The Challenge Of Fairness & Multi-Sibling Dynamics In Family Firms

Fairness is one of the most cherished values within families, and many parents in family businesses go to great lengths to treat their children equally. Yet, when a business is involved, along with money, legacy and leadership, the concepts of fairness and equality quickly become complicated.

For families with more than one child in the next generation, what seems like an honourable commitment to equality can sometimes become the very source of conflict that undermines both family harmony and business success.

Why Equal Doesn’t Always Mean Fair

Parents often assume that fairness means treating each child the same. It feels safe, intuitive and protective of family unity. However, equality rarely reflects the realities of business life. Children grow into adults with different talents, ambitions and temperaments. One may be deeply committed to the business while another chooses a different career path entirely. Some siblings have strong managerial or entrepreneurial instincts; others are better suited to governance roles, or may prefer to be passive shareholders.

When all siblings are given the same opportunities, responsibilities or influence regardless of these differences, the attempt at fairness can unintentionally create a sense of inequality. Those working hardest may feel exploited, while those less involved may sense pressure or inadequacy.

As Paul Andrews, Founder and CEO of Family Business United explains, "This is one of the biggest issues facing parents who want to treat their children equally but it can be far more complicated than expected and tugs at the heart strings for many, especially if some are in the business and some not."

Equal Ownership, Unequal Consequences

Ownership distribution is a particular flashpoint. Many families divide shares equally among siblings to avoid the appearance of favouritism. But equal ownership can create tension when only one sibling is actively running the business. The managing sibling may feel responsible for generating value for everyone, while their brothers or sisters, who may be uninvolved, still expect dividends and have an equal vote on major decisions.

Inactive siblings, meanwhile, may feel dependent on the active one, lacking the influence to safeguard their own interests. Conflicts then arise around reinvestment decisions, risk appetite and strategy, paralysing the business’s ability to move forward.

As Paul continues, "Developing frameworks and governance procedures to enable appropriate involvement of the family members in the business decisions, or not, is important as it will help to define roles and responsibilities and minimise potential for disagreements. Rules are important as is the need for each individual to understand their role and how to fulfil it appropriately, and that may mean just being a responsible owner for some."

The Succession Minefield

Succession heightens these issues further. The leadership conversation becomes emotionally charged when more than one child might want to run the business, or when none of them do.

Parents often avoid choosing a successor for fear of hurting someone’s feelings or being seen as biased. But postponing the decision rarely helps. Childhood rivalries, birth order expectations and old family dynamics quickly resurface. The eldest may assume leadership is their birthright; the most capable may feel guilty or defensive; the overlooked may harbour frustration or resentment. Succession is, at its core, one of the most profound tests of fairness within a family firm.

As Paul continues, "This is a really difficult situation for many and may necessitate difficult conversations but at some point a decision needs to be made."

"Creating a framework for determining successors and the process of selecting the next leader can really help to dispel some of the emotion but ultimately the best person for the role is the one that should be selected, however difficult that decision may be to take."

"External advisers can certainly help in this area and open, honest conversations along the way can too."

Emotional Undercurrents and Long Memories

These emotional undercurrents run deep. In family businesses, siblings do not meet one another as neutral colleagues; they carry decades of shared history. Perceptions of parental favouritism, differing relationships with the founder and long-standing insecurities colour their interactions. Business disagreements often become entangled with personal narratives: assumptions about who was always “the favourite”, who “works harder”, or who “never understood the business”.

Without clear structures and open communication, these sentiments can disrupt even the strongest operations.

Redefining What Fairness Really Means

Much of this turmoil stems from a misunderstanding of fairness. True fairness is not about identical treatment or symmetrical outcomes. Instead, it relies on clarity, consistency and respect.

Families that recognise the distinction are better positioned to create equitable systems in which siblings feel valued, even if their roles and rewards differ. This may involve allocating responsibilities based on competence, defining transparent employment and remuneration policies, or acknowledging that ownership and management do not have to be linked.

Governance Tools That Prevent Tensions

Practical governance tools can help families navigate these complexities. A family constitution brings transparency by outlining shared values and setting clear expectations for ownership transfer, employment, compensation and dispute resolution.

Independent board members introduce objectivity, helping separate emotional issues from strategic ones. Well-defined employment policies prevent accusations of nepotism or bias, while thoughtful ownership structures—such as separating economic rights from voting rights—can protect both active and inactive shareholders. Most importantly, succession planning should be treated as an ongoing dialogue rather than a sudden announcement.

Towards a Constructive Model of Fairness

Ultimately, the most successful family businesses are those that embrace fairness as a thoughtful, intentional design rather than a simplistic formula. They acknowledge that siblings are individuals with different strengths, dreams and contributions, and they plan accordingly.

As Paul concludes, "When the next generation understands not only the decisions made but the principles behind them, they are far better equipped to work collaboratively."

"In these families, fairness becomes a foundation for unity, not division, and the business stands a far stronger chance of flourishing through the generations."