"The business tore them apart. And it forced employees into awkward positions because they had to take sides in arguments," says Napoli, who worked for his family's business from age 12 until it was sold. "My parents were absolutely incapable of separating their personal animosity toward one another from operating a business."

Candace Talmadge worked for a broker-dealer in the 1990s founded by a husband-and-wife team, but the family's dysfunctional dramas were played out regularly in the office. Just before the firm was slated to go public, the husband, who headed up the firm, initiated divorce proceedings against his wife, and the animosity between the two of them only got worse. One day the two of them walked a circuit through the entire office, arguing at the top of their lungs, making everyone around them squirm.
"We all just hunkered down at our desks and didn't move or speak until the show was over," Talmadge says. "They hired second-in-command people, but they all tended to leave. It was a really bad environment."

Family businesses usually hire outsiders to key management positions if there's either an internal crisis no one in the family can handle or if there's no internal heir capable of taking over. In those cases, the firm may hire an outsider on an interim basis that may last years-until that family member can get up to speed. Some 10% to 15% of U.S. family firms are managed by non-family executives, according to a 2009 report by Barclays Wealth and The Economist Intelligence Unit.

One of the most notable cases is that of Henry Ford II, who was not ready to lead the automaker when his grandfather died, so an outsider was hired as interim CEO until the younger Ford was ready.

"Those circumstances work if you're up front with the candidate," says James Olan Hutcheson, president of Regeneration Partners, a Dallas-based consultant that deals with family businesses. He says an executive not too far from retirement might not mind stepping into a mentoring situation, so long as company officials clearly define the outsider's role.

Bringing in an outsider, however, won't work if the person is hired for the wrong reasons. Sometimes, a non-family member is installed as president because, for example, two brothers can't agree on who should take the position. That's a recipe for disaster, Hutcheson says.

In a family business, the foundational question members have to ask themselves is, are they going to make decisions related to the business that are in the interest of the business or in the interest of the family? Hutcheson says. For the business to work, the answer must be the former.

"That's the key that turns the entire machine," he says. "Without that clarity of understanding, you end up with a bunch of noise that just serves to damage and hurt the family and the business."

Jessica L. French, 29, chief operating officer of W.L. French Excavating Corporation in North Billerica, Mass., says her family firm works because they put business first, family dynamics second. For instance, French's oldest sister, 38, is an authority figure in the family, organizing family gatherings, acting like older siblings might act. But in the family business, she has a subordinate role because while her siblings were working for their father, she was getting married and raising a family. Now that her children have grown, she's rejoined the family business but sometimes chafes at the fact that she must answer to her younger brother and sister.

"She came in later and hasn't earned her stripes," French says. "It was hard for her having her younger siblings telling her what to do, but this is a business, and either you know your role or you're out."