Why do family businesses need an external trusted advisor? Family are often run on emotion

In some family business projects I have been involved with, the external company accountant or the family leader's legal representative is attempting to facilitate internal conversations and conflicts. This is a conflict of interest as their primary obligation is to the family leader and his or her interests. Unfortunately, I have experienced first hand where this has simply turned into a more complicated family situation. The next generation very quickly see through this and before you know it, they have sought alternate advice.

I offer the following comments from David Harland of FINH.

A Family Business Adviser works as an trusted ally who works towards resolving conflicts among family members, and protect family business from its evil effects  David Harland, Managing Director of FINH

The real value of a trusted business advisor is most apparent when there is conflict in the family. Most enterprising families work together quite well when times are good, and there are many non-specialist advisors (such as accountants and lawyers) who perform good work under these conditions.

Conflict resolution is a different animal. The Harvard Business Review perhaps said it best decades ago: “A family-owned company is often grievously complicated by friction arising from rivalries involving family members who hold positions in the business, or at least derive income from it.”

That was written by corporate psychologist Harry Levinson, a pioneer in the understanding of how emotional health impacts job conditions. Levinson notes that serious family conflicts will harm or kill good businesses, concluding that “the only real solution is to move towards professional management.”

If you work for family businesses, you may be faced with unfamiliar or uncomfortable positions. Sometimes the best decision for the business (and yourself) is to consult a specialist in the field of family business. 

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