Emotions and negotiating in a family business

In the United States, approximately 90% of businesses are family owned, employing 60% of the work force. In addition, 30% of S&P 500 companies are family firms. Clearly, family businesses provide a strong source of economic growth and wealth in our nation. However, the majority of family firms don't survive past the second generation. More often than not, this is related to differences in priorities and perspective, along with a lack of communication between family members.

An article about negotiating in the December issue of the Harvard Business Journal, “Control the Negotiation Before it Begins,” got me thinking about how the typical strategies used in corporate America aren't always going to be appropriate in family businesses. This article, and many others on the same topic, suggests that most negotiation experts focus on strategy and tactics. However, research shows we can regulate emotions such as anxiety, anger, excitement and disappointment during the process to help achieve a better outcome. As a family business adviser, I thought this seems especially relevant for family businesses.

This is clearly demonstrated in the case of a family business that I consulted with recently. There were four adult siblings in the family; two working in the business and two who were not. The parents felt that in the spirit of “fairness” all their children should have equal ownership of the company. Initially, when the parents passed away, the company was profitable and there were seemingly no major issues in the family. However, when there was a downturn in the economy, the “non-working” siblings wanted more accountability for how the company was being run. The two working in the business resented the interference from their siblings.