In Praise of In-laws

As experts in working with family businesses, by definition, we have worked with a lot of in-laws. They often get a bad rap, and sometimes this is deserved. However, most of the time they are extraordinary family members trying to do their best as parents, family members and sometimes businesspeople.

Family dynamics even outside the family business mean that this is often not a simple situation, but we firmly believe we need to acknowledge the input, value and dedication that in-laws bring to family businesses. The reality is they are choosing to be part of the family and potentially, the business. They are not born into it; they consciously choose to be part of the family and in fact seal the deal with a legal contract — commonly known as marriage.

There are two broad opposing views of in-laws: One is fear based, the other is based on love. The fear is that the in-laws will suddenly divorce the family member and, in the process, take all the family’s assets and ruin the family business. And with today’s marriage failure statistics, there is a reality to this, if you let it.

On the other side, is love. That is why they become part of our family, they have fallen in love with a member of the family and choose to become part of the family. And of course, there is no next generation without an in-law…

So how do we manage these quite violently opposing views and feelings? In this blog we’ll explore some of the ways to manage the contradictions and complexity of in-laws.

Based on working with hundreds, if not thousands, of families over more than 30 years, most of the in-laws we see invariably have the best interests of their family firmly in mind. They are not there to ‘wreak the family’, steal the family assets and ruin the business. I guess there may well be examples that are like that, but hand on heart, I can’t remember one.

That said let’s look at what any good in-law will do, and how sometimes this leads to angst and conflict within families. A good in-law will:

1. Support their partner to the hilt – sometimes over the rest of the family if necessary. They are their partner’s most fierce defender and supporter — they will often fight harder for their partner than the partner will.
2. In turn, their partner will back them. Unless the relationship is in trouble, of course the partner is going to back them, sometimes at the expense of the family.
3. Worry about what happens to their children. Our kids are our biggest concern, so of course we are focused on what is going to happen to our kids. An in-law will want to see that they are treated fairly and ensure that the interests of their kids is foremost. Again, this just makes sense.
4. Be concerned about how their partner is treated in the family business. If they believe their partner is being unfairly treated, the in-law will often be on the warpath defending them — see #1 above.
5. Be worried about what happens to them if their partner was to die or become incapacitated. Will they have the finances to support themselves and their children? Will they have to ‘go begging’ to the family for money? Will they even have a home?
6. They will raise their family in ways that are often quite different from the original family. They may parent differently, deal with money differently, run their household differently, build a different family culture.
7. Last but by no means least — they are often highly concerned about what is going on in the family business. Questions around succession, the health of the business, etc. Interestingly, we get a significant number of referrals from in-laws who only want good things to happen in their family but are concerned with what is happening.

Side note: in-laws almost always see their family with a clarity that other family members do not have.

While the above points are common sense, they are also common sources of conflict and disagreement in families. How do we manage our fears of divorce and protect our hard-won assets from the divorce courts? How do we manage the differences and how do we really build a family (and a family business) within which, while there are differences, there is also a sense of unity and purpose?

And, if there is a divorce, how can this be handled in a way that does not destroy the business but also does not make the now ex family member destitute and put their children — the next generation — on the outside?

While a small to medium sized book would be required to answer these questions fully, let’s have a top line look at what families can do to tackle these challenges (preferably before they even arise).

Fairness

Conflict is often brewed when an in-law is treated or perceives they, their partner or children have been treated unfairly. It is the perception that is crucial and honest and open conversations, started early, are the easiest way to address this.

Independence Scale

The ‘Independence Scale’ talks about how dependent or independent family members are on the larger family/family business. If they are at the ‘dependent’ end, then family members have little or no financial independence from the family business. They may not even own their own house. Too high at the ‘independent’ end, and the family member has virtually nothing to do with the family business, has all their own assets and has effectively left the family business and therefore lost the advantages being involved provides. Of course, we are looking for a middle ground, where each family member has their own core assets while also taking advantage of being part of a larger entity.

Being in this position provides a level of security for all family members and if there is a divorce, the assets that that particular couple own are split up. There may well be other negotiations with the larger family, particularly if the family member has been a significant contributor to growing family wealth and there are a number of different ways this can be addressed. The key point is that, while the divorce is extraordinarily difficult for everyone involved, it does not have to be a business wreaking event.

There is a valid argument for fair and transparent pre-nuptial agreements between partners. This ensures that everyone – the partners and the family know where they stand and what will happen if there is a divorce. While the romantic in me wants to run a mile from these, with a good lawyer, these can be extremely helpful.

Involve them in Family Governance

While this is a somewhat controversial position, we find that it is extremely useful to have the in-laws involved in the writing and development of key family documents like a family charter. By being part of the discussions and deliberations, they have a genuine sense of involvement and belonging in the family. Leaving them out while their partner and his or her siblings discuss all this just makes them feel estranged. We have worked with a number of family businesses who have done this, and it has been an excellent process.

Tap Into Their Skills

In-laws can bring enormous talents and skills to a family, so tap into them. We know numerous examples where in-laws have taken on the key leadership roles of family businesses and have done outstandingly well. The whole family has benefited. As mentioned above, they often bring a different and very useful perspective and see things the rest of the family can’t. They are just as invested in the success of the family business because they know that they, their partner, their children and their nieces and nephews will all benefit.

Avoid Criticising

So often we hear family members criticising other family members, usually around how they run their house, how they spend their money, what they do with their spare time, etc. Criticism, often leading to condescension is a real relationship killer — don’t do it.

The old saying “you catch more flies with honey than with vinegar” is apt here. Treat people well, show fairness, have open conversations and see what they can do — it is amazing how people rise to the occasion and become your biggest assets. And while there are examples of in-laws doing terrible things, we believe this is the exception rather than the rule. Indeed, you have someone who has consciously chosen to be part of your family, who loves one of your family members to the ends of the world and is the parent to your grandchildren. They are pretty special!

If you’d like to discuss this and anything else to do with family business, please contact Philip Pryor on philip@familybusinesscentral.com.