This article intends to provide a clearer understanding of power, particularly as it is exercised in connection with the three key elements of family business, that is, the wealth, the family, and the business itself.
Power is the central force that works through these three elements of family business and which ties them together. The success of the whole combined enterprise depends on the wise and appropriate use of power. The how that power is exercised determines how the family serves its members, how the business serves the family, its employees and other constituents, and how wealth is garnered and used.
What is Power?
Among the many definitions of power are possession of control, authority or influence over others and the ability to act or produce an effect. Interestingly, another definition identifies power as a source or means of supplying energy. Power can come from one’s position, that is CEO or parent, and it can result from being perceived as having special knowledge and talents. The ability to be granted power can be an element of the personality. There are charismatic people, who emanate power and tend to get their way.
Having power often implies being able to enforce one’s wishes, where the acceptance or refusal of what is desired has consequences, positive or negative. Power is a central reality in life, nowhere more so than in a family enterprise. Where family members are in business together, power is the factor which runs through and across all of the elements, within the family, in the conduct of the business, and in the management and distribution of the wealth. Yet, power is often overlooked, unexamined, and unrecognized. The implicit taboo against talking about power directly and openly is similar to those having to do with sex and wealth. Each of these taboos is harmful to the family unit and to the individuals in it, and the taboo against discussing power is damaging to the business as well.
Use of Power
Power itself is neither positive nor negative. Just as electrical power can be used to light rooms or to electrocute people, interpersonal power can serve its users and those affected by it, or it can be damaging to one or all those involved. The use of power in business is usually, but by no means always, rather direct and clear. With wealth it is less so, especially where parents use the money and its current and planned distributions to manipulate their children to behave as desired. Power within the family is usually a much more subtle and complex matter. This is particularly true as the children grow through adolescence to adulthood, when they resist the power of their parents and claim their own.
Power can bring freedom, and this is one of the reasons it is so zealously pursued. Being empowered means having choice, being able to select among options and to follow and live out what was chosen. Power can bring freedom from unwelcome demands and restrictions, and it can provide freedom to pursue attractive options in life. But power can also limit freedom, particularly where the power is more than can be handled well. Being in a position of authority, whether in the company of family, brings responsibilities, which are usually restrictive. Also, maintaining this position can require careful attention to one’s actions and behavior, which can be a serious limitation of freedom.
Conclusion
Power is a fact of life, by nature neither good nor bad. When misused, it usually fails to achieve its purposes, and it can damage all involved, the ones with the power and those who are subject to it. But it can be used well, so that its exercise likely to benefit everyone, serving the family, the business and the accumulation and use of the wealth. Using power appropriately is a hallmark of maturity, of the subordination of egocentric drives to the welfare of the enterprise and of all involved. The principles which underlie the wise and effective use of power are rather clear and understandable, though not always easy to implement.
This article has been extracted and modified from Levy, J.L. (1994). Power in the family business: Is uses and abuses. Proceedings of the 1994 Family Firm Institute Conference, October 5-8, Scottsdale, Arizona, USA.