“A Violence Against Confidence” – Betrayal in the Family Business

Next to death, few tragedies we encounter are as deeply and personally painful as a betrayal by someone you love and care about. Maliciously undermining the presumption of trust can cause huge emotional and psychological damage, and when it occurs within a business (and especially a family-run business), this damage can even ruin otherwise successful enterprises. It’s no wonder that Tom Hubler ranks betrayal as “a top destroyer of otherwise-successful family businesses.” 

A betrayal can encompass everything from sharing trade secrets with competitors to divulging privileged financial information, and while in some cases could be illegal (in the cases of copyright infringement), are many times simply competitively disadvantageous and emotionally ruinous. ​​Family businesses are especially susceptible to betrayal because many families are so tight-knit that actions need not be malicious to be considered betrayals. Two family members with seemingly psychic links between each other’s minds may feel betrayal when a genuine misunderstanding finally arises. A parent who merely hints at expectations for their child may feel betrayal when the child goes against or fails to meet those unspoken expectations. These hurt feelings may not be the result of intentional emotional violence, but they cut, sting, and damage relationships nonetheless. Because of the familial connection, rarely (if ever) are these issues written off as “just business,” but rather nearly always taken personally. The worst part is that when these personal betrayals arise, calm reconciliation can seem utterly impossible.

With all this in the forefront of our minds, know that reconciliation is far from impossible. While it is undoubtedly difficult, many successful family businesses have great systems in place to heal as families when a betrayal occurs, and (importantly) keep them from happening in the first place. Next month we’ll begin to tackle the forgiveness process that families can follow when a betrayal does rear its ugly head, but today we’re focusing on prevention. 

An Ounce of Prevention…

To quote the old Benjamin Franklin axiom, “an ounce of prevention is worth a pound of cure,” and that couldn’t be more relevant to this subject of betrayal. As we’ve discussed in the past, the deepness of a family’s connection is both a family business’s greatest strength as well as one of its most fundamental challenges. Far too often, family members feel so “in tune” with each other that they see no need for formal organization and structure to work effectively, when in fact these are even stronger necessities. So many perceived betrayals within family businesses arise due to unspoken expectations and assumptions that families will “just understand each other,” and clearly communicated structures, boundaries, responsibilities, and job descriptions can go a long way to ensure that everyone in the family is on the same page about business needs so that the risk of misunderstanding and hurt feelings is significantly diminished. Taking this a step further, family businesses can institute a board of directors made up of impartial non-family members to enforce these boundaries, function as a check to balance the power of the family or those “in charge,” and help mitigate disputes and disagreements before they turn into ugly interpersonal conflict. Countless families truly believe that the love they feel and the understanding they have for each other mitigates the need for these checks and balances, but unless structures are consciously instituted and actively enforced, a business will undoubtedly suffer when family dynamics fracture.

While preventing betrayal is always the ideal solution, no amount of preventative maintenance can inoculate fully against the risk of harmful actions and misunderstandings. Next month, we’ll start to dive into the forgiveness process, especially as it relates to reconciling a sense of betrayal within family businesses. For more about the harmful consequences of (and methods to prevent) betrayal in business families, check out The Soul of the Family Business by Tom Hubler. Through personal anecdotes, real-world case studies, useful tools and frameworks, and more, Hubler offers a wealth of lessons on structuring your business in a way that minimizes emotional risk and ensures the success of the family members and the business enterprise. For all of this, pick up The Soul of the Family Business, available in hardcover form on Amazon.com, directly through Itasca Books, or at a bookstore near you. And of course, you can always contact Hubler for Business Families today to set up a free orientation meeting with Thomas Hubler, the expert on family business planning.