Like Marriott, Walmart, and Ford Motor Company, the British monarchy is a family business which, like all companies and organizations, can be hit with a crisis at any time and without warning. Some crisis situations play out behind closed doors and never become known to the public. Others, like the British royal family’s latest drama, can make international headlines.
Martha Sullivan is a family business advisor and president of Provenance Hill Consulting. She noted that 90% of American businesses are family-owned, according to the U.S. Census Bureau. The long-term viability of these businesses “… impacts our communities and economy. Only 12% of family businesses survive to the third generation and less than 3% make it to the fourth. Strong frameworks are vital to the health of the business and the family,” Sullivan said.
By contrast, she said the British royal family “is a ‘business family’ in the extreme, cracking under the weight of 1,200-year-old monarchy optics.”
In their recent interview with Oprah Winfrey, Sullivan said the Duke and Duchess of Sussex described “…. in heart-wrenching detail the feeling of being trapped as [members] of the royal family. But it’s an all too familiar feeling for those involved in family businesses, often being pulled in different directions, with their loyalties constantly tested.
“Their revelations reveal an important truth: there‘s a difference between a ‘family business’ and a ‘business family,’ and, what makes being in either a fairy tale or an utter nightmare,” Sullivan said.
In a recent blog post, Sullivan observed that “in a ‘business family’ the business is placed at higher priority than any one individual or the care of the family itself. The royal family is the prime example of a ‘business family’ on steroids.”
At the other end of the spectrum, Sullivan said a “family business” is one when the needs of the family and its members take priority over the needs of the business.
- In its most extreme form, family members have jobs without any regard to qualifications, experience or performance.
- Policies for the rank-and-file employees don’t apply to family members. Liberties with the assets of the company, such as borrowing equipment to move a kid to college or asking employees to handle personal tasks for the family go unchecked.
Secrets Of Success
Sullivan told me that in this extreme form the “family business” serves the pleasures of the family first. Coming on the heels of the Winfrey interview, she said these are among the secrets to success for a happy family business.
One person can simultaneously be in multiple roles (owner, parent, child, spouse, boss, employee, sibling, etc.). Knowing which role is appropriate for any given situation is crucial. Without this clarity, relationships and the health of both the company and the family are at risk.
“Business families” place the good of the company ahead of personal or family matters. For example, these leaders prioritize having the most qualified and experienced individuals in a position.
- If there’s an issue or position open, the fact that it involves your closest sibling’s spouse is irrelevant. Discussions surrounding the matter follow strict corporate guidelines and cut others in the family out of it entirely.
- In a “family businesses,” the leader prioritizes family harmony, may broaden the conversation to include other family members, and extends liberties that other employees wouldn’t get.
Know Your Framework
A “business family” sets priorities differently that a “family business.” The chosen framework creates the culture for ownership, management and the family and, assuming a reasonably balanced approach, sets the stage for its long-term success.
In the Oprah interview, Meaghan and Harry reflected on what happens when the framework isn’t well understood. Meaghan admitted that she did not do her research. The family and the Firm did little to educate her in the royal ways or set the stage for her success. This led to her reported isolation, hurtful misunderstandings and mental health issues.
Develop Ground Rule
Establish strong governance and ground rules to manage the health of the company and the family. Set and routinely reset expectations. Manage and make decisions accordingly. Unlike many family-owned businesses, the royal family does this exceptionally well.
Meaghan, as family member and in her formal role of Duchess, recognized the rulebook by the time she faced her own mental health crisis. She went to HR for guidance. HR, in turn, understood the ground rules established by the business family and enforced their policy. While one could reasonably argue that the situation called for a more compassionate response, the systems were in place. It was up to Harry and Meaghan to make their decisions within the provided parameters.
Ask Key Questions
According to Sullivan, the quality of communication and shared understanding directly impacts the health and success of family-owned enterprises and the family.
- What are our values?
- What is our mission and role as a family, a company and member of our community? Why?
- How will we communicate with each other within the family, from the family to the company and within the company?
- How will we resolve our differences?
Transparency And Communication
Marc Snyderman is an attorney, serial entrepreneur, and co-founder of Apolline Group, a family-owned business. “There are many similarities between the monarchy and a family-run business,” he said. “By nature, they are close-knit and private and there is a lack of transparency into the organization and its core purpose and function. Employees are left guessing most of the time and not having a clear understanding of what is going on at the top levels, even for other non-family executives.”
He observed that, “The recent crises of the monarchy started when Meghan and Harry left the U.K. The monarchy was quiet and thought that this would just ‘go away’ which is a common issue in a family-run business.
“Trying to keep it in the family eventually leaks out and causes significant harm to reputation and erodes the culture of the company. Instead of dealing with things when they left, it festered and is now a real PR crisis for the monarchy,” he said.
“The lesson learned here is to be more transparent, communicate and then over-communicate Make sure that issues are dealt with and not swept under a proverbial rug only left to be uncovered one day and rear its ugly head,” Snyderman concluded.