IN MY years of doing consultancy work in Asia for my firm, W+B Family Advisory, I have encountered dozens of family businesses threatened and impaired by the actions of in-laws. One significant but unpredictable issue is the effect that in-laws have on family-owned businesses. They can either be a positive contributor or can be a huge burden to the family and the business.
Having in-laws in the family business stokes many fears among family members and non-family executives. In most cases, those fears are real. Many look at the in-law as an additional complexity that could be avoided. And this complication is manifested in unusually interconnected problems that will eventually affect the business and subsequently, family relations.
Business owners must realize that they will never know who their children will choose as partners. Not even the most controlling family business owner can determine his children’s final choices. So no matter how you look at in-laws, they will always play a huge role in the way your adult children will manage the business and the family especially when you are no longer around.
Advice for in-laws
For in-laws joining family businesses, family expert Ricci Victorio has some advice: “In–laws are stepping into one of the hardest working environments imaginable. A family member is held to a higher standard than regular employees, but an in-law has to work even harder than a family member. It really takes someone with vision and purpose because there will be a lot of extra challenges.” She further explains that the key considerations in making any in-law’s entry productive is by “laying the right groundwork, the establishment of clear expectations and collaborating with an adviser familiar with the challenges that will occur.”
Occupational psychologist Roberta Fenech expressed her concerns about in-laws coming from a non-business owning family: “In-laws, irrespective of whether or not they work in the business, who were not brought up in business-owning families experience culture shock. Most business-owning families have used the business as the center of conversation for decades. If in-laws are not closely involved in the business they may feel left out. In-laws who come from a non-business owning family may lack the experience to prepare them for the dominance of the family business.”
In Asia, hiring in-laws is correlated to culture and necessity. For startup businesses where resources are limited, in-laws are usually relied upon to help in the business and fill the void. Their engagement is critical as they not only play a pivotal role in the growth of the business but they end up becoming a natural extension of the founder’s trust. In a latter’s circle of trusted people in the organization, in-laws are classified as part of the “cheap labor” pool of relatives and friends.
However, problems generally surface when the business transitions from a mom and pop venture to a bigger and complex organization, when there is marital conflict, when there are differences in values and when the probability and frequency of conflict increases as the family expands. Despite these natural transitions, the owners often disregard the importance of establishing rules and policies related to in-law entry.
Advice to business leaders
While the key business leader is still active he or she must recognize that unity, governance, wealth transition, stewardship and legacy building efforts should always be in place before proceeding with the ambiguous plan of bringing in-laws to the business.
Fenech’s advice is straightforward, “The leader should foster open communication among family members and in-laws.” She also recommends “educating in-laws about the family business and involving them in regular family meetings. Some families develop a family code that spells out what behavior is encouraged by all family members.”
Overall it is best to have clearly defined rules when it comes to the role and responsibility of in-laws and clear expectations of the consequences in the event of death, separation/divorce.