A Well Run Family Business is Not an Oxymoron by John Rogers A “well-run” family business is not necessarily a contradiction in terms. However, while having family aboard not only can help, at times it hurts. That’s because familial ties are so strong. Why did you start your business? Ask a founder entrepreneur that question and the answer likely will be: “To build something for my family.” Yes, the American Dream of launching your own business often includes keeping the family together through that business. Family can be one of the biggest challenges a business can face. Main problems are how to mix love for family with fairness to all staff and how to resolve family conflicts within the business. Results may be a disgruntled staff plus rivalry in the family. For this article on managing the family business, we interviewed several experts. First, a word about the importance of the family business in the American economy. Family-controlled businesses are responsible for 59% of employment and 78% of all new jobs. Eight of ten companies in North America are family firms, many of them small ones but nonetheless distinct businesses. Family Business: What’s Good, What’s Not An important question to our experts was: What are the pros and cons of the family business? Generally, all agreed that the family firm offers the advantage of a closer relationship with family members and provides them with opportunities. Greater loyalty from customers also is likely because they relish dealing with the owner/boss of the family. There’s a warmer relationship usually. 16
Another advantage of the family business can be more agility and less bureaucracy in management. Dad or mom or son or daughter may quickly say yes or no rather than taking it to a board for a vote. On the Other Hand Drawbacks are as plentiful as are the advantages. Unfortunately family members often assume the same roles in the business that they do in the family. There’s a carry-over of personalities and emotions. Also, even worse, often there’s a feeling of entitlement among family members. Keeping the Family Baggage Out of the Family Business, is the title of a book by management consultant Quenton Flemming, published by Simon and Schuster. Fleming finds that families tend to bring home their patterns of relating to each other. This may recreate the family hierarchy within the firm even though the business has different needs than does the family. Nurturing the Family Employee How to develop family in the business draws some unanimous comment from experts. All of them point to the danger of an older generation holding onto authority too long and suffocating the younger generation. Elders refuse to allow the mistakes necessary in any learning process. Or too often a job is designed to bring a relative on board rather than having each job described in detail and then matching the relative to that position. “Clarify roles and responsibilities based on positions, not people,” urges Kim Schneider of Schneider Consulting Groups, Denver. Preferably before signing on, family members will have acquired out-
side experience, perhaps working for another firm in the same field. Some family firms require two years of such hard knocks elsewhere before taking on a relative. There’s nothing like working for someone other than dad or mom to learn humility, respect and responsibility. An added plus would be respect of other staffers for having paid your dues. Early Preparation at Home Expert Joseph Astrachan of the Family Firm Institute, Boston, stresses the importance of preparing a son or daughter at an early age, teaching the value of hard work, money and personal responsibility long before being hired. Short family meetings of 5-10 minutes are recommended to set goals for homework and chores, etc. If you have a daughter, better treat her like a son in regard to your business. While less likely than sons to join the business, even today, daughters are stepping up the pace. And they resent having to ask to become part of the business while a son may have been invited. Equal consideration for daughter and son is best. And in developing a family employee, there should be a career timeline established. Goals and positions should be specified for every two-year period, according to Paul Karofsky, executive director of the Northeastern University Center for Family Business, Dedham, Mass. As with other employees, it’s often best for family members to be assigned a mentor to monitor individual work progress, Karofsky adds. How to Be Fair Yet Take Care of Family What about fairness and does this require treating family like everyone The National Dipper
May/June 2022
