Mistakes happen in both family businesses and in non-family businesses, however, the reaction in a family business to a mistake is different, but mistakes are equally consequential – to the business.  Here is what you need to know to deal effectively with the problem.

Family businesses, at their best, are businesses that include every member of the family in a roll that complements everyone else in the family.  They know each other well, so they can anticipate any move the other will make and what they will do in a situation.

They are often like a team that plays to win.   The difference between a well-tuned family business and a team is the team practices to get their plays down pat while the members of a family business regularly discuss what happens in the business, so each member understands how each other member thinks about situations that regularly occur.

In a closely coordinated family, errors are examined, and, over time, every member becomes familiar with what every other member expect them to do.   It takes time, effort, and concentration.

Every family business does not reach that level of performance.  But most of the time, every family business has some of that integration and closeness in order to get everything done in the family and in the business.

Compare that level of closeness and integration to a non-family business and you will understand the essential difference between a family business and any regular business.  Yes, mistakes happen in both and a mistake is as consequential in a family business as in a non-family business.

But the reaction in a well-functioning family business to a mistake is different: it is examined as a group so that everyone understands how the mistake happened and how each member of the family will change to respond in future similar situations.

A mistake in a non-family business too often is handled very differently and a mistake has different repercussions: Instead of focusing on learning from the mistake so all see how to avoid it, a “search for the guilty” ensues and the maker of the mistake may be severely reprimanded or even fired.  At least they are not put on the promotion list.

In a family business, every member must take it seriously enough to anticipate the possible mistake and learn how to adjust.  It is this group adjustment process that helps create the closeness of the family business environment.

It is the lack of this interpersonal group adjustment process that characterizes non-family business.

Because businesses do not have the extra manpower to insert into the mistake situation or the freedom to remove a family member without repercussions, failing to respond appropriately can negatively impact a family business far more severely, often to the point of destroying the business.

That is why we in The Business Clinic pay so much attention to helping you and your management team adopt the most effective leadership strategies and principles for fixing mistakes, for example.  We know doing so will help the family as a team to apply an approach which helps each member of the family avoid past mistakes and respond more appropriately and profitably the next time things upset the smooth functioning of your business.