Little Room for Feuds in Family-Run Businesses : Management: Conflicts more likely to sink such companies than those run by outsiders.

Working for a family firm whose members do not get together for outings may be no picnic. If they don’t get on well together socially, the company may not have much of a future and working for it could be a career-killer.

Largely because of its potential for conflict, a family firm is at greater risk of failure than one managed by outside professionals.

“What I found,” said business professor Michael Wakefield, who recently sifted data from 1,002 family firms having sales of more than $2 million each, “is that cohesiveness of the family is the best predictor of whether there is going to be conflict over business issues.

“If they don’t have family picnics, if they don’t play together, it could be they are bickering and having disputes that could break up the business,” said Wakefield, who teaches at Black Hills State University here.

“I would look to see how well these people got along as individuals outside the business. That would dictate whether there was going to be problems or not.”

“Some conflict may be desirable,” Wakefield added. “It means they are concerned about the company and not afraid to air opposing views. Too much conflict, though, means that there are power struggles and they are more concerned about their power base than about the business. Too little conflict could mean complacency.”

Odds are, he said, that 80% of all family firms “will cease to exist as family firms by the third generation,” and while that’s a peril for a hired executive, it’s also an opportunity.

The outside hire who joins a family firm about the time a son or daughter is ready to take over should not realistically hope to become chief executive.

However, Wakefield said, an outsider “will have an excellent opportunity to step in and move up” if the company’s bloodlines are thinning out, which often happens around the third generation.

That’s because the founder’s grandchildren may not be interested in the firm or competent enough to take over, so the outfit by then may be run by cousins, nephews or nieces.

“I wouldn’t work for a family firm that didn’t have an outside board of directors, one that’s more concerned with business issues than family issues,” Wakefield said.

“An outside board will recommend people to leadership positions who are most qualified rather than those who are most related,” he said.

For the same reason, he said, an outsider is better off working for family firms that have written job descriptions and performance reviews.

“The tendency for most family businesses is not to have formal job descriptions, employee evaluations and mission statements--all the things that go along with [larger] businesses,” he said.

Conservatively, about 90% of all businesses could be classified as family concerns, Wakefield said. They employ more than half of all workers and churn out more than half the gross national product.

Because family firms are smaller than typical publicly held companies, Wakefield said, if you go to work for one “you get to wear a lot of different hats” and have more responsibilities.

Frequently “there’s less money available for pensions and benefits and if there aren’t any written rules, decisions by the owner may seem to be arbitrary and capricious, so inconsistency can be a problem,” Wakefield said.

Studies show “there’s a liability in smallness and newness,” so if you’re job hunting, look for a family firm having sales exceeding $1 million.