Family businesses—from mom-and-pop shops to corporate behemoths like Walmart, Ford, Berkshire Hathaway, and News Corp.—share as many weaknesses as strengths. On one hand, they create resilient, values-driven organizations. But they’re often faulted for nepotism and poor succession planning, generating real-life, stranger-than-HBO soap operas.
Behind closed doors, substance abuse disorders are among the most common sources of conflict for families running companies, according to consultant James Olan Hutcheson, founder of ReGeneration Partners, in Dallas, which specializes in family-owned enterprises and has made helping those in which a member suffers from addiction a subspecialty. No broad research exists to confirm this, but Hutcheson believes there should be: When he analyzed the 270-plus clients he has worked with over 30 years, he found addiction lurked within more than 55% of cases. His customers’ reasons for contacting him varied, but once the work began, the consultants would often discover that someone in a leadership position was struggling with addiction. “It was eye-popping to see just how frequent this issue is,” Hutcheson says.
He remembers one company that reached out about relationship problems and conflict in the firm. When he arrived, he saw an executive family member acting erratically; he had a “flash temper” and a strong sense of entitlement. After several months, Hutcheson learned that the rage was connected to excessive drinking. “I found out that the head of the business had 17 martinis at an awards presentation where he was being honored, and he could barely stand up,” Hutcheson says. Later, the family said that 17 martinis “was nothing” for this heir.
Hutcheson’s career choice was partly inspired by his own life experience: His family ran the once-popular Olan Mills chain of portrait studios, which were go-to destinations for keepsake family portraits in the pre-iPhone days. “My family company was no different than the majority of other family businesses, in that we, too, had addiction issues,” he says. The experience taught him that addiction—usually for alcohol, though the consultants have dealt with drugs, gambling, and sex addictions, as well—is an unrecognized challenge for family-operated firms.
Over the years, Hutcheson and ReGeneration managing partner Elle Hansen have developed theories about why drug or alcohol abuse appears prevalent among the heirs to a family business dynasty. Though the famous Anna Karenina principle applies to families—each unhappy family business is unhappy in its own way—there are also some common themes, they say.
For example, some scions are plagued by inner conflict about what they’re meant to be doing in life, while others feel oppressed by expectations to step into a company role. Unlike a parent or grandparent founder, the presumed future leader of a firm may not share their passion or sense of urgency about building the family business, but they see no way out, Hansen explains.
Heirs also often suffer from a lack of self-confidence, Hutcheson adds, because they skip a vital formative experience that would allow a person to develop self-knowledge and self-esteem: They fail to go get work and life experience somewhere else before joining their parents’ company. To be sure, for some people, going straight to work for mom and dad is fine, says Hutcheson. But for other personalities, he explains, it’s necessary to establish a strong sense of self by “working for a real boss, working as a part of a team, working appropriately for their skill set, knowledge, and experience, as opposed to shortcutting that.”
What’s more, an adult child who is a second- or third-generation family business leader might live in the shadow of the much-lauded and storied kin who came before them. “There’s often struggles in self-actualization and identity,” Hansen explains. Business heirs ask, “Will I ever live up to my parent?” Another common internal script: “Oh, my God, I just can’t break it. I’m responsible now, and I just better not break what my dad spent his life creating,” says Hansen.
Turning to alcohol, pills, or other drugs to cope with uncomfortable feelings is also easy to do when you’re wealthy and you have a lot of time on your hands. Both things are often true for successive generations at companies, who tend to grow up with country club memberships, private jets, vacation homes, and unfettered access to all of life’s distractions. Relatively few family businesses survive through multiple generations, but when they do, the heirs have very little connection to the original mission of the founder.
Having navigated these fraught scenarios for years, the consultants say they’ve developed a few principles to guide their work supporting both the person with an addiction, as well as the family members and company around them.
Accountability has to come with consequences
Helping parents of adult children maintain and enforce boundaries they’ve already set is a key part of their remit, says Hutcheson. How many episodes involving public intoxication are too many? What does it mean that a son’s or a daughter’s erratic behavior is on full display at the company holiday party? “ We routinely see parents that are unable to impose consequences on kids that are struggling with addiction,” says Hansen. “So they’ll drain the resources of the family, the business, the reputation, the culture, morale—but they have a really difficult time holding the boundaries that are in the best interest for the health and well-being of the kid, as well as other family members in the organization.”
Families can drag their heels with these issues for any number of reasons, including denial or an unwillingness to take on the thorny problem of an adult child. “It’s like, ‘It’s their life, let them live it,’” Hutcheson says, adding that many times, business-owner parents are afraid their adult children will withhold grandchild visits to retaliate against boundaries they draw at work.
But when the addict in question is already in a senior leadership role, such as president or CEO, the consultants often contend with serious resistance. For instance, Hansen recently found herself working with a client, a next-generation leader, who denied that they had lost control. “This was after four arrests, a DUI, domestic violence charges, et cetera,” she says. This person framed those crises as “everybody else’s fault but the alcoholic’s.”
“There’s an arrogance or an ego that says, ‘I’m above this. I’m above consequences. And I can get myself out of it,’” she notes.
The whole family needs emotional support, not just the addict
The consultants have found there’s truth in the truism that “addiction is a family disease. It’s also a lifelong scourge, says Hutcheson, even if someone becomes sober. Addressing it must involve all family members connected to the business.
Finding solutions to keep the business running optimally while someone is in rehab is relatively straightforward, says Hutcheson. You can hire a part-time CFO or redistribute work. The tougher part is the psychic fallout from an addiction crisis. “Emotionally, the family is in such turmoil,” says Hutcheson, “and it’s going to be detrimental, a distraction to the addict.”
It’s important that families develop additional communication structures, or establish boundaries and consequences so that when that person reenters the business, he adds, “everyone’s as prepared as they can be.”
Families are most successful when everyone becomes engaged in the process and commits to it through relapses, which are, statistically speaking, almost inevitable.
Families sometimes need a nudge to see other possibilities
Not everyone returns to the family business, of course, and that’s just fine—and survivable. For people who didn’t grow up in a family business, it might be hard to understand why families are not more open to alternative options for their heirs, Hansen says. But for many families, it has always been a given that Junior was going to take over the business. “We see our role as educators to help them evaluate the various options, including sitting at the ownership level and getting out of the day-to-day operations.”
In unhealthy family systems, she adds, the drive is to get everyone back to the way things were, “to do what we know best,” she says. However, healthy families take a holistic approach, considering the individual, their goals, their performance, their relationships, what has changed because of the addiction, and whether the business environment is right for the individual and for the company.
“The first step is to put your arm around your family member and say, ‘We care. We love you. We want the best for you. What can we do to solve this?’” Hutcheson adds.
Rehab is not a career death sentence, but giving people endless opportunities to change can be
Hutcheson and Hansen never enter a situation intent on moving someone into rehab, but they can help with that, and they often work with a family to understand the ramifications. Taking that step can be frightening, but Hutcheson reassures families that it doesn’t have to spell the end of someone’s career. “A lot of people have gone to rehab who we’ve worked with. I mean, I daresay hundreds have gone to rehab, and many have very positive outcomes. They return to work … and do an effective job.”
But it’s also true that treatment doesn’t always work right away and can instead require multiple attempts. If the family will hang in there through it all, “that is one of the strongest indicators of longer-term success,” says Hutcheson.
He has seen families wrestle with the same issue for years, he says, at which point the consultants may help their clients separate their challenges dealing with addiction from company operations by suggesting the person struggling with the disorder leave the business and focus fully on recovery. “You may or may not get a better outcome,” in terms of treatment, he says, “but at least you’re not allowing the business to suffer, and that would be the rationale for drawing hard boundaries.”
