Breaking the Silence: The Importance of Feedback in Family Businesses

Sharon Dorsett, PhD

Family businesses often operate under unique dynamics. The combination of familial ties, business goals, and personal histories can create a rich, complex environment. However, one recurring challenge in many family-run enterprises is the absence of consistent, constructive feedback. This silence can undermine both business growth and family relationships.

Why Feedback Tends to be Uncommon in Family Businesses

Several factors contribute to difficulties experienced around giving and receiving feedback in family businesses:

Senior Leader Beliefs and Assumptions

1. Generational gaps in leadership style

The older generation may not have grown up in a culture that valued constructive feedback and might find it unfamiliar or uncomfortable to initiate, structure, or even have the discussion. In contrast, younger generations often expect coaching and developmental feedback, as they are accustomed to practices common in non-family corporate environments where feedback is frequent and structured.

2. Assumptions that others understand what is expected

Within family dynamics, there is often an unspoken assumption that members should instinctively know what their roles entail and what is expected of them, making feedback unnecessary.

3. Belief in learning through adversity

In some families, there’s a strong belief that grit and resilience are best developed by learning “at the rock face.” Older generations may feel that offering too much guidance or feedback amounts to coddling.

This approach is often rooted in a fear—conscious or unconscious—of fostering entitlement in the next generation. While the intention may be to build character, the lack of guidance can leave NextGen family members feeling unsupported and unprepared for the challenges of leadership.

4. The Entrepreneurial Mindset at play

Founders of family businesses are frequently entrepreneurs who focus intensely on growing the business. They tend to be visionaries and problem-solvers who prioritize results and survival, especially in the early years.

As a result, they may not instinctively value or prioritize feedback for several reasons:

• Their focus is typically on immediate goals, such as securing clients or expanding operations, leaving little room for employee development.
• Feedback might not have been part of their own journey, so the practice doesn’t come naturally.
• Many operate with a self-starter mentality and expect family members to exhibit the same initiative without much guidance.

Culture and Emotions

5. Conflict avoidance

Families often shy away from feedback to preserve harmony. Staying silent may feel easier than risking tension in personal relationships.

6. Family hierarchy

In many family businesses, there is a deeply ingrained sense of respect toward one’s elders. This can create a dynamic in which managing up—offering feedback to senior members—is almost unheard of. Feedback becomes a one-way street, or worse, it doesn’t happen at all.

7. Cultural differences

Different cultures have varying approaches to giving feedback and managing family dynamics. In some cultures, communication might flow more freely, while in others open communication can feel immensely uncomfortable or be perceived as disrespectful. Every family business system is unique, with its own appetite for adopting new behaviors.

Need Structures to Support Feedback

8. Lack of systems and processes for sharing feedback

Another challenge is that formal systems for feedback may not be in place. In many family businesses, structured processes such as performance reviews or 360-degree assessments do not exist. Without such tools, feedback can’t become a regular part of the culture—a classic chicken-and-egg situation.

9. Roles can be difficult to define

Defining roles in family businesses is often challenging, especially in the first generation. The job description frequently boils down to “doing whatever needs to be done as an owner.” A similar scenario tends to follow into the second generation, as they may also work under vaguely defined role expectations.

When it comes to later generations, if the business has grown significantly, the concept of “doing everything” becomes less viable. At this point, the family may recognize the practicality of adopting more specific role descriptions while still valuing an owner-mentality. Establishing agreed-upon role descriptions with clear expectations is critical to the feedback process.

Case Illustration: Developing the Next Generation of Leaders

A few years ago, a family with whom we work approached us for support in preparing their third generation to grow into senior leadership roles. After assessing the current processes, we felt their NextGen would benefit both from clearer role descriptions and from a formal structure for providing actionable feedback. Introducing performance feedback was new to them, so we carefully set about customizing a framework to get them started.

The first step was to partner each NextGen with one of our coaches to explore personal strengths, challenges, and interests. They generated a list of what they understood to be their assigned responsibilities. With this in hand, they coordinated with their line manager to create a detailed summary of essential role functions and expectations.

Together with our coaches, the NextGens designed tailored development plans, including actionable goals and strategies for personal growth, paving the way for effective feedback systems. The family instituted formal biannual performance reviews. While there was a learning curve, six months into it the discussions became increasingly comfortable.

While a stronger foundation for NextGen leadership development was the main objective, it also opened the door for more open intergenerational dialogue.

Why Feedback Matters

For employees to grow, they need a deeper understanding of how they are performing. This requires well-defined role expectations, measurable indicators of success, and guidance on how to improve when expectations aren’t met. Constructive feedback provides valuable insights, helping younger generations learn, adapt, and develop both personally and professionally.

From the senior generation’s perspective, a structured feedback system is equally essential. It enables leaders to make informed decisions about which members of the next generation are best suited for future leadership roles. When feedback and expectations have been consistently communicated, these decisions become more transparent and less contentious.

Family members not chosen for leadership positions will better understand the rationale, and the decision-making process will be seen as objective and fair.

Effective feedback helps to:

• Provide role clarity and expectations: Feedback clarifies expectations and responsibilities, reducing misunderstandings.
• Empower others with knowledge: Feedback provides information needed to make adjustments and take action.
• Encourage growth mindset: Regular feedback supports adaptability and the belief that abilities improve through effort and practice.
• Foster open communication and relationship building: Feedback increases transparency and connectedness.
• Promote business sustainability: Open communication ensures the business evolves and stays competitive.
• Develop leadership skills: Modeling feedback contributes to skill development in future leaders.
• Increase employee engagement: Tailored feedback shows individuals they matter and are valued.

How the Current Leading Generation Can Set an Example

Family business leaders are in the unique position to model methods for providing effective feedback. To encourage and develop a culture of feedback, we recommend leaders:

1. Recognize the importance of feedback. Feedback plays a critical role in employee development and continuous improvement:

• Acknowledge that providing feedback is a skill that can be learned.
• Understand that feedback is not criticism; it’s a tool for growth.

2. Learn and practice effective feedback techniques. Practice tools make feedback more constructive:

• Be specific: replace vague statements with actionable guidance.
• Describe effort and impact: explain the effect on team or organization.
• Focus on behaviors, not personality.
• Balance reinforcing with corrective feedback.

3. Model feedback behavior. Leaders set the tone through their actions:

• Practice active listening.
• Encourage open dialogue.
• Be open to receiving feedback yourself.
• Share experiences of what worked and what didn’t.

4. Create a feedback culture. Embed feedback into the rhythm of the business:

• Schedule regular meetings and reviews.
• Establish norms for giving and receiving feedback.

5. Teach the next generation. Give younger family members safe practice and support:

• Use role play to build confidence.
• Provide training or mentorship.

The Bigger Picture

Family businesses thrive when everyone is aligned and working toward shared goals. Feedback serves as the foundation for this alignment. By breaking the silence and fostering a culture of constructive communication, the older generation can ensure the longevity and success of both the business and family relationships. It’s about leaving a legacy of trust, openness, and growth.

We invite your family leaders to reflect on the current feedback structure you have in place. If you aspire to strengthen its role in your culture, there are many ways to begin – through self-education, engaging a consultant, or initiating a family discussion via your family council.