Conflict Management: Navigating Guilt Manipulation in Family Businesses
One of my clients, a dedicated entrepreneur, spent years building a successful business while simultaneously raising two children in a fulfilling marriage. It was disheartening to witness her reaction to the “guilt card” played by her children during challenging times.
The trouble started when her son became unemployed. She offered him a part-time position in her company with a $30,000 salary. Initially, everything seemed fine. However, he soon negotiated a $40,000 bonus and 50% ownership of his mother’s business. When his sister discovered her brother was earning over $80,000 for minimal weekly hours, she demanded a piece of the pie.
Consequently, the mother included her daughter in the payroll and divided the ownership equally among them. Presently, each of them earns approximately $250,000 annually. Unfortunately, the children rarely visit the office or contribute meaningfully to justify their compensation.
The Cost of Overindulgence
As a family business consultant, I frequently inquire about the parents’ aspirations for their children. The universal response is the desire for their children’s happiness. While commendable, some parents mistakenly equate happiness with financial security, leading to overindulgence in salaries and unproductive roles. This approach often adversely impacts the business.
Excessive employee compensation escalates operational costs and diminishes productivity when employees underperform. Additionally, when other staff members recognize this disparity, it undermines overall morale. Decision-making becomes severely compromised when ownership is imprudently allocated among individuals prioritizing personal gains over business interests.
In this case, the non-contributing family members prioritize extracting maximum profits from the business rather than judiciously reinvesting in its growth. The founder feels constrained to make decisions only with their consent, as it could affect their profits.
Earning Privileges
Why would an entrepreneur willingly place herself in such a dilemma? Often, children condition their love and affection on receiving substantial financial benefits. The antidote to this manipulation is straightforward: allow children to earn their privileges. If they fail to do so, either compensate them fairly or sever financial ties. This approach transforms a potential liability into a valuable asset.
A motivated and well-trained family employee can help minimize costs and enhance productivity. A prospective leader who has proven their capability to uphold the company’s legacy can invigorate the workforce. While it is detrimental for business leaders to retain control excessively, centralizing ownership to the extent necessary for swift decision-making enables a business to adapt to evolving circumstances and compete more effectively.
Instilling Values Through Example
Implementing this simple solution is challenging because the guilt card, particularly when wielded by children, is potent. Many are vulnerable to this manipulation, and children often master its deployment.
Ultimately, the best you can do is equip family members with the tools to cultivate their happiness with your support. This involves instilling proper business values, offering training and skills, and demonstrating a passion for leading your business. Ultimately, the responsibility for their happiness lies with them.
Warren Buffett, the renowned investor, addressed this issue by bequeathing the majority of his immense wealth to the Bill & Melinda Gates Foundation instead of his children. He succinctly justified his decision by expressing his desire to leave his children “enough so they can do anything, but not enough so they can do nothing.“
If you are struggling with conflict management and confronting tough issues within your family business, reach out to REGENERATION today.
