There is no such thing as a stereotypical addict. Extreme wealth and an unhealthy penchant for narcotics have long been bedfellows, as proved by the slew of celebrities that check into rehab each year, but then again, addiction and poverty aren’t strangers either. It is almost impossible to run a line of best fit through the characteristics and backgrounds of addicts. But all that said, there is worrying evidence to show the rate of drug or alcohol dependency in family businesses is much higher than in their non-family counterparts.
In early 2013, Texas-based family business consultants Regeneration Partners published the results of preliminary research into the issue. Out of a sample of 92 of its client families, it found 56% had been significantly affected by addiction – the US national average, according to the National Institute on Drug Abuse, is closer to 10%.
So what is it about family businesses that foster the problem? For the moment, the few specialists on the subject don’t have the answer, and James Olan Hutcheson, founder of Regeneration Partners, thinks there is a desperate need for more research. Olan Hutcheson has an academic background in psychology and sociology, but he also grew up in a large family business, and first came across the problem in his own firm when a family member died from alcohol poisoning. When he started working as an adviser, he realised how often it was at the root of their issues.
“No one has ever come to us and said ‘we have an addiction problem’, that’s the elephant in the living room, or one of the elephants in the living room – people come to us with problems of communication or relationships, and that often stems from addiction issues,” he says.
Olan Hutcheson says it is easy to speculate as to why children growing up in family firms become drug or alcohol dependant. For example the founder may be wedded to their business and spend less time raising their kids, or because there is extraordinary pressure on the younger generation to devote their life to the company the way the previous generations did. Although these are by no means the only routes to drug abuse problems, these influences can lead to what psychologists term “co-occurring issues,” such as anxiety or depression, which can go hand in hand with addiction.
Michael Stern, a clinical psychologist, family business adviser and addiction specialist based in New York State, published research in 1999 that uncovered different collections of characteristics in addicts and went some way toward uncovering how the unique structure of a family business can trigger a substance abuse problem. Emotional constriction and delayed emotional development was one of the frequent root causes he found.
Normally, he says, adolescence is a time of great vulnerability when a person deals with issues of separation, family loyalty, develops a secure identity and forges a new relationship with their parents. But instead of being given greater freedom and space to develop, Stern found children who were being groomed to take the helm of the family business often continued to function under the direction of their parents throughout their teenage years and were actively discouraged from establishing their independence.
“Just by nature the whole process of the family business tends to weigh very heavily and impede individuation very significantly unless there has been an awareness and a focus to avoid that,” says Stern. “The 40-year-old still working for their 65 or 70-year-old father has not achieved that independence, that individuation, so that’s an emotional risk factor.”
Furthermore, it will always be dangerous to try and shoehorn family members into a business they do not want to be in. According to Stern, some family businesses have concocted a formula to avoid immediately handing relatives a senior position in the company. They stipulate that before being eligible to join, family members must first graduate from college, get a job elsewhere and get promoted in that job. This is considered healthy and mitigates substance problems because the next generation has evidence of their own independent achievement. However, even this recipe is very restrictive, and can be hazardous to the mental health of anyone who simply isn’t cut out to be part of a family firm. Olan Hutcheson agrees, and he frequently has to tell his clients the best thing they can do is allow their children to discover what it is they want to do with their life.
Access to significant resources from a very young age also poses a risk. When people think of high-profile cases of drug abuse in family businesses, the grisly tale of Eva and Hans Kristian Rausing, heirs to the multi-billion Tetra Pak fortune, might be the first case to spring to mind. The couple met at a rehabilitation centre in the US and married in the early 1990s. They both continued to struggle with addiction throughout their marriage and in July 2012, following Hans Kristian’s arrest on suspicion of driving under the influence of drugs, police discovered Eva’s decomposing remains wrapped in a shroud of bin bags and dirty sheets. It is thought she had lain dead at the house for more than two months. The coroner concluded her death was due to drug dependency, and her husband, who said he couldn’t bear to be without her, was charged with preventing the lawful burial of her body.
While the case generated a media storm, Stern is careful to distinguish between members of family businesses and those he dubs “trustafarians” – those with a high level of wealth and no accountability or responsibility. Neither Hans Kristian nor Eva Rausing ever had anything to do with the Tetra Pak business. Another high-profile case is that of Edoardo Agnelli, the only son of Gianni Agnelli, the late patriarch behind Italian family business Fiat. Edoardo was kept well away from the family businesses when his father realised he had long-term dependency issues. When he took his own life at the age of 46, the only job he had ever held was a directorship of family-owned Juventus football club.
Stern does think, however, there are similarities between the wealth-related self-esteem issues he has witnessed in children from family businesses and those experienced by trust fund kids. He says he frequently sees next-gen addicts with a level of resources and affluence inconsistent with their own work and capabilities. He cites an incident he witnessed during his time as clinical director of an outpatient substance abuse programme in suburban New York in the mid-1980s. A scion of a family business once turned up in a Ferrari, all the other attendees were impressed and wanted to look at the engine, at which point the owner was forced to admit he didn’t know how to open the bonnet.
“It’s more of a challenge for them to be their own person and also to experience the satisfaction of achievement and recognition. In line with the high net worth families or the trust fund kids, they often have access to resources in excess of their own efforts and work,” reckons Stern. “There can be that devaluing message from others – so, if their name is the same as the family business there’s often an assumption of ‘oh well you’ve got some special deal or special privilege or you’re not held to the same standards’ and that message can become internalised.”
This feeling of inadequacy and unearned privilege can easily poison the heir’s relationship with their colleagues. Stern’s study found that although they might technically be starting on the bottom rung of the ladder, the heir to the business was often awarded higher pay, more authority and more flexible hours, which led to resentment from their peers and fostered a feeling of guilt, alienation and social anxiety in the next generation. One individual in the study who was from a family construction business felt so miserable and isolated at work he resorted to drug abuse and fantasised about being able to fire his colleagues once he took control of the firm.
Although many family business members had similar feelings of inadequacy, isolation or pressure, the different archetypes found in Stern’s research is not the full picture of why a family member may become dependent on narcotics and there isn’t a perfect formula that can predict these issues. Olan Hutcheson also emphasises it is important not to generalise, the only thing known for certain, he says, is that “people become alcoholic or drug addicted because they are in an alcohol or drug addicted environment or they have a genetic proclivity”.
Olan Hutcheson says, however, that family firms can be enablers because they may be more tolerant of substance abuse problems among family staff members than non-family employees. “Because it’s a family business, if junior has a drinking problem or comes in late for work or doesn’t show up for a week and he reports to the parents, the parents may be more willing to let that go, whereas if you are in a non-family business, those type of behaviour generally will be the reason for sharp reprimand and correction and/or termination.” Non-family employees are often complicit in this enabling behaviour, says Stern. “They are not going to report an individual who might be the crowned prince who is in line to be the owner and boss someday.”
According to Stern, addicts usually only decide to tackle their problem when they are facing a loss, whether this is the loss of their spouse, health or their job. By continuing to provide employment and security to an addict when in another situation they would have lost their job, the family business can delay the individual making the decision to seek help, which both jeopardises their health and the long-term stability of the company. This tolerance is probably one of the most important reasons why the rates of substance abuse appear to be so much higher in family firms than elsewhere.
There is a final factor to take into consideration, which is the fact that a large body of psychological research has established that a proclivity to chemical dependency is often a hereditary trait. Parents that have battled drug or alcohol addiction should be aware their children might be vulnerable to similar problems. The invention of the MRI scan has proved that process addiction – to things like gambling, sex, shopping or even video games – affects the same pleasure centres of the brain as chemical dependency does, and it is possible to see patterns of withdrawal in people that suffer from it. Obsession with work is now increasingly classed as a process addiction, something that should perhaps ring alarm bells in workaholic entrepreneurs who are preparing to hand the business to their offspring.
As yet there is no concrete proof process addiction in a parent could indicate a proclivity to addiction in their children, but Stern thinks that it is something parents should keep in mind when raising children in a family business environment. “I’ve seen in the founding generation entrepreneurs, that they really are addicted to the thrill of the deal,” he says. “I would say if you know there are some inherited predispositions, just as you might with a family history of heart disease or hyper tension or diabetes, it’s extra important you are aware and that you make the lifestyle changes to mitigate that.”
Ultimately specialists agree awareness will become the most important thing in protecting members of family businesses from life-destroying addictions. “If people know there’s that risk factor in a family business, and actually whether or not it’s there, I think it’s important to look at what are the factors that are important to develop healthy children and healthy adults,” says Stern. “It’s important to have things that facilitate that individuation, to have clarity of responsibility, to intervene if there are problems, and to have a clear policy in the family business regarding actions about substance abuse.”
Olan Hutcheson adds that there is a growing momentum around the issue. “At Regeneration we find out very early on in the engagement if there’s an addiction issue, no different than if we were to ask them ‘is there a lawsuit,’ ‘is someone dying of cancer’ or ‘is the company solvent’ – these are all fundamental questions. How can you do your work if you don’t know that?”
As awareness and acceptance grows, the discussion around addiction in the family business could become as commonplace as the discussion around succession or governance, which can only be a good thing for those in desperate need of help.
Junk in the family recycling business
Two brothers from a New England-based recycling firm shared their experiences of trying to work through their addiction problems in a family business. Their father, the business’s head, was a regular substance abuser, and both men found they had a genetic proclivity towards chemical and process addiction. Being in an environment where substance use was accepted and their employment was guaranteed meant all barriers to addiction were removed.
“I would show up in front of customers high,” one brother says, “Employees would see me under the influence quite often.” He adds, “There were no consequences, and stuff that never would have been tolerated in a corporate setting was tolerated in the business.” His sibling says, “Our father used a lot of substances – he was very controlled in his use, he would never go to work and use or drink during the day, but after work he drank and he smoked pot.”
Having joined the business in their early twenties and been unhappy in the hyper-masculine, bullying environment, the brothers’ substance abuse became really evident in their early thirties, and one developed a $10,000-a-week gambling habit.
“We all really enabled each other to a large degree, and I think my behaviour gave others – especially my dad – the feeling that whatever he was doing wasn’t so bad because my addiction was so pronounced,” says the eldest brother. Even so, his addiction became so marked that his family started to worry for his life.
Despite working so closely together, the two men tended to keep their issues very separate from the other. Eventually, however, both men came to the realisation they needed to address their problems. “The gambling got me to the point where if I didn’t stop it was really going to start to have a negative impact on my family’s financial well being,” says the second brother. “As soon as I sought treatment for gambling I immediately recognised that I needed to manage my drug use as well.”
Slotting back into the same toxic environment while trying to stay sober was never going to be easy. The eldest says, “Everyone [in the business] wanted me to be sober but they didn’t want me to change,” adding, “Living my life sober meant being in direct contradiction to the morals, values and behaviour of the family structure.”
When it became clear the two men would never be able to reconcile sobriety with their family business environment, they made the decision to break away and found their own company, a company that has a clear set of values in place.
Despite the influence of their working environment, neither discounts the role genetics played in their problems. One says, “I think the work environment was a key contributor to driving my addiction,” but adds, “If I grew up, moved to California and became an attorney I think I would probably still have issues with drugs and alcohol.”
This awareness has made them extra mindful of the future of their children. One says “I know they’re biologically predisposed to have potential addiction issues, so the modelling is correct [they are growing up in a healthy home environment], but when they get to the age where they start drinking and experimenting with drugs, who knows?”