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Family Business Series - 6 - Addiction

When the second generation son is taking over the family business from a founding parent, and the son has a serious drinking or drug problem, who is going to confront him?

One out of two American family businesses will have to deal with a family-related addiction problem within the company, according to a 2012 study of 99 family businesses from a broad range of industries across the country.

One out of two. Addiction is a big problem for American family businesses — mostly a hidden problem.

Conducted by ReGeneration Partners, a family business consulting and advisory firm with Caron Drug Treatment Centers, the study found that 83 % of the companies studied admitted to current issues with drug or alcohol addiction of an owner or managing family member in the business, while the rest admitted to past issues. The results were published in the esteemed Family Business Review. (Hutcheson, Jaffe, Gilliland, “Addiction in the Family Enterprise”, Family Business review, March 2013, vol. 26, 1:pp. 104-107) Also, online business news picked it up. [Smith, Ned, “The Hidden Secret that's Destroying Many Family Businesses”, Dec. 21, 2012, Business News Daily]

The percentage of addicts in family businesses is higher than that of the general population. The National Institute on Drug Abuse (NIDA) reports that, as of 2012, about 9.2 percent of the population, age 12 and over, had used an illicit drug in the month prior to the survey. About 23% were binge-drinking alcohol users in the month preceding the survey. [samhsa.gov]

As the percentage of addicts in the family business clearly surpasses the percentage of addicts in the general population, the business itself, and inherent characteristics of the family business, are clear risk factors. What would make a family business a ripe environment for addiction? Consulting firms, psychologists, and even lawyers have brought their expertise to the table on this subject. Some possibilities are:

  • Parent-child relationships in the family business — The second generation can't meet the high standards of the founding generation. Following in the footsteps of highly successful immigrant parents can create low self esteem for the second generation, as 'who can top that?' [docstern.com]
  • Funds to party — affluence of family business members makes it possible to pursue substance abuse with relative financial ease. “Time, money and denial” create opportunities for substance abuse, according to Michael Stern, Ph.D.in his research paper “Addiction in the Family Business” [docstern.com]
  • Breakdown in communication — the presence of an addict is an impediment to full communication between family members, acting to “divert, shrink and sever” lines of communication.[Hutcheson, et. al, p.105]

What happens to family businesses when an addicted family member is involved? Customers suffer, as other family members are distracted, and business itself suffers. The family crisis can be handled by treatment and family interaction. A combination of automated monitoring and optimization software, such as Route4Me, can be used to take the daily logistics of the business out of the hands of an addicted manager and back to running smoothly again.

Fortunately, addiction treatments exist and are effective. Identifying this issue is the first step, particularly in the closed, private world of the family business. In the meantime, other concerned family members can protect the business with some smart moves.