10. How to Create Trust in Family Firms and Rebuild It When It’s Lost: Implications for Practice and Research

As a consultant to family businesses for almost 3 decades, I have found trust to be a fundamental issue in these types of organizations. One example of a family business that faced a breakdown of trust is a company that I will call the Jackson Corporation (all names disguised). Jim Jackson, the company founder, worked in the business with his wife, Stella, his two sons, Fred and Tim, and his daughter-in-law, Sarah. One day I received a phone call at my office from Jim asking me to meet with him for lunch to discuss his family business and some of the problems that he faced. Since I rarely turn down a free lunch, I agreed to meet with Jim. During lunch Jim discussed his family’s history: he had gone into business early in his career with his brother, but eventually they couldn’t work together, so Jim left the business to start a new firm that competed with his brother. This, of course, caused hard feelings between Jim and his brother, and they never spoke to one another again. After starting the new business, Jim’s wife, his two sons, and eventually his daughter-in-law went to work for him. However, over time, Jim believed that his son Fred was behaving unethically, so he fired him. This upset Stella so much that she kicked Jim out of the house, and Jim confessed that he was now sleeping on the couch at his office. Jim asked me: “What should I do now? How can I repair the trust that’s been lost?”