Has the Family Business Become Too Much Family and Not Enough Business?

One of the many plights of a successful family-owned business is employing family members to the point that it hurts the business.

There are articles, posts, research, and everything in-between about how you should run a family-owned business. What many do not address is what to do if you are already in the situation where there’s too much family.

Let’s be honest, many times, family members are hired because they need the job and may not be the most qualified candidate. If it happens too much, the business becomes burdened to the point that it struggles to survive.

Even worse, family issues can and do spread into the daily operations.

  • A child wants to do things their way and the parent (owner) refuses. 
  • Preferential treatment is shown toward family members and their close allies.
  • Special “bonuses” or gifts are provided to family creating financial stress.
  • Cliques are formed.
  • Non-family members are afraid to speak up due to the “Sunday dinner effect”.

Eventually, something must be done.

What do you do?

This just might be one of the most difficult challenges an owner faces. Save the company and lose family members? Appease family and the company goes under (along with the family finances).

First of all, the owner MUST be committed to doing what’s right for the company.

Second, a hired gun can help execute changes, but the owner must provide 100% support and backup. Anything less and it quickly falls apart.

Third, communicate with the family what is going to happen and how they must adhere fully. Any deviation and they can find employment elsewhere.

Here are seven ways to avoid this trap.

Everyone has a job they’re accountable for.

A family member, whether intentional or not, changes the dynamics of meetings when they’re present. They cannot be allowed to come and go as they like. They must have a specific job with accountability, corresponding duties, and complementary compensation. They must be held accountable for their performance just like everyone else.

This is especially true for immediate family members like a spouse or child. I’ve seen spouses that want to “drop into a meeting” just to see what is going on. Most of the meeting is spent bringing the spouse up to speed and nothing gets accomplished. Even worse, the outcome is not what the team wants, it is what the unprepared spouse decides.

Make family members work at another company to learn before joining the family business.

Many family members may not have worked anywhere else in their adult life. Let them learn from other bosses, be held accountable, and learn how to fail. Experts say a person should work somewhere else at least 2-3 years, if not more, before joining the family business.

If they’re already in the business, have them seek employment elsewhere. This will be very tough for most as they are unlikely to want to start over and may not get as sweet a deal as they currently have. That’s part of the lesson to be learned – value hard work, earnings, and authority.

When work is discussed, Owner is boss, even at home.

Talking shop at home is inevitable. We all do it. As the owner, however, the position of authority must be respected. Whenever work is discussed, it is not father/daughter, mother/son, etc. It is Owner/CEO and Vice President or Director or Customer Service agent (whatever the title).

If you as the owner would not want an employee to speak to you directly without going through their boss at work, don’t allow it at home. I’ve seen too many owners agree to something on Friday afternoon only to change their minds to the staff Monday morning. Weekend discussions erode trust across the board.

“Open door policies” used at home is allowing someone to leverage undue influence associated with family.

No more one-off, special financial treatments provided to family members. No “spot bonuses”, new cars, new cell phones, etc. to drag down the financials. Arrangements can be made to fund family members based upon the profitability of the company. An example is to establish quarterly “dividends” to family members based upon profits. They learn to spend what they earn, not drag down the company finances when they choose.

Here’s a tragic example – I saw a company provide profit goals to the employees for their upcoming bonuses. The employees did their jobs and qualified. The family pulled profits from the company for themselves and the employees received much smaller bonuses.

I’m not saying an owner should not share success with the family. It just needs to be factored into the financials of the company and not treated as a cookie jar.

All employees are treated equally/fairly, regardless of family relationship.

This is a tough one. If a family member needs to be reprimanded, do it. If they deserve praise, do it. Letting family get away with bad behavior is at the top of the “bad things to do” list. It destroys morale and trust throughout the company. Let the family members know up front they are accountable for their actions.

I’ve seen family behavior so destructive that good employees quit and those that remained hated being there.

Family members can also be very deceptive. I’ve seen Jekyll and Hyde many times. The family member acts great in front of mom/dad and is abusive around employees. Be willing to accept constructive feedback from non-family members and be acceptable to doing something about it.

Identify training gaps for each family member and require training.

If you have family members that have rapidly advanced in rank or haven’t worked somewhere else, there can be crucial knowledge they’re missing. As the Owner, you could help but may not have time or they may not listen? What child listens to their parents anyway?

I’ve seen too many family members in leadership roles that had major gaps in their knowledge. They may know the product but not the business side. The company may have grown due to the Owner’s relationships throughout the years but now they need a more traditional approach (i.e. Marketing and Sales best practices).

Take an inventory of each family member, their knowledge, and skills, based upon their current and potentially future job function. If you want them to someday take over the company, start preparing and training them now. Make this training a priority as it will only help them in the future.

Consider a non-family executive or coach as a mentor.

It is very hard to be objective when dealing with family. I get it. I’ve been the hired gun before and provided feedback on what needed to be done with family members. Sometimes it went over well, other times not so. Objectivity is the key here. It is easy to let personal feelings or knowledge of homelife influence your thinking on the business. More times than not, it leads to compromise.

I’ve seen successful family businesses run by an outsider in the President’s role. Owner is still the majority shareholder and CEO.

I’ve seen other companies establish an “Operating Unit” and a “Family Unit”. The Operating Unit runs the business and is held accountable by the Board of Directors. Family members can be on the BoD and in the business, but leadership and decision making are empowered to the leadership.

Consider hiring an executive coach/business advisor for family leaders to help them develop and navigate the waters. It gives them someone other than the Owner to bounce problems off and receive professional feedback.

Wrapping it up!

Much of my career has been working in family-owned businesses. There is something about a true family-centric culture that is appealing to work for.

I’ve seen:

  • Owners provide a chef to employees because they wanted healthy meals rather than fast food.
  • Friday afternoon company meetings with “wine and cheese” to celebrate the week.
  • Owner call an employee and meet them at the hospital because they had a health issue that was getting worse.

I’ve also seen:

  • Business falls apart because of an unruly family member.
  • Business goes bankrupt because of unrestrained family spending.
  • Long-term employees depart because they’d had enough and wanted a well-run company.

My goal for you is to make sound business decisions to ensure the success of your company for generations to come. It starts with the employees and ends with the leadership team. Sometimes you must make tough and unpopular choices. I hope some of the recommendations I’ve made will benefit you now or in the future.

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The Ultimate Leadership Development Guide

The Ultimate Leadership Development Guide

One of the biggest gaps in the maturation of leaders is the lack of an effective leadership development program. Leadership development is tough and expensive. It is not a 3-day course that you can bring in-house and expect to have rockstar leaders. It requires training in multiple areas of employee development along with ongoing coaching/mentoring over time.

Many training companies will try to turn their product into a leadership training program only to hit part of the target with an ineffective solution.

The most common reasons for ineffective leadership development programs are:

  • One Size Does Not Fit All – leaders of Fortune 1000 corporations need different training than leaders of small, family-owned businesses.
  • Situational Awareness – lack of relevant scenarios to develop on-the-job situational awareness
  • Emotional Intelligence – many courses teach it, but few spend enough time on it in the context of a larger training program. Very important but not all inclusive.
  • Lack of Sponsorship – most companies sponsor the program but do not ingrain it into the daily operations from top to bottom of the company. Executives rarely model their own training.
  • Limited On-Going Feedback – leadership is not a checklist. Very few resources exist to provide on-going feedback in the context of what was trained.
  • Circumstances Change – employees, managers, and circumstances change over time. The program must be flexible and more evergreen than a one-time inspirational session.

I’ve seen companies develop their own programs that were marginally more effective than the “box” ones. They usually start with a central theme and add their flavor to it. Examples are:

  • A course based upon a book that is popular at the time but doesn’t cover all the bases. Interest quickly fades when a new fad comes along.
  • An offsite facilitated training that is part training, part boondoggle, and part role-play but loses steam after real life back at the office continues.

Each approach has their own merit but should play their part and not outweigh other equally relevant areas.

What is the best approach to develop leaders?

The best answer lies in the combination of best practices within the culture of the company and the leaders being trained. What I am about to outline is a lot for a single course. I recommend having separate training programs along with an overarching strategy that is communicated to the future leaders. Show them how it all ties together and monitor their progress. Most HR systems today allow tracking of employee training and progress.

Let’s dive right in.

  • Company-specific training

If you ask most management personnel to name the company values, could they? What about an accurate description of the business model? Doubtful.

Many of the important factors of who, what, when, how, and why a company is run may not be fully defined or periodically refreshed with the employees. Giving a new employee the company handbook and walking them through it during orientation is not the way to train your leaders on the most important aspects of your company.

  • Key Company Specific Items for Leaders
    1. Business model
      • Explain how the company makes money, what it takes to make the product or services, and how it ultimately turns a profit.
    2. Culture
      • Do you know what your culture is? Trust me – you have one whether it is easily defined or not. Discuss it and reinforce with the leaders.
    3. Values
      • Everything starts with values. Do you have values written down and readily available? Do all employees know them, abide by them, and are they held accountable to them?
    4. Mission, Goals, Strategy
      • These are important for leaders to know and convey. There are always issues and initiatives that can be distracting for leaders. Do their activities align with the mission and goals of the company? Are the strategies in place aligned as well?

All levels of employees need to know why the company is in business, how it makes money, what the goals are, and the value of their role. This helps them feel like they are a valuable part of the company and not just a commodity.

  • High Performing Teams training

A core element of a leader is to develop teams that can accomplish more than a combination of individuals by themselves. How they do it is equally as important.

I’ve always been a big fan of leadership training programs based upon Patrick Lencioni’s book “The Five Dysfunctions of a Team”. It is scenario based which means people can really relate. It teaches team members to trust each other and to overcome the fear of conflict, lack of commitment, avoidance of accountability, and inattention to results.

The key takeaway for me is that everyone is focused on what is best for the company and not their own individual self-interests. When you trust each other, serve each other, and collaborate as a team, no hill is too large to climb. There may be individual sacrifices to be made for the greater good of the company over time.

There are other great HPT training programs out there. Investigate what is right for you and your organization and get some people trained. I prefer a “train the trainer” approach myself but you can decide which is best for your firm.

  • Personality assessment – Individual and Team

I’ve used personality assessments for years. I’m professionally trained in Birkman but have used DISC, MBTI, Predictive Index, and others. You can go as deep as you want with these.

The key use of personal assessments in a corporate setting is to recognize your own personality traits and learn how to best communicate with others. Create a cheat sheet of yourself and how you relate to your teammates. The single biggest problem in corporate America today is poor communication. Not poor intent.

  • Mentoring/Coaching

I believe having a mentor, whether inside or outside the company, is a tremendous asset to any leader. Having the ability to bounce ideas off someone else and discuss real life issues will greatly improve a leader’s growth and situational awareness.

You should also consider hiring an Executive Coach for key leaders. They tend to ask questions that make us feel uncomfortable. They try to stretch us into areas we need to grow and to look at things from different perspectives.

I like the coach that has been there and done that in the business world and is not afraid to broach difficult topics.

  • Repeatable Operational and Managerial Processes

As stated earlier, the company needs to clearly define what the goals are for the organization. Once defined, each leader and corresponding departments need to be aligned toward the goals. Everyone in the organization, from CEO to front line staff, needs to be on the same page to create a high-performing organization.

One of the best approaches out there is the Entrepreneurial Operating System (EOS). The implementation process walks you through defining clear goals and then breaks them down for each department and person in the company. Everyone knows what is expected of them and when. It establishes accountability and discipline for everyone in the organization.

You can hire an “implementer” or get someone trained and do it yourself.

  • Sponsorship

If you really want to transform your leadership into top tier leaders, an initiative like this requires sponsorship and alignment from the CEO and executive leadership team. Remember – employees are always watching you. If you tell them they need to do something better, but you are not willing yourself, save your money. It will never work.

Be fully engaged as a sponsor and this guide will be transformational for you and your company.

FINAL THOUGHTS

A program like I’ve outlined here will work. It will not be easy nor inexpensive. Do not try to tackle everything at once. Phase it in over time. Some things will only need to be implemented once while others will need to occur periodically as the leadership team members change.

If you would like to learn more, contact me at rhall@silverfox.org. Happy to discuss all aspects of this program with you. 

COVID Fatigue is Real!

The United States is in a high state of uncertainty where the future is concerned. We’re a nation that wants our news, meals, and money right now. Once a big event happens, we are all consumed with Twitter, Facebook, and news outlets for a few days or even weeks. And then we move on.

We’re not able to move on from COVID, at least not yet. We’re still wearing masks, social distancing, working from home, dealing with childcare, loneliness, financial, and mental issues. We drag on wondering when this will be over.

I spoke with a group of CEOs recently that are highly concerned with employee fatigue. They’re seeing a rise in employee issues and considerable productivity drop off. Words of encouragement are falling on deaf ears when the actions following are not personal. “Just do your job” or “find a way” is not cutting it.

Each person is wired differently. How they act under fatigue may be quite different than normal circumstances and not easily recognizable.

If you want to combat COVID fatigue, you have to meet your employees where they are. Get personal.

team meeting

Here are some ideas for you to think about that I’ve heard were effective:

Conduct 30-minute discussions with staff daily. One on one meetings may not be doable but small group calls can be. Ask how are they doing at home, how are the spouse and kids, is there anything impeding their work that you could help with?

Proactively identify those at risk. If you already have a personality assessment on employees, dust them off. If not, consider getting one. Look for things like their Social Energy scores, or Restlessness, or Organizational needs.

Employee Surveys– Do a formal and confidential survey and get a pulse. Results may not be specific, but it can be a good starting point.

Professional Counseling – Many insurance companies offer some form of counseling for mental challenges. Inquire about eligibility through the Employment Assistance Option or consider purchasing an option for the employees. Whatever you do, make sure the employees know it is confidential.

No one is certain when the risk with the pandemic will finally subside. We should expect COVID fatigue to get worse before it gets better.

Get on top of it with your employees now. It is real.

If you need further assistance, send us a note through SilverFox.org.

UPCOMING EVENTS
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