Can family ties replace a contractual agreement?

No. Contracts are at least as important in family businesses as in other firms.

Indeed, a family member who is not contractually obliged to fulfil a well-defined role in the company can be difficult to manage. And the superficial contract can become a source of uncertainty and confusion for the daughter, brother or brother-in-law who should be able to rely on it.

What are the success criteria - and what am I actually allowed to do? Without the framework of a solid contract, family dynamics are more likely to lead to intractable conflicts. When I was the day-to-day manager of the Norwegian division of our family business, I often opted to simply do whatever I felt like I needed to do to solve my division's challenges.

It wasn't super professional, and in fact I ended up feeling stressed about the ambiguity of the situation. A thorough contract would have helped. Because the flimsy contract equated to a lack of governance - but also to the absence of a process that should have clarified my role when I became part of the company's management.

The result was that no one could produce a paper and say: "We may disagree, but this is how it is!" What is your experience with contracts in family businesses?

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Eva Fischer Hansen

Eva Fischer Hansen

Her deep insight, yet practical advice, brings new hope and renewal to those working for family- or founder-owned businesses

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