Communication Problems in the Family Business

Business Communication

Essay, 2010

28 Pages, Grade: A (1,3)


Table of Contents

Executive Summary

Letterer of Transmittal

Statement of Problem

Research and Discussion
I. Organizational Communication and Information Schemes in the Family Business
II. Eliminating Potential Areas for Dispute
1. Guidance of Family Members
2. Encouragement of Family Members
III. Improving Managerial Abilities and Business Activities
1. Effective Management Communication
2. Effective Management of Employees
IV. Creating a Positive Impact on Customer Relationships
1. Employees’ Satisfaction
2. Professional Appearance



Sources Cited

Sources Consulted

Executive Summary

For family businesses, effective communication is an even more integral factor for successful business operations due to the peculiarity that personal (family) emotions frequently interfere with business decisions. Family businesses often have to struggle with conflicts among members of the organization, low managerial abilities, interfered daily business activities, and customer relationships that suffer from the lack of structure and poor communication.

The research provided in this paper shows that small family businesses face similar problems, whereas effective communication is the most frequently mentioned issue regarding the need for improvement in family businesses. This paper considers the importance of common expectations and values to guide family members, thereby eliminating areas for dispute. Other important findings are that leadership training and structured responsibilities (clear work roles) make the management more congruent and improve managerial communication; well-managed employees, who have direction and know about priorities, affect business activities positively; and that a professional appearance of the family business has a positive impact on customer relationships.

The conclusion presented at the end of this document states that once the family business has successfully implemented an effective organizational and information communication scheme that includes emphasis on family values, then the business will be able to make use of the particular advantages a family business can have.

Letterer of Transmittal


This paper is about effective communication in family businesses and consists of three main parts. The first part is the statement of the problem, which provides some background information about why I chose this issue to write about, but mainly annotates in depth where I think the main problems in family businesses are. I decided to order the problems in three main categories: Category 1 contains conflicts among family members (Areas for Dispute); category 2 includes problems regarding the managerial abilities (Business Activities); and category 3 is about customer relationships (Business’ Appearance).

In the second part of this paper, I will present research and discussion synthesizing on the thesis that the introduction of an organizational communication and information scheme would eliminate the problems in question. In this part, I will illustrate some opinions and approaches of several authors.

The third part is my personal recommendation, where I will provide a detailed problem-solving approach, which small business can use to overcome the common challenges for family business. This part ends with a short conclusion that briefly describes the advantages of eliminating the problems in question.

'Communication Problems in the Family Business'

Statement of Problem

Family businesses differ from other businesses due to family involvement in the business. Due to this peculiarity, communication is an even more integral factor for successful business operations. Poor communication in family businesses can lead to the following common problems: Family members assume they know what other family members feel or want, personal ties inhibit expressing opinions, personal problems become business problems, non-family members feel excluded, and insufficient arrangements between managers and employees result in disadvantages for customers. The family business I work for is also struggling with these problems. In 1993, my father founded a construction and engineering company all by himself. Today the company operates internationally, has a turnover of over 9,000,000 Euros per year, has more than 50 employees, and engages almost the entire family. With the increasing figures, the problems relating to the informal communication style became more serious: Managers became suspicious and employees became dissatisfied because of the lack of an information structure. Introducing an organizational communication and information scheme to a family business eliminates potential areas for dispute, improves the managerial abilities and business activities, and has a positive impact on customer relationships.

Typical areas for dispute in family business include family membersassuming to know what other family members feel or want, meaning that family members do not take the possibility of misinterpretation into consideration. For instance, the chief executive officer (CEO) criticizes the manager’s (his daughter's) behavior constructively, in passing, without thinking, assuming that she understands his advice as she would at home. Surprisingly, the business environment causes the daughter to perceive the criticism as punishment so the communication misses the intended purpose of improving the daughter's behavior. The CEO, who is assuming that the manager will understand his advice correctly, even though communicated in passing, causes a dispute instead of enhancing the manager’s skills. A communication system that prescribes regular performance assessment could have prevented the mentioned situation.

Furthermore, various family members oftendo not see the necessity to tell each other what to dobecause they mostly know each other well and expect each other already to know how to behave. For example, the CEO hires a new family member and assumes that the new employee is aware of the necessity to behave differently in a business environment. However, the new employee, who is used to a trusting, loving relationship with the CEO, suddenly finds him or herself in business situations with outside businesses but has no clue how to react appropriately. Thus, even if business environment obviously requires some matter or patterns (e.g. separating private from business matters), yet the necessity of communicating remains in order to prevent unnecessary trouble.

Another problem is thatfamily members may have personal ties that inhibit expressing their opinions,on the one hand to avoid hurting each other and on the other as a reaction to excessive respect that may hinder free expression. An example for the first case is a loving father and CEO who has problems with criticizing his children's (his employees') behavior simply to avoid hurting their feelings. The latter case is more common because in family business, the head of the family often automatically assumes control of the business even if he or she does not have the best business skills. That parents often do not tolerate words of protest from their children is common and therefore a financial manager and son with better skills than the CEO (his father) might withhold his ideas because he is afraid of making the impression of disrespecting his father. Both examples suggest that personal ties can inhibit expression of opinions in the business environment, rendering effective use of existing knowledge impossible.

In addition, another difficulty to deal with in family business ispersonal problems becoming business problems, conflicts among family members, and the inability to communicate with one another satisfactorily, distressing the executives and disturbing day-to-day business. A good example is a dispute between siblings that leads to contradicting each other only to prevent the other from having any kind of success. This inconspicuous battle could become a significant problem for the entire company if the siblings try to polarize other employees. Disagreements between employees embarrass the general decision-making process and can affect several audiences, the family itself and the entire company, its employees and customers; therefore, the importance of separating family and business problems is indisputable.

Furthermore,non-family members sometimes feel excludedfrom ordinary business activities, which give rise to uncertainty and suspicion. Often communication, if at all, only occurs at the dinner table or in the corridor, and only the persons who happen to be present get the information. Those absent, especially if they are non-family members, feel excluded or deceived. A good example is an outstanding and important decision about a large customer that family members discuss and decide at the dinner table without involving non-family members who might also have authority to decide. From the non-family members’ point of view, this behavior brings to light the attitude of the family members, resulting in an unexpressed deceived feeling on the part of the non-family members. Dissatisfaction that negatively affects daily business communication is the consequence. This example shows the importance and the possible benefit of a structured communication and information scheme very plainly. In general, we can say that a structured communication and information scheme could help to eliminate potential areas for dispute in family business.

First, managing is about getting people together to complete desired goals efficiently and effectively. Keeping that in mind, all the examples above made clear that insufficient communication at management level has a great impact on the abilities to manage employees effectively. Only when the managers communicate effectively among one another, and all of the management knows about the priorities and importance of pending tasks, then allocating work to employees and supervising the tasks is possible. Actually, the existing problems are obvious. The missing communication channels cause a lot of trouble and minimize the company’s efficiency, but no one sees the importance to change something because the business ever worked like this until now. The unstructured responsibilities and decision-making abilities conduct in stressful and confusing work environment.

Finally, we will look into the negative impact on customer relationships regarding the lacking communication and information system in the family business in account. As we have already mentioned, customer relationships smart from delays in due dates, but they also suffer from inappropriate and inconsistent communication. Employees are not able to answer the customer’s questions because no one knows who is responsible. Furthermore, the inconsistent presence in printing and communication matters gives customers reason to doubt the company’s competency.

In general, all the mentioned problems result from lack of communication and organization. The company in question is unfortunately unable to make use of the advantages a family business can have. Successful family businesses prove that appropriatecommunicationexternal and especially internal– plus a continuous improvement of the benefits of their products or services, build the basis for long-term success. Different to other businessesPEOPLEcarry the enterprise communications and this leads inevitably to great differences because individual persons and traditions shape family business cultures. The family business need to integrate these family values in an organizational model and the entire organizational structure needs to be developed and more target-oriented. When the family business discovers its particular strengths, connects and uses them, and is as well able to keep the family in the background, then it will develop great advantages compared to other businesses.

Research and Discussion

I. Organizational Communication and Information Schemes in the Family Business

This research is about managing effective communication in family businesses. Family businesses often have to struggle with conflicts among family members, because emotions frequently interfere with business decisions. Managerial abilities, and by association business activities, suffer from the lack of organizational schemes. In addition, lacking communication channels influence customer relationships. Lynn Lofton notes that family businesses often do not have the structure which non-family businesses provide (B7). This means that other family businesses face similar problems as the one I took into consideration. Therefore, this paper will explore how others introduced organizational communication and information schemes to family businesses, to eliminate areas for dispute, to improve managerial abilities and business activities, and to create a positive impact on customer relationships.

II. Eliminating Potential Areas for Dispute

1. Guidance of Family Members

This section is about one of the most commonly mentioned problems in family businesses; namely conflicts among individuals. I assume that the introduction of an organizational communication and information scheme can eliminate potential areas for dispute, because family members can draw on guidance and common arrangements. Lynn Lofton writes about the particularity of family relationships in the business. She recommends, “Establishing specific guidelines and expectations – discussed with all members – of how the family should act in the business and how the business should be managed” (B7). My opinion to this: Her advice is valuable, but not easy to put into play.

Nevertheless, elaborating generalities and expectations will avoid misunderstandings, thus reducing the potential for conflict. For example, calling the entire family together and talking about values and expectations will help everyone to see the different views and opinions of each member. Simple rules can avoid misunderstandings, like the rule “Only criticize in regular evaluation-meetings!” This rule would avert suddenly occurring criticism, which could come across as punishment. In my opinion, elaborating on guidelines and expectations supports the awareness of family-related business problems and gives instructions on how to handle conflict or critical situations. When determining expectations, the members have to decide on limits of personal communications in the business environment.

Brian Distelberg carried out a study about family communication in the business. He pointed out that limited family communication gives more room for interpretation; that uncertainty can be very stressful, especially when it comes to assumptions about the future of the business (11). Therefore, he gives the piece of advice to build communication channels for personal communication (11). My comment: Distelberg’s advice is valuable and relatively easy to implement. For example, the communication of personal concerns may avoid negative results in advance. Imagine a son, at the same time human resource manager, thinking about moving somewhere else because of a new solid relationship. Talking about his plans will avoid misunderstandings and inform the organization members that he might leave the business. Only personal communication enables the family members to develop guidelines and expectations anyway.

2. Encouragement of Family Members

Another source for dispute is that family members may have personal ties that inhibit expressing their opinions. Eddleston, Otondo, and Kellermanns write about enlarging family member’s participation in the decision-making process to reduce relationship conflicts. They recommend intensifying the family member’s participation in the decision-making process because that will encourage family members to voice their opinions (461). My comment: the authors’ advice sounds consistent. A schematic decision-making process that requires the attendance and opinions of several members may reduce needless inhibitions because the members feel needed and appreciated. For example, managers (children) who restrain their valuable counter-proposal because they are afraid to hurt the CEO’s (father’s) feelings will lose this anxiety when the involvement in the decision-making process regularly asks for their opinion. Kelly, Lewa, and Kamaria provide another approach for avoiding personal ties in the business environment. They carried out a study that applies a social network and strategic leadership theory to an examination of founder centrality in family businesses. Their advice is introducing leadership training to improve the management congruence, which motivates the free exchange of ideas between the organization's members (383). In my opinion, this advice is very useful; when all managers successfully pass leadership training and learn how to communicate appropriately, several conflict-areas in the family business will not exist anymore. Defined standards allow the management to appear congruent, and develop uniform customs of how to communicate their opinions reasonably. For example, when discussing important topics between the responsible managers becomes daily routine, then restrained opinions will no longer be of concern.


Excerpt out of 28 pages


Communication Problems in the Family Business
Business Communication
Pfeiffer University, Charlotte Campus
Business Communication
A (1,3)
Catalog Number
ISBN (eBook)
ISBN (Book)
File size
550 KB
Communication, Communication Problems, Family Business, Family Owned Business, Problems, Statement of Problem, organizational communication, information scheme, business activities, managerial abilities, customer relationships, areas for dispute, Business Communication
Quote paper
Stephanie Olbrich (Author), 2010, Communication Problems in the Family Business, Munich, GRIN Verlag,


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