stakeholders, is to recognize the issues that family businesses face, understand how to develop strategies to address them, and more importantly, to create narratives, or family stories, that explain the emotional dimension of the issues to the family. It cannot be repeated too often: the most intractable family business issues are not the business problems the organization faces, but the emotional issues that compound them. Applying psychodynamic and systemic concepts will help to explain behavior and will enable the family to prepare for life cycle transitions and other issues that may arise. Examples of the psychological issues that many family businesses face include: deciphering roles and responsibilities within the family and business systems; exploring the motivations of individual protagonists and their family; and developing organizational structures and processes that support decision-making processes in the larger family business system.

Unfortunately, when analyzing organizations (including family businesses), too many people take a ‘rational actor’ approach, concentrating on structures and systems instead of paying attention to the human dynamics. Even when people are taken into consideration, however, most theories of individual motivation, decision making, and group behavior tend to be oversimplified. Many of these theories appear to be one-dimensional and static. Usually, differences in personality are ignored [6], and very little attention is given to the unique aspects of an individual’s character: specific motives, needs, defences, fantasies, symptoms, fears, and anxieties. Completely absent from the literature of family business is any consideration of the family system’s influence on individual behavior, a critical element in family firms [7].

In this book we will show that there are limitations to logical decision making. Non-rational forces can strongly influence leadership, interpersonal relations, group functioning, organizational strategy and structure, and corporate culture [8]. Our challenge is to apply both psychodynamic and family systemic perspectives to bring the human and family dimension back into our thinking about organizations.

Because the psychological forces that make up individual personality are fundamental to understanding the psychodynamics of the family firm, we will explore psychodynamic constructs such as the role of unconscious motivation, the effect of intrapsychic reality, defense mechanisms, and the impact of childhood experiences on adult behavior. We’ll also look briefly at human development, and explore how life cycle transitions can affect a business family. In addition, we will apply family systemic constructs such as interpersonal relationships, family functioning, and structures and hierarchies. These concepts will support a deeper understanding of how to improve functioning and strengthen relationships in the family. They are applied to real family businesses, through case studies.

Ideas from the psychodynamic and family systemic approaches are integrated with an existing body of literature on leadership, executive behavior, decision making, group dynamics, organizational stress, power and politics, organizational design, organizational culture, strategy, and organizational development and consultation, to offer new perspectives on family business functioning. The application of concepts derived from these psychological paradigms to more traditional management theory discloses patterns that can be woven into a unified gestalt, helping us to explain the psychodynamics of life in family businesses.

OUR INTENDED AUDIENCE

We hope that a book offering a broader perspective on family business by addressing the human dynamics of such firms will be useful to a number of audiences.

Our most important readers will be business families themselves and their stakeholders, some of whose experiences and issues we will be sharing and exploring in this book. We hope that family executives, owners and directors, and non-family directors and executives will all find this book deepens their understanding of the unique challenges associated with a family enterprise.

Another aim is to provide business students taking a family business, strategy or organizational behavior course with a new resource to understand better the challenges and opportunities created for consultants working with family businesses. The book should also be of interest in executive seminars, and we hope, management consultants, executive coaches and other professional advisers will find it useful in their organizational diagnoses and interventions.

For the venture capitalist, investment banker, lawyer, accountant, estate planner, or tax adviser, this book should provide help in judging the stability and potential of business leaders, owners, and their companies. The case studies should also be useful in evaluating the kind of interpersonal issues that are usually not discussed in publicly owned businesses.

For the academic and research community, we hope this book will provide an in-depth understanding of human motivation and family dynamics in a business setting. It should also help in developing more realistic models of organizational functioning and enhance understanding of the influence of family concerns on individual careers.

A ROADMAP

Immersing yourself in the non-rational world of family dynamics can be a baptism by fire. The learning-by-doing experience is there, but without sound theory the understanding of the various interdependencies may come too late. The case method can prevent some costly mistakes. Rich case descriptions allow students to assume the role of the protagonists, trying to find options that improve performance and make sense of complex situations. Empathy, applied new thinking, and reflection are ideal vehicles for personal learning.

As indicated before, we offer two complementary frameworks (psychodynamic and family systemic) to help to make sense of family-run organizations. Although this book includes many conceptual models, it is first and foremost a practical book about the real world issues faced by business families. It includes many case stories, most of which we have developed from our consulting and research and use regularly in the classroom. Although the cases provide factual narrative, they are susceptible to human error and bias. For many, we offer some of our reflections on what we think is happening—but those reflections only represent our perspective. Readers should examine each case carefully and draw their own conclusions, identifying the problems or dilemmas faced, and the options for improved business performance and family relationships. They should ask what they might have done in the given situation and what new insight into individual or family behavior the case offers.

THE STRUCTURE OF THE BOOK

Part I: Questions and Observations

Introduction We begin with a story about Steinberg, Inc., a once-successful Canadian family company that was sold and later went bankrupt, primarily due to conflict in the third generation. This case study presents the kind of family business psychodynamic processes that we question and explore in subsequent chapters.

Chapter 1 A Psychological Perspective on Business Families proposes that understanding individual and family behavior is a useful framework for families, advisers, students and academics. It explains in greater depth the psychodynamic and family systems approaches, and life cycle stages in human development.

Chapter 2 The Challenges of Love and Work is based on our research and interviews with many stakeholders in family enterprises. It looks at the business and human challenges that are particularly applicable to family firms.

Chapter 3 Family Business Practices: Assessing Strengths and Weaknesses looks at the strengths and weaknesses of family businesses from a psychological perspective. We explore some of the advantages in working for a family firm and the particular challenges that family firms face.

Part II: Reflection and Learning

Chapter 4 The Life Cycle as an Organizing Construct is a way of understanding the different stages in human development. The life cycle highlights the biological aspects of psychosexual development while recognizing the impact of society, history, and culture on personality. These life stages need to be taken into consideration when dealing with the protagonists in family firms.

Chapter 5 Narcissism, Envy, and Myths in Family Firms starts with a discussion of psychodynamic perspectives on individual development. The origin and dynamics of a reactive form of narcissism, which is quite common among people in family businesses, are explored. We also examine separation-individuation—the process of becoming a person and differentiating oneself from one’s family—sibling rivalry, and Oedipal problems. The chapter ends with a discussion of envy and how it colors generational and intergenerational dynamics.

Chapter 6 The Entrepreneur: Alone at the Top. All family firms begin with an entrepreneurial act. In this chapter, we examine some of the themes that preoccupy entrepreneurs and how they affect their behavior, and address the difficulties in working with entrepreneurs.

Chapter 7 Leadership Transition: Replacing a Parent as CEO examines the psychological pressures that leaders of organizations face, and provides insight into why some leaders fail when they reach the top.

Chapter 8 A Systemic View of the Business Family places the overall family system under the microscope. We highlight how what happens in a family business is strongly influenced by the family system’s structure and matrix of relationships.

Chapter 9 Diagnosing Family Entanglements introduces two conceptual instruments that will help the reader to decipher the entanglements that occur in families and family business. In this chapter we discuss the genogram—a tool that gives a quick snapshot of family relationships. Another conceptual tool that will be dealt with in this chapter is the Circumplex model—a framework that provides information about degrees of family cohesion and flexibility.

Part III: Integration and Action

Chapter 10 Addressing Transitions and Change explores how change affects individuals, families, and their enterprises. This chapter includes a review of tools and techniques for assessing and understanding change in individuals, families and organizations.

Chapter 11 The Vicissitudes of Family Business is an in-depth study of the Steinberg family, first introduced at the beginning of the book, with full commentary and analysis, and describes the way an imaginary intervention might evolve.

Chapter 12 Putting Family Business Intervention into Practice closes the book with an application of psychological thinking in a real-world situation, with examples and advice on using the techniques we present in the earlier chapters. We share our insights the ways in which coaches, consultants or counselors may help family businesses to manage interpersonal and group relationships for sustaining business performance and family harmony.

ENDNOTES

1. The term ‘family controlled’ is difficult to define. In many companies, the family may have a minority stake, but for historic or other reasons, they may also retain a great deal of influence in the company and in the community. We define family-controlled firms as organizations where family members retain significant decision-making power concerning strategic direction and the making of key appointments. See Carlock, R.S., Kets de Vries, M.F.R. and Florent-Treacy, E. (2007) ‘Family Business’ entry in the International Encyclopedia of Organization Studies, Thousand Oaks, CA: Sage.

2. Dyer, W.G. Jr. (2003). ‘The family: the missing variable in organizational research,’ Entrepreneurship Theory & Practice, 27 (4): 402.

3. Freud, S. (1955). Civilization and Its Discontents. The Standard Edition of the Complete Psychological Works of Sigmund Freud Vol.21 (trans. and ed., James Strachey). London: Hogarth Press and the Institute of Psychoanalysis.

4. Carlock, R.S. and Ward, J.L. (2001). Strategic Planning for the Family Business: Parallel Planning to Unify the Family and Business. London: Palgrave Macmillan.

5. Beckhard, R. and Dyer, W. (1983a). ‘Managing change in the family firm: Issues and strategies,’ Sloan Management Review, 24: 59-65; Beckhard, R. and Dyer, W. (1983b). ‘Managing continuity in the family-owned business,’ Organizational Dynamics, 12: 5-12.

6. Kets de Vries, M.F.R. and Perzow, S. (1991). Handbook of Character Studies: Psychoanalytic Explorations. New York: International Universities Press; and Kets de Vries, M.F.R. (2006). The Leader on the Couch. London: John Wiley & Sons Ltd.

7. Dyer, W.G. Jr. (2003). ‘The family: the missing variable in organizational research,’ Entrepreneurship Theory & Practice, 27 (4).

8. Kets de Vries, M.F.R. (1984). The Neurotic Organization. San Francisco: Jossey-Bass.

ACKNOWLEDGMENTS

As this book is an interdisciplinary effort, we would like to recognize the support of two teams.

• Our colleagues in the INSEAD Global Leadership Centre (of which Professor Kets de Vries is the Director) are Agata Halczewska-Figuet (Executive Director), Sheila Loxham, Silke Bequet, Fabienne Chemin, and Nadine Theallier.

• Our colleagues in the Wendel International Centre for Family Enterprise (of which Professor Carlock is the director) are Christine Blondel (Executive Director) and centre coordinators Veronique Sanciaume and Nathalie Bogacz.

The two teams have shared original theories, and critical insights, and provided unflagging moral support; we thank them all warmly for their contributions to this book.

We are also extremely grateful to the Berghmans and Lhoist, Hoffmann and Wendel families and to the INSEAD Research and Development committee, who early on recognized the importance of our work and provided the financial support that made our research and writing possible.

We are very fortunate to have the support of Sally Simmons, of Cambridge Editorial Partnership Ltd, who worked on an early draft of the manuscript, and contributed some of the case vignettes, and we also thank her colleague Carol Schaessens for her research and editorial support. We are also happy to be working with Francesca Warren and her very professional team at John Wiley & Sons Ltd.

Most of all, we would like to thank the families who told us their stories, taking us into their homes and businesses. When the limelight of academia shines in the dark corners of a family business, only the stout-hearted are courageous enough to speak about the issues that concern them on personal and professional levels. The families we work with often say they hope to pass on their hard-earned wisdom to other business families and the people who work for them. By sharing through this book what we have learned, we hope to repay our debt to ‘our’ business families.

PART I

QUESTIONS AND OBSERVATIONS

INTRODUCTION

We start this book by providing a case study of a real-life family in order to give a flavor of the kind of issues commonly occurring in family businesses. We chose this case because it demonstrates how over 50 years of entrepreneurial achievement, through two generations, can be destroyed by subsequent generations if the family fails to address the psychological issues they face.

A Family Story: The Rise and Fall of Steinberg Inc.

Act One

The Steinberg case is the story of a family who, through hard work and innovation, created one of North America’s greatest retail companies [1]. In 1911 Ida Steinberg and her husband immigrated to Canada to escape the poverty and anti-Semitism in their native Hungary. The husband, never much of a provider, soon abandoned Ida and their children. Ida, an energetic and resourceful young woman, opened a small grocery store in Montreal’s Jewish ghetto. The store was profitable and her son, Sam, left school at age 14 to become his mother’s junior partner in the business. Over the next 20 years, Sam became a pioneer in grocery retailing, developing the concept of the full service supermarket. In 1978, at the time of Sam’s death, sales exceeded $4 billion (Canadian) and the Steinbergs had become one of North America’s leading business families.

. . .

Act Two (to be discussed below)

. . .

Act Three

The final 18 months of Steinberg Inc. as an independent company were marked by a battle for control of the firm. On August 22, 1989, over 70 years after Ida Steinberg opened her first grocery store on St Lawrence Boulevard in Montreal, family conflicts that spilled over into the boardroom and business forced them to sell the business.

The new owner of Steinberg Inc. went bankrupt only three years after the takeover, having financially overextended himself, and the stores were sold off to various supermarket chains. Thousands of employees lost their jobs. And the ultimate cost? There is no longer any store with the name of Steinberg.

In presenting this family drama, we have deliberately omitted Act Two. Why? Because by doing this, we can draw your attention to the fact that it is events in Act Two that completely reverse the destiny of this company. In Act Two, the second and third generations enter the scene, and the real drama begins. Act Two also describes how family relations broke down; how non-family professional executives lost confidence in the family owners; how Sam’s four daughters took their personal battles into the business arena; how the family was forced to sell; and how many key stakeholders lost money in the transaction. It tells us what happened and gives clues about why. Act Two holds important clues to understanding the family’s destiny, and we will now look at it more closely.

A Family Story: The Rise and Fall of Steinberg Inc., Act Two

Act Two

The seeds of the conflicts that would destroy the Steinberg family’s business were sown quite early on, in decisions that Sam Steinberg made regarding business and family governance, and ownership and management succession. Business governance at Steinberg was dominated by Sam and his friends, who followed Sam’s lead on all major strategy and management decisions, including management succession—Sam appointed his son-in-law as CEO on the basis of his family membership rather than a decision based on talent. This sent a clear message to the organization that professional competence was not an important leadership selection criterion.

Sam organized his estate so that ownership of his company would be handed over to his children when he died. Ironically, part of the motivation behind his estate planning was to keep his family together after he was gone. In 1952, Sam had divided most of his assets into equal trusts for each of his four daughters and their children. The daughters all became trustees of each others’ trusts. This system worked well while Sam was alive. His voting control and strong personality restrained emotional undercurrents among his four daughters. After his death, the voting shares were kept together and were voted as a block by his widow, Helen. For a few more years, the process worked smoothly. Sam’s oldest daughter Mitzi took an executive role in the company, and his third daughter Marilyn took over effective control of the family trusts. There were irritations, however, because the daughters had different views on how they wanted to invest and manage their portions of the money accruing to the trusts and how they wanted to spend the proceeds.

The problems began in earnest in 1985, after a non-family CEO ousted Mitzi from Steinberg Inc. Sidelined from the business, she began to assert herself through her ownership role and the management of the family trusts. More critically, having lost the power struggle with the CEO, she seemed to have lost interest in the company and wanted to sell Steinberg Inc. Alarmed, Sam’s two surviving daughters, Marilyn and Evelyn (Rita had died in 1970), joined forces to prevent Mitzi selling the company.

Attempts by other family members to mediate the resulting disputes failed, and both sides became increasingly hostile. Then, in 1987, Marilyn and Evelyn, who had cemented their voting control of the family trusts, managed to push through a motion breaking the agreement that gave Helen the voting rights for 40% of shares held by the trusts, along with the 12% left to her directly by Sam. Helen was served legal notice of the intention to break the voting arrangement in July of that year, 35 years after Sam had created the trusts. This break in the control block represented a material change for the company and had to be reported publicly. The family feud became public knowledge and front page news, and the stock market picked up the scent of a family business in trouble and a possible forced sale.

Shortly afterwards, a family business meeting degenerated into a screaming brawl, and all civil communication between the warring parties ceased. The last vestiges of privacy were stripped on December 30, 1987, when Mitzi shocked everyone by filing a lawsuit to have her sisters and their husbands removed from the management of the family trusts. In the statement of claim, peppered with catty personal comments, Mitzi accused her sisters of ‘gross negligence and reprehensible neglect’ in managing the trusts. A well-known Montreal cartoonist satirized the unseemly spectacle by portraying the Steinberg sisters as sodden mud wrestlers.

In many family businesses it is what happens in Act Two of the family drama (the point at which later generations get involved) that determines the continuity and success of the business, or conversely, sows the seeds of conflict and ultimate break up. Clues to what went wrong in this family drama, and its bitter ending, can be found in Sam Steinberg himself. Part of what we would seek to analyze in looking at a family like this are the following questions:

• What early experiences shaped Sam’s mother?

• How did she raise Sam and his siblings?

• How did Sam’s life experiences influence his leadership style?

• How did his personality steer the creation and growth of his empire? How did it influence its downfall?

• Could the mistakes Sam made have been avoided, or was Steinberg Inc. programmed to self-destruct from the time he took control (and if so, why)?

• How did Sam’s parenting style and gender attitudes affect his daughters?

• What could have been done to prevent the downfall of the company?

At various points throughout this book, we will be looking at the kinds of issues raised by this family drama. We will also look at other family case studies, before returning in Chapter 11 to a more thorough analysis of the Steinbergs. We hope by this means to show how business families going through change and transition can avoid the pitfalls that endanger both family and company. Our goal is to help readers who own, work in or deal with a family business to avoid an ending like that of the Steinbergs.1

ENDNOTE

1 The Steinberg family story in this Introduction and in Chapter 11 is taken from a case study written by Manfred Kets de Vries (1996). Family Business: Human Dilemmas in the Family Firm. London: Thompson. Other sources for the Steinberg case: Gibbon, A. and Hadekel, P. (1990). Steinberg: The Break Up of a Family Empire. Toronto: Macmillan; National Film Board of Canada documentary The Corporation: After Sam; Mintzberg, H. and Waters, J.A. (1982). ‘Tracking strategy in an entrepreneurial firm,’ Academy of Management Journal, 25 (3), 465-499; and Steinberg Inc.’s annual reports and corporate communication materials. Arnold Steinberg, a former executive vice president at Steinberg Inc., and a nephew of Sam, was also a valuable resource.

CHAPTER 1

A PSYCHOLOGICAL PERSPECTIVE ON BUSINESS FAMILIES

In most societies the family is a fundamental institution for transmitting values to succeeding generations, and for ensuring their physical and emotional development. Families are usually driven by a deep concern for both the well-being of individual family members and for the family legacy. However, in a business family, normal family goals may come into conflict with the business’s economic goals because an important theme within the family system is to meet the human and psychological needs of its members rather than to arrive at the best economic return.

It is a truism that human beings are subjected to many elusive, out of awareness processes that affect how they make decisions. We all know that executives (including people working in family businesses) do not always act rationally, logically, or sensibly [1]. However, we have discovered that many leaders of family businesses seem to be especially prone to irrational behavior (as will be illustrated in the various case studies that appear in this book) [2]. Clinical investigation has shown that many problems in family businesses stem from the fact that their leaders (as well as other family members employed in key positions in the business) are often unknowingly acting out their deepest conflicts, desires and fantasies in the larger arena of the family business. The task for anyone studying family businesses is therefore to look at deep structures: the inner motives, fantasies, desires and defensive reactions of the principal actors. What drives them? What makes them act the way they do? How can we make sense of their behavior?

In a family business (particularly one in crisis) there will be a need at some point for its members to reflect on how their family is organized and to tease out the structures and rules that drive their interpersonal relationships. They will have to discover which of their interaction patterns are functional and which are dysfunctional. Carl Jung often asked his troubled patients, ‘Is this behavior working for you?’ If the answer is ‘No,’ it may well be time for the family to consider other approaches to relating to each other.

A very effective conceptual way of understanding individual behavior and motivation is psychoanalytic psychology, particularly objects relations theory [3]. However, when studying family businesses we have found that this orientation to understanding complex human processes needs to be enhanced by theory from the more recent fields of systems analysis and family therapy—known as family systems theory [4]. We have discovered that combining psychodynamic thinking with family systems ideas into a psychodynamic-systems approach can be invaluable as a key to unlocking many of the knotty problems faced by business families.

PSYCHODYNAMIC AND FAMILY SYSTEMIC PERSPECTIVES

One of the challenges we faced in writing this book was overcoming some of the institutional or academic barriers to working across the boundaries between psychodynamic and family systemic therapy. In 1998, Christopher Dare, in a paper on the practice of psychodynamic and family systemic therapy, commented:

The two disciplines of family therapy and psychoanalysis remain organizationally and conceptually disassociated from each other despite the two subjects having considerable overlap, plying adjacent trades and using theoretical ideas which show considerable parallels [5].

At the time, Dare encouraged a stronger link between the two disciplines. But in fact, a rapprochement of these two ways of looking at human behavior is increasingly becoming a reality. In practice, we have found it extremely useful to establish a link to the inner psychological theater of the individual and explore how the scenes of this inner theater are enacted in the larger family system.

To have a greater impact in family business interventions, this book is designed around the application of psychodynamic and family systemic frameworks for studying human behavior [6]. Applying these two perspectives creates a more complete and balanced view of individual behavior and interpersonal relationships. It is an ideal way to bring a degree of rationality to what can, at times, be extremely perplexing behavior.

Because of this orientation, we use theories, concepts, methodologies, techniques, and vocabularies that are more often used in psychology than in discussions of management issues. In particular, we draw on concepts and theories taken from psychodynamic psychology (particularly object relations theory, self-psychology, and ego psychology), dynamic psychiatry, developmental theory, cognition, and the study of narrative.

In this search for rapprochement between various disciplines we like to emphasize that object relations theory, an offshoot of psychoanalytic theory that emphasizes interpersonal relations, primarily in the family and especially between mother and child, will be especially helpful to bridge the gap between classical psychoanalytic psychology and family systems theory. Object relations theorists are interested in inner images of the self and other, and how they manifest themselves in interpersonal situations. Consequently, there is a degree of overlap between this derivative of classical psychoanalysis and family systems theory. As Christopher Dare said, ‘Psychoanalysis and family therapy can come together now, [. . .] by agreeing that both are preoccupied with the therapeutically useful, ethically apt re-creation and telling of stories’ [7].

KEY IDEAS FROM THE PSYCHODYNAMIC APPROACH

The psychoanalyst Sigmund Freud postulated that the human mind functions through the interaction of opposing forces. A person has wishes and fantasies that evoke anxiety, leading to defensive reactions that range from relatively normal to dysfunctional. The conflict between these forces is mainly unconscious, and yet can have a huge impact on people’s emotional life, self-image and relationships with other people and larger organizations [8].

Children are born with certain innate desires that cause them to seek pleasure and avoid pain. These desires become transformed into mental images that govern their feelings and behavior. As their parents attempt to socialize and fit them for society, children inevitably experience frustration of such desires as they learn what is allowed and what is forbidden. Gradually their childish impulses are modified and transformed more in line with societal norms. During this process many of the original desires and anxieties associated with them are seemingly forgotten. However, these unacceptable wishes and desires are not really forgotten but continue to linger below the surface, retaining the potential to affect adult behavior significantly in later life.

Freud later went on to formulate a general theory of mental development, part of which involved defining ideas such as the unconscious, defenses (the desire of the conscious mind to cope with wishes and fantasies emerging from the unconscious), and character patterns. He also described the developmental stages of childhood in his ‘psychosexual stages of development’ (which we look at in more detail in Chapter 4) and the idea of transference.

THE ROLE OF TRANSFERENCE AND COUNTERTRANSFERENCE

Everyday conversation consists of one person attempting to transmit feelings to another. We talk about ‘putting something across,’ or giving someone ‘a piece of our mind.’ For example, when we are in distress, we may try to convey to another person our distress in such a way that he or she can literally feel it. The normal communication process consists of fairly rapidly oscillating cycles of projection and introjection: as one person communicates with words and demeanor (projection), the other receives and interprets the communication (introjection); then the listener, having understood the speaker’s message, reprojects it to the original speaker, perhaps accompanied by an interpretation [9].

Similarly, at some stage in any research or process involving the investigating of human behavior, the subject of that investigation is likely to evoke certain responses in the researcher—responses that in a therapeutic encounter between a client and therapist are usually referred to as ‘transference’ and ‘countertransference. ’ This cycle of projection and introjection—a ubiquitous phenomenon—is what transference and countertransference processes are all about.

Transference is normally used to describe the way in which a client perceives or experiences in their therapist characteristics or behavior that belong either to an important figure from the client’s own past (a parent, for example), or that are a denied part of their own personality (for example, the client perceives the therapist as being angry or sad when in fact these are the client’s subconscious feelings ‘projected’ on to the therapist).

The term ‘countertransference’ is normally used to mean the feelings that a client evokes in a therapist—again, possibly relating to an important figure or figures from the therapist’s past. It describes feelings that therapists become aware of that do not seem to belong to themselves but which they experience as a result of being with the client. For example, at the end of a therapy session the therapist may feel inexplicably frightened, sad, confused, or worried. This may be due to the subtle transference of these feelings to the therapist by the client.

In short, transference refers to the feelings of the client about the therapist, countertransference refers to its mirror image: the feelings that a patient arouses in a therapist [10]. In this book we will use these terms to apply to the feelings that the subject (the business family) arouses not only in the researcher, therapist, coach, or consultant, but also in the individual members of a family organization toward one another.

For example, a typical example of a transference reaction can be found in the case of two colleagues at work, say a young woman and her much older boss, who can barely stand to be in the same room with one another. Both are competent, responsible individuals but when together they seem to regress into dysfunctional behavior. Even though their acrimonious personal relationship has been addressed directly, agreements reached and boundaries set, the effectiveness of both women is compromised. The younger woman harbors a permanent grudge against her boss that she herself cannot rationally explain. Moreover, the older woman takes the bait, and the younger woman brings out the worst in her.

One approach to solving this problem would be to evaluate the possibility of a transference reaction on the part of the younger woman. Perhaps, as a child, she had a difficult, unresolved relationship with her mother or another older, female relative—many of whose mannerisms her boss shares. Forced to deal with her ‘mother’ at work, the young woman’s unconscious emotions may spill over into her relationship with her unwitting superior.

Thus careful evaluation of transference and countertransference reactions provides us with another source of information that can be used concurrently with more conventional data. Although countertransference reactions can be confusing, we need to be aware of them and understand why they are happening, as they can be great assets to us in our ‘detective’ work.

Transference and countertransference are critical concepts in interpersonal understanding because they are ubiquitous elements of the human condition. They are processes whereby (as we indicated) there is a confusion of person, place, and time, due to the reliving of earlier relationships, usually in an attempt to resolve earlier development problems that were not successfully dealt with by someone earlier in life. They can be viewed as a kind of repetition, resulting in persistent, stereotypical behavior patterns that have their roots in privileged relationships with early caretakers. These two concepts are organizing activities, indicating the continuing influence of a person’s early life experiences throughout the life cycle. The challenge is for us to understand that this pattern—useful as it may have been when we were young—may no longer be appropriate at a later stage of life.

Psychological Defenses

An individual’s personality is largely determined by the particular way that person balances his or her intrapsychic view of the world with the impact of external reality. In dealing with the stress and strain of daily life we use ‘psychological defenses’ to help us to cope with emerging anxiety [11]. These defensive reactions are mostly unconscious (although we can learn to become aware of what we are doing), and have the effect of preventing us having to face aspects of ourselves that we find threatening, preventing us from being overwhelmed by feelings that are too disturbing. These often work well because through them we are able to find a mental equilibrium—albeit somewhat limited in some areas [12]. Of course, these defenses contribute to behavior that is not always easily understandable. A classic example is the ‘kicking the dog’ phenomenon—returning from work at the end of a frustrating day and shouting at the children or the dog. This pattern can be viewed as a displacement defense: we displace our anger from the person to whom we cannot safely express it (a likely candidate being the boss) onto a safer target, one that is less likely to retaliate.

A number of ‘mechanisms of defense’ are now part of everyday language—for example, projection and denial. Other terms often mean different things to different theorists and overlap: ideas such as ‘rationalization,’ ‘intellectualization,’ ‘displacement,’ ‘reaction-formation,’ ‘introjection,’ and ‘splitting’. We take a closer look at splitting later in the book.

The Idea of Texts

One particular clinical research concept in psychodynamic therapy that is especially useful in understanding the family business is the notion of texts (in family systemic therapy they are known as ‘scripts’ or ‘narrative’) [13]. Texts are the grouping of interrelated information and all types of data containing messages and themes that can be systematized. When decoding family-business texts, significance is extracted from interrelated factual, cognitive, and affective units constructed from the researcher’s experiences with people in the business.

Texts can include obvious things (like managerial statements, writing, and observable behavior) and implicit things (like symbolic behavior, organizational myths and stories, specific strategic decisions, particular interpersonal styles, and the type of organizational structure that characterizes the company). When analyzed, these give clues to what life in a family or an organization is all about. Understanding these texts adds a further dimension to our analysis of organizational phenomena. If we are alert to underlying themes, to meanings behind the metaphors used by family members and other stakeholders, to the reasons for the selection of certain words, and to the implications of certain activities, our knowledge of family and organizational life becomes much richer [14].

A number of rules are helpful when decoding these texts. First, there is the ‘rule of thematic unity.’ When we try to analyze an organizational story, we have to shape the different observations into an interconnected, cohesive unit, a gestalt or whole. We need to identify themes.

Second, we are engaged in pattern matching, looking for structural parallels, for a fit between present-day events and earlier incidents in the history of an individual or organization; we are watching for revealing repetition [15]. These patterns demonstrate how individuals may misinterpret the present in terms of the past and relive the past through present actions. Transparently anachronistic repetitions probably indicate some form of transference reaction and when these happen, it is time to sit up and pay attention.

Third, interpretations need to be guided by the ‘rule of psychological urgency,’ which assumes that an individual’s most pressing needs, intentions, or ways of acting can be identified somewhere in the family text. We need to tease out the operational code—what drives the individual—of a person’s life [16]. The challenge is to identify pervasive relationship patterns, what have also been called ‘core conflictual relationship themes’ [17]. To understand what is going on, it is essential to identify these constantly repeated patterns. There are always consistencies in an individual’s relationships.

Finally, there is the ‘rule of multiple function’ [18]. Depending on the psychological urgency of the matter at hand, part of the text can have more than one meaning and can be looked at from many different points of view. Sometimes organizational resistances and defensive processes stand out. At other times, the key dynamics may be related to the way people manage aggression or affectionate bonds. Processes evolving around shame, guilt, envy, jealousy, and rivalry can also be important. To complicate matters even further, these issues can occur concurrently at the individual, interpersonal, group, intergroup, and organizational levels. It is therefore necessary to seek out meanings at multiple levels and to tease out the individual and organizational roots and consequences of a family business’s actions and decisions.

THE FAMILY SYSTEMIC PERSPECTIVE