A management consultant and psychologist explains why offspring scorned by a family business can cause big trouble.
Hell hath no fury like an offspring scorned by a family business
Management thinking is awash in military metaphors. But one military leader never got his justly deserved recognition within the management community. I refer to King Pyrrhus of Epirus. His comment "Another such victory over the Romans, and we are undone" led to the term Pyrrhic victory, which today means winning at a near-ruinous cost. By sustaining the losses he did, Pyrrhus showed countless generations of losers that they have a latent capacity to bring victors to their knees if they can suffer long enough to wear their opponents down.
I've seen losers inflict catastrophic injury on winners so often that I've dubbed the dynamic Pyrrhic Revenge. The reason this particular dynamic is relevant to you, the business builder, is that if your company is or will become a family business, and you have more than one child who wants to succeed you as chief executive, you're likely to fall victim to some form of Pyrrhic Revenge when the time comes to pass control to the next generation.
Why? I'm glad you asked.
Most owners who bring more than one family member into the business face a crisis point at which a "winner" in the battle to succeed the founder is declared. From that moment on, the remaining siblings feel like losers. In family businesses, work is typically the medium through which the owner-parents interact with their offspring. Those offspring want little more than to be seen as worthy of replacing their parents as head of the family business. When children lose that battle, they often seek to avenge the hurt they believe their parents have caused them.
Let me give you an example of one individual--let's call him Barry--who lost the battle to succeed his father as CEO of the family business. Barry's father had built a food-processing conglomerate that took off in the 1980s. Barry always assumed that he and his two brothers would follow in their dad's footsteps. When I met Barry, he was the vice-president of sales and marketing, his older brother was the vice-president of finance, and his eldest brother was chief operating officer. The brothers weren't close, but their relationships were amicable, since the business was profitable enough to provide them all with mid-six-figure incomes.
Harmony ceased when Barry's father suffered a heart attack. Although he recovered fully and returned as CEO of the business, he decided that a formal business-succession plan was long overdue. He chose Barry's eldest brother to be the one to succeed him. Although there were covenants in the succession plan that provided roles in the business for the other two brothers, Barry felt that by not naming him CEO, his father had "stabbed him in the heart."
Within weeks of that trauma, Barry began gambling and piling up massive debts. But more significantly, he used the family business to "feed" his pathology. He placed bets from the company's warehouse telephones, met with bookies in the commissary, and embezzled money from the corporate bank account to pay for his losses.
But there was another aspect to Barry's behavior that made the motives behind, and the value of, his gambling problem crystal clear. Every time Barry was exposed as having exploited the business to cover his gambling debts, he and his father would engage in a profanity-riddled shouting match. But those fights would end with their reconciling while crying and hugging each other. According to Barry's father, "I knew this crazy behavior began when I made his brother president. Each time I met with him to plead with him to stop betting, he'd yell at me, 'You bastard! It's your fault I have no self-esteem. That's why I do this, because you robbed me of my rightful career leading the business." Barry's take on the "bouts" was more revelatory: "The only time the SOB ever hugged me was after I crapped all over his business."
Barry was enacting the role of a loser who needed his father to rescue him, but a secondary gain was winning his father's love. Had Barry not engaged in a Pyrrhic Revenge strategy of hurting himself to hurt his father, he would have continued as vice-president of sales and marketing, drawn his handsome salary, and been ignored by the man he worshiped. Now his dad couldn't ignore him and couldn't fail to stay bound to him. Granted, those ties were negative, but they were ties that Barry believed he needed to feel worthy. Sadly, that's not terribly uncommon when children are reared in an environment in which their only source of self-esteem is winning approval for their involvement in a family business.
Over the years, I've seen instances of Pyrrhic Revenge in which "slighted" heirs have squandered fortunes, committed felonies, and used the media to vilify their parents. In each of those cases, the slighted child succeeded in achieving a negative attachment to his or her parent. By the time such a state evolves, there's not a management theory or a consultant capable of turning it around. The only healthful way to transform a negative attachment into a positive one is through intensive psychotherapy.
But there is something you can do before patterns of Pyrrhic Revenge show themselves in your offspring. I urge all business builders to follow these suggestions:
Barry, by the way, is now in the midst of reconciling with his father and eldest brother through intensive psychotherapy. Other families I know who relied on business consultants to resolve Pyrrhic Revenge "wars" are now depending on lawyers to win their disputes in court, where victories in battles like these truly are Pyrrhic.
Dr. Steven Berglas (email@example.com) is a management consultant and a psychologist on the faculty of Harvard Medical School.