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The Paradox of Family Business Leadership

Updated: Sep 13, 2023

Henry faces a no-win decision. His cousin Jerome is bringing the company down, and the company won’t last much longer without a major change. Volatile, unreliable, and offensive to coworkers, Jerome spends more time on the golf course than the office.

Adding insult to injury, both Henry and Jerome earn the same salary, courtesy of the prior CEO, their loving and conflict-avoidant Aunt Elinor. She insisted that all family members earn the same, regardless of title. The result? Compared to the market, Henry is underpaid, while Jerome is overpaid.

Notice the mismatch of privileges and responsibilities. Henry bears hefty responsibilities with minimal privileges, whereas Jerome takes excessive privileges with minimal responsibilities.

Henry is crystal clear that he needs to fire Jerome. It’s his duty as CEO of their grandfather's business. However, as a cousin, Henry worries about how the rest of the family will react, and as an uncle, he worries about how Jerome would support his family if Henry fires him. Jerome couldn’t replace his income elsewhere. His skills and experience don’t justify his current compensation.

With three unsolvable dilemmas on his hands, Henry swirls with frustration.

  1. Business Mindset :: Family Mindset – How do you make leadership decisions when your Business Mindset tells you to do one thing and your Family Mindset tells you to do another?

  2. Equal :: Unequal – How do you reconcile the tension between equal compensation and unequal compensation for family members?

  3. Responsibility :: Privilege – How do you harmonize responsibilities and privileges in a family business?

Leading a family business can feel like living in socialism and capitalism at the same time. While the Business Mindset values profits, competition and meritocracy, the Family Mindset values sharing, fairness, and unconditional belonging. How do leaders make decisions with both of these opposing mindsets in play concurrently? Polarity management is the answer.

At its most basic, polarity thinking changes the question by supplementing either/or thinking with both/and thinking. For example, instead of asking whether to pay either equally or unequally, inquire how to get both the upsides of equal pay and the upsides of unequal pay. A leadership superpower in any complex domain, polarity thinking an essential skill in a family business given the countless polarities that family business leaders face daily.

I’m so passionate about this topic that I’ve written a book about it! (Anticipated publishing date: Fall of 2024.). Interested in learning more? Join my mailing list to receive occasional communications about how to leverage polarities to help your family business thrive.

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