How Family Businesses Abuse Their Power

How Family Businesses Abuse Their Power
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Implications of the Korean Air Nut Rage Incident

The world is abuzz with the story of a Korean Air executive who threw a tantrum and delayed a flight because she was angry at being served macadamia nuts in its original packaging, not on a plate. While this sounds like a bad joke out of a second-rate comedy, this incident is the latest in a series of abuses of power by family business members of wealthy dynastic families.

Dubbed the “nut rage” by Korean media, Cho Hyun-ah, the airline’s head of cabin service and daughter of its chairman, ordered a senior crew member off the plane and forced it to return to the gate at John F. Kennedy airport upon receiving her unacceptably presented macadamia nuts. In typical Korean fashion, the ensuing media uproar lead to a public apology by Cho Hyun-ah followed by her resignation from all company positions.

For many Koreans, this was only the latest example of the inappropriate behaviour they had come to expect from the families who make up Korea’s dynastic business elite, also known as the chaebol. The Cho family members in particular, had already been embroiled in public controversies ranging from tax evasion to assault.

In times past, Koreans once held respect for the families that founded the industrial conglomerates like Samsung and Hyundai that helped modernise the country and catapult it into a developed economy. Such days are long gone as social media and growing economic inequality fuels distaste of ostentatious wealth and nepotism, which have resulted in increased criticism especially toward the new generation of family members inheriting the business.

This latest incident underlines again that family members are the greatest ambassadors of the company brand and its culture. It is no secret that the large influence wielded by these members can be collectively utilised to marshal the company’s resources into long-term growth that is not to be matched by many non-family businesses. However, this influence and power can easily be used in harmful ways to ruin the business by destroying relationships between family members, its employees, and the watchful public.

As the “nut rage” story unraveled before the public eye, an online forum used by Korean Air pilots was flooded with complaints about the behaviour of the Cho family and the way they run the company. The culture of power abuse by the family has now permeated the conscience of the public and the group’s employees.

All family business members have a choice to make. Will they drive the company forward with a unified, positive vision or will they irresponsibly utilise their family connections to abuse their power? It will probably come down to the implementation of the proper family governance systems and some serious communication training. As the case of Cho Hyun-ah and Korean Air shows, making the wrong choice and lacking the right codes to regulate family members behaviours in relation to the business, can make people go a little bit nuts.