Working with Siblings

Working with siblings involves a unique set of challenges. Siblings generally have a much stronger competitive streak than parents and children. When multiple siblings are involved in the family business, conflict can easily arise.

Siblings are rarely involved in the business in comparable ways. For example, in a dentistry practice, one might be a dentist or hygienist, while another might work as a receptionist or in the office. While one sibling might rack up billable hours, another might do legwork that is critical to keeping the business afloat. Pay differences depend on hours worked, the nature of the work, the quality of the work, and a host of other factors.

In theory, it should be easier to navigate when one sibling does not want to be involved in the business and the other does, since differences in salary are much easier to justify. However, this can create tension in regards to distribution of stock. Some families elect to distribute stock equally, regardless of the stock owners’ involvement in the business. This is not a generally recommended strategy, for obvious reasons (an individual who is not directly involved in the business generally has different incentives as a shareholder).

Succession planning can pose problems when more than one child is involved in the family business. For family business, strategic succession planning is even more critical to the health of the business (and the family members involved).

The relationships within the family business are part of the business’s system. While this can be problematic, truly successful family businesses acknowledge and work around the family dynamics element within the system.

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