How to Handle New People Entering a Business Family

By Josh Baron and Rob Lachenauer

New spouses, babies, and stepchildren are all examples of new entrants to the business family that affect family dynamics. 

A single new person becoming part of the family can disrupt a long-established business family. It happens more easily than you might think. Whenever anyone joins the business family—for example, new children and spouses—the members of the family need to find a new equilibrium for their relationships with each other. Think about the impact of Meghan Markle on the royal family (see our thoughts below).

Her entry into the royal family may be more public than many families, but new spouses can disrupt the business family culture in a wide range of family businesses. That’s because the entry of a spouse (1) creates a new nuclear family, (2) alters every relationship the newlywed has in the family—with parents, siblings, and others, and (3) creates several new important relationships such as the spouse’s relationship with a father-in-law and mother-in-law. Communication patterns, loyalties, family customs and beliefs, and relationships all change, even in close-knit families. 

The impact is magnified because, unlike most families, business families can’t choose to limit their interactions to social gatherings. 

How you treat a new spouse will greatly influence how they enter and ultimately influence your system. Many business families try to “protect” their family from new spouses. As one spouse explained to us, “I learned a few rules of the road during my first year after marrying into this business family. You marry not only your spouse but also your spouse’s business family.” You quickly learn, this spouse told us, that though you are in the family, you are out of ownership. Prenuptial agreements and other legal documents ensure that you will never be an owner but that your children will. The spouse told us, “What they don’t say is, ‘Our family, that we let you join, is special. Your family is not quite as special as ours, but we would never say that out loud. We’ll just make sure you feel that.’” Such messages, whether explicit or implicit, are usually received loud and clear. 

If poorly treated, spouses have the power to bias the next generation against the family business. Why would they want their children involved in a business family that has not welcomed them? 

There are a few best practices to integrate new family members more smoothly. 

1. Decide who gets to be family. Don’t wait until there is the prospect of a new family member to decide how they will be legally and emotionally incorporated into the business family, advises Fredda Herz Brown, senior partner at Relative Solutions. “If you wait until you have the prospect of a new in-law,” she told us “then the issue becomes focused around that person. It will feel personal and has the potential for all kinds of hurt feelings.” Herz Brown advises instead to start discussing how your family wants to define who is family early on, perhaps when your children are still young teenagers. Discuss all permutations that might occur—adopted children, biological children, in-laws, stepchildren, and so on. “You’re discussing the issue of membership in the family before it becomes about a particular person,” she says. Your family may define family—and all the attendant benefits and emotional implications—in any number of ways, and that’s okay. But family businesses need to raise the issue as a philosophical question for discussion before anyone in particular is in the picture.

2. Protect the family assets. Business families naturally want to protect their wealth and the business from new family members. Most families fear the worst-case scenario—where a nasty divorce damages both the family and the business. Shareholder agreements that specify who is allowed to own shares in the company can help avoid heated emotions down the line. (That doesn’t mean spouses can’t benefit from the shares; it just means that they can’t take ownership from outside the marriage.) It’s also reasonable to ask a new family member to sign a prenuptial agreement—but how you ask them is critical. The intended spouse should not hear about a prenup for the first time seated in the family lawyer’s office or with the parents hovering nearby providing pressure to sign. The family member they are marrying should introduce the idea in private conversations, Herz Brown advises, as part of both sides discussing what they bring to the marriage and establishing their own boundaries and ground rules about their shared and independent wealth. Then a prenup can be discussed, negotiated, and signed with goodwill on both sides.

3. Establish appropriate boundaries and roles. As discussed earlier, spouses are not necessarily included in Owner Room discussions or privy to all financial information about the family business. Some families make explicit efforts to include spouses in the Owner Room. For example, one large business family offers new spouses the opportunity to buy a few shares so they can access the Owner Room. But even if spouses are not in the Owner Room, that doesn’t mean you can’t find opportunities for inclusion that will make spouses feel part of the family. Spouses play an important role in the Family Room and in establishing goodwill toward the extended family in the next generation.

4. Celebrate the culture of new family members, too. Rather than signal that new spouses should consider themselves lucky to join your family, our colleague Marion McCollom Hampton, coauthor of the seminal book Generation to Generation, suggests that new spouses be welcomed into the family in ways that celebrate their background and culture as well. (To hear more from Hampton on this topic, click here.) Acknowledge, for example, that the newlyweds will probably alternate important holidays with their respective families. Be open to including the new spouse’s family traditions and rituals in your family, too. If the new spouse gets the message that they are expected to quietly adapt to the new family’s culture while forgetting their own, that impression can set up conflict down the line. Find ways for new family members to feel part of your family while celebrating the one they come from, too.

5. Set expectations for spouses in the family business. Spouses entering a business family often face a peculiar career challenge. As one family in-law explained to us, “I married a fabulous woman from a rich business family. I love my career and like to work. Soon, however, some family members would ask me, ‘Why do you work so hard? You will never make enough money to matter.’ Yet my fellow spouses who don’t have careers are considered freeloaders who take advantage of the family’s wealth.” In such systems, talking openly about the unusual circumstances and expectations is enough to resolve the mixed signals and encourage the spouses to pursue their career interests.

Family can be one of the most stable institutions in life. Your relationships with your brothers and sisters, for example, are likely to be the longest in your life. At the same time, families are constantly changing. When a generation is in its thirties and early forties—getting married and having children—you can expect lots of new family members. If, say, you are a first-generation member and your three children marry and each has two children, your family has gone from five members to fourteen members. And the number of unique relationships in your business family has gone from ten to ninety-one! As one matriarch told us, “As our family grows, it’s hard work to stay together. But it’s worth it!” Bringing new family members into the family can be challenging for both sides — the family and the new family member. But without a deliberate strategy for making it work, your family is far more likely to be disrupted in the long run. In our experience, it’s much better to work to find ways to make new family members feel accepted sooner rather than later.

For more advice from the experts at BanyanGlobal, check out the resources we have available here.

*Adapted from the Harvard Business Review Family Business Handbook by Josh Baron and Rob Lachenauer. Pages 149-154.

Josh Baron is cofounder and partner at BanyanGlobal Family Business Advisors. He works with the leaders of family businesses to define their purpose as owners and establish the structures, strategies, and skills they need to accomplish their goals.

Rob Lachenauer is a cofounder and managing partner of BanyanGlobal Family Business Advisors. Lachenauer works around the world helping families thrive.