All in the family: there are ways to deal with what can be the malignant mindsets of those running family firms.

• Author: Greenberg, Brian
• Position: Business & Finance

FAMILY-OWNED companies comprise between 80% and 90% of businesses worldwide, generating an estimated 6.5 trillion dollars in annual sales--enough to be the third-largest economy in the world behind the U.S. and China. Despite these gaudy numbers, entrepreneurship rarely is easy, and having family in the mix can add multiple layers of complexity--barriers and challenges that your competitors may not be burdened with. That said, the unique dynamics of a family-run business also can result in extraordinary success, as evidenced by Walmart, BMW, Ford, and Tyson --all highly accomplished family firms.

The Global Family Business Index--a compilation of the largest 500 family firms around the globe intended to exemplify the economic power and relevance of family firms worldwide--has found that 44% are owned by fourth-generation or older family members. These companies are in it for the long haul and clearly have realized the kind of sustained success needed to withstand the test of time.

One major component of long-term success among family businesses simply is knowing how to navigate and circumvent personal relationships in order to work together effectively, while also maintaining positive perceptions and overall integrity with nonrelated staffers. Achieving all of this, while tending to "standard" business issues, can be daunting at best and a death knell for far too many.

With this in mind, here is a list of pitfalls to avoid--all of which can cause an assortment of strife, from uncomfortable family friction to completely tearing a family and business apart.

Not respecting family hierarchy. Every family has a pecking order and not respecting this order within the business will cause friction. If someone feels they are being disrespected or not being heard, it is a recipe for resentment and conflict. A certain level of mutual respect and a feeling of collaboration is essential. Leveraging each person's individual strengths, including management capabilities, for the business' greater good continually needs to be top-of-mind. Each family member should take the lead in the area they have the most experience and/or knowledge. While there are times when a younger family member may be in charge of a particular project or aspect of the business, respect for family hierarchies within the organization must be maintained.

Neglecting to define or agree upon roles. It is important for family members to take an active part in choosing and defining their...