When Family Dynamics Disrupt the Business – Part 2: The Cost of Double Standards
This is the second in a two-part series on the complexities of family business dynamics.
The leadership team had gathered for their Annual Planning session—ready to reflect, realign, and chart the next chapter for the business. But the energy in the room shifted quickly.
As we reviewed the prior year’s performance, one area stood out: the retail division, led by the founder’s son, had underperformed significantly compared to the other franchise stores. Before anyone could dig into the numbers, the son launched into a story about a recent vacation with friends and a new side idea—importing artisanal carpets from the region. The rest of the team looked stunned. The message was clear: while others were laser-focused on performance, one leader wasn’t playing by the same rules.
For non-family executives, moments like this create tension and doubt. How do you voice concerns when the person at the center of the problem is both a peer and a family member of the owner? What happens when underperformance is tolerated in the name of family harmony—but at the expense of the business? And what is the long-term cost to trust, morale, and team accountability?
These aren’t hypothetical questions—they’re real dynamics that play out across family businesses every day.
The Double Standard Dilemma
Family-run companies often face a hidden leadership challenge: differing standards of accountability between family and non-family leaders. High expectations are placed on employees, while some family members are shielded from performance reviews or hard conversations. Over time, this imbalance erodes team cohesion, drains morale, and ultimately threatens business sustainability.
If you’re in a leadership seat—family member or not—this situation must be addressed head-on. Here’s how to start:
1. Understand the Three Circles Model
If you haven’t already, revisit Dr. John Davis’s Three Circles Model (also introduced in Part 1). It’s essential to distinguish between roles: family, ownership, and business. Just because someone is part of the family doesn’t automatically qualify them for a leadership seat in the business. Each circle comes with its own expectations, responsibilities, and boundaries.
2. Use the EOS People Analyzer—Objectively
One of the best tools in the EOS toolbox is the People Analyzer. Apply it equally—regardless of last name. Would this family member meet the company’s Core Values and the GWC™ criteria (Gets it, Wants it, Capacity to do it)? If not, they should be placed on a performance improvement path just like any other employee. Protecting someone from accountability only creates confusion and resentment within the team.
3. Recognize That Family Members Can—and Sometimes Should—Be Let Go
It’s not easy, but it’s necessary. If a family member isn’t fulfilling the responsibilities of their role, you owe it to the business—and to the rest of the team—to take action. Ask yourself honestly: would you tolerate this performance from anyone else? If the answer is no, then a change is needed. The long-term success of the business must take precedence.
4. Bring in a Trusted Third Party
Addressing dysfunction within a family business is delicate work. A skilled, objective third party—like a business coach who specializes in family dynamics—can bring clarity, neutrality, and structure to what may otherwise feel like a personal or political minefield. Sometimes, it takes an outsider to hold up the mirror and say what others are afraid to.
Final Thought
Family businesses are powerful. They bring passion, legacy, and resilience. But without clear accountability, they can drift into chaos. When double standards take hold, the very trust and cohesion that make family businesses great begins to unravel.
The good news? With the right tools, honest conversations, and a willingness to lead through the discomfort, families can build businesses that are not only high-performing—but truly united in purpose.
Ready to transform your family business?
Let’s have a conversation.
