It’s no secret that a family business advisor needs considerable skill at untangling complicated personal relationships in addition to expertise in business areas such as financial management, strategy, and succession planning. What’s less widely appreciated is the fact that family business consulting also very often calls for the ability to identify and assist with issues related to addiction(s).
Simply put, alcohol addiction is virtually a plague affecting family enterprises. Abuse of alcohol, as well as other substances is, so commonly found at the root of or in addition to more conventional family business problems like inter-generational transfer and leadership development that it is almost to be expected.
In part, this is because both family business and addiction are such large parts of our society. For instance, in one study of over 43,000 thousand American adults, the National Institute of Alcohol Abuse and Alcoholism found that 3 in 10 drank at levels placing then at risk for alcoholism, liver disease, and other health and emotional problems.
If abuse of alcoholic is this widespread, it would be surprising to find that family enterprises were not heavily affected, given the omnipresence of family businesses in America’s economy. Family business scholars using carefully considered criteria estimate that 60 percent of partnerships, all sole proprietorships, and sizable proportions of even very large businesses such as members of the Fortune 500, qualify as family firms.
And, in fact, there may be reason to think that family firms are more likely than others to suffer from addiction among the leadership group. For instance, some studies suggest that affluent youths are more likely than those from less privileged backgrounds to have substance abuse-related issues. And because employment and promotion in family enterprises is more likely than at other firms to be based on family ties, rather than sheer merit alone, people with addiction-related problems are more likely to keep their jobs and even rise to the executive suite, assuming they have the right last name.
This is not a small problem, for any business. Alcohol and drug abuse costs American companies $81 billion annually in lost productivity due to employees’ sickness and premature death, according to an estimate from the U.S. Department of Labor.
And, again, family firms may suffer more and more prolonged losses due to the widespread practice of denying, minimizing, ignoring, and excusing poor decisionmaking by addicted family business leaders. It’s much harder to contain the damage done by an addicted member of the founding family than when the addict is just another employee.
Family firms also have built-in communication issues that are made much worse when one of the links in the communications network is troubled by addiction. Addicts are generally poor communicators, ineffective at building consensus, and often rely on intimidation in order to get their way. In an already-fragile family business system, where ancient resentments constantly threaten to derail effective communication, a single addict with authority can bring communication to an effective halt.
Despite the prevalence and problems presented by addition in family businesses, there is surprisingly little information available to advisors about how to identify and respond to the presence of addiction. Part of this may be due to the tendency of families to hide the presence and minimize the problem of addicted family members. Much is likely due to the admittedly difficult challenge that coping with addiction poses to family business advisors. In other words, nobody wants to talk about it and, if they do, nobody knows what to do about it.
Family business advising, however, benefits greatly from some ability to spot and handle addiction-related issues. Neither of those capabilities is well-addressed by training available to family business consultants today. However, those who work advising family enterprises can make a big step toward doing better by simply being aware of the basic facts presented here. Namely, addiction is common in family businesses, it’s a serious problem when it occurs, and it will not readily go away on its own.
If your family is struggling with an addiction that is impacting your business we are here to help.