Internal communication issues in family businesses could be a sign of an addiction problem at the management level, according to consultants Regeneration Partners. Its recent research has found high levels of addiction in US family firms.
Regeneration's chief executive, James Olan Hutcheson, told CampdenFB that the Texas-based firm had first become aware of the problem around 1998 when it realised “how often addiction played a part in the breakdown of communication” in family businesses.
The study of 99 of Regeneration Partners' clients found that 54% had or were working through an addiction disorder within the company’s ownership or management. The study was conducted in the first quarter of 2012 in conjunction with Caron Treatment Centers.
Of the 54% figure, 83% were still in the process of working through a continuing addiction disorder. This was not a random sample; nonetheless these figures far exceed the general levels for the US population. According to the US’s National Institute of Alcohol Abuse and Alcoholism, approximately 18 million people in the country suffer from an alcohol problem, or 6% of the 300 million inhabitants.
In a statement, Regeneration Partners said substance abuse was a serious threat to the future of family businesses, which account for about three-quarters of all US businesses. Hutcheson said: “Few counsellors and business consultants have recognised, much less addressed the depth of addiction and substance abuse within family-owned businesses. Our study highlights the fact that we can no longer ignore addiction and it’s impact on the economy.”
The study found addiction is frequently found in the next generation of family business members, often when children feel the pressure to succeed from high-achieving parents and turn to drugs or alcohol to cope.
But, Hutcheson said that substance abuse is more problematic when it is found in the senior levels of management: “When someone abuses alcohol or drugs, the power and influence of the family often protects or enables them by preventing intervention. In some cases, they deny the destructive effects on the individual, the family and the workplace.”
According to research by John Ward, clinical professor of family enterprises at the Kellogg School of Management, only 30% of family businesses survive into the second generation, 12% into the third and only 3% beyond that.
Hutcheson added: “Addictions dramatically magnify the risk of failure. But, like a number of issues facing family businesses, addiction can be treated.”
Hutcheson reckons the first step to addressing the problem is recognising it. He told CampdenFB: “When communication breaks down for long period of time go through the check list of possibilities among which include addictive behaviour.”
The full results are due for publication in March in academic journal Family Business Review.