The Challenges Of A Family Business
Whether we love, hate or just barely tolerate our own family business, they are a critical part of many families’ lives. One patriarch recently said: “Pretty soon my son will be competent, but first he needs more experience.” These words were spoken by an 80-year-old about his 52-year-old son.
Other common complaints:
“My dad wants everything run his way. How can I keep him from interfering in my department?”
“My son works 30 hours a week but is paid for 60 — he’ll never be motivated.”
“How can I fire my son? There is no other employer who would tolerate his erratic hours, but I don’t want to throw him out on the street and further, why should my grandchildren suffer?”
How can a family develop a rational, compassionate process around the enormously complex issues of a family business? Can they support the growth needs of individuals, family and business? How can family businesses address these issues with integrity? How do we keep families centered on the business of love and keep businesses centered on the competencies needed to grow the business?
The entanglements of family-run businesses are often difficult to discuss. Some typical predicaments include:
• Family members who are given jobs for which they’re not qualified
• Family members who are given responsibility without authority
• Parents who judge kids’ work performance
• Family members who are paid more then non-family members are paid for the same job
• Family members who take significant time away from work for personal matters yet are paid a full-time salary
• Parents who refuse to give up certain leadership aspects even when kids have clearly demonstrated competence
• Parents who refuse to make a retirement and succession plan
• Family members who have alcohol, drug or other addictions interfering with work performance and these issues are not addressed
• Business issues that are constantly discussed at family gatherings.
These entanglements truly are difficult to work out among family members. Most families have difficulty with communication long before they attempt to work together. Although sometimes working relationships improve communication, more often it makes current communication more difficult. Many families have a history of ignoring frustration, anger, hurt feelings or developmental issues. Family members do not enter into the family business with a clean slate; they enter the business within the context of their family relationships.
Although difficult, it helps to separate family life as much as possible from business life. The fact that one’s dad is his or her boss can never change the fact that dad is judging, criticizing and reviewing his or her work. The fact that one’s son or daughter is an executive or manager can never be taken out of the equation.
Nevertheless, it helps to separate these arenas as much as possible. Family business members need to see that there are different arenas. In my work, I encourage families to create three separate arenas: the family — where family needs and issues are dealt with; the business — where business needs and issues are handled; and the family council — where the interface of family and business issues are addressed.
Family members should strive to make family time a warm and comfortable experience. Many families get so wrapped up in the business that conflicts at work permeate and infiltrate the families. The family should strive to become great regardless of business issues, otherwise family relationships become dependent on how well business conflicts are handled.
Family time can be effective if members set up regular meetings to plan for family events in ways that are sensitive to individual needs. Meetings should also be a forum where members can discuss the family as a whole. Many families have set up a series of family retreats to accomplish this purpose.
Staying On Track
In the business arena, boards of directors or advisors often help keep the business on track. As the business grows and the need to professionalize increases, the skills needed will shift. Development of a clear vision, mission and strategic objective is critical.
Clarifying decision-making and organizational structure allows the business to perform competitively and meet substantial strategic goals. Competency levels must be made clear with the utilization of non-family professionals. Business discussions should take place at work with clear and reasonable work expectations on family members.
The family council — a forum created for family members to discuss and resolve the sticky issues of family members — becomes the critical forum for family and business sustainability. It is here that family members are encouraged to discuss and decide policies regarding family employment, performance review of family employees and stockholder issues.
Most family councils create a protocol: an agreement as to how family members will resolve business conflicts as well as strategic and succession issues. It is the family council that can provide the glue that holds the family together through leadership succession.
Family businesses can be places of great joy as well as frustration. They can significantly help family members become successful in the world and they can strengthen family bonds if the family works closely together to respect individual needs, jointly develops family goals and uses the business for the purpose for which it is intended.
Marc A. Silverman Ph.D. is a family business consultant who has been working with family businesses for over 15 years. He can be reached by phone at 305-865-8186
|One Family’s Dilemma
The following example provides a look at one family’s confusion over the different needs in the family, business and individual-life arenas.
Meet the “Jones” family. Dad is 62, in excellent health and the founder and major mover of this business. His wife would like him to retire soon. They have three children; the oldest, Dave, has been in the business for 20 years; the middle, Jack, lives in another town, and is not in the business; and the youngest, Bob, has been working in the business for five years.
As the oldest, Dave has spent his life learning the business but feels depressed and disillusioned. His Dad doesn’t consider him to be a strong leader and turns down most ideas he suggests.
Dave sees his brother, Bob, who has only been in the business five years, making the same amount of money and being listened to more by his dad. Personally, he distrusts his brother.
Recently, a competitive company has offered Dave a position. Although he is the heir apparent, he is tempted by the offer. He worries that if he leaves, his dad may never forgive him.
At the holiday dinner table Dad asked Jack, the middle child, why he doesn’t come back home. “I can give you a nice position and your skills would help me and the business enormously.” Dad sees the tension between the other two “boys” and is thinking that maybe, if the middle son returns, the other two will stop fighting.
The two brothers were silent, surprised by Dad’s offer. The younger one said privately to his oldest brother: “One more example of how little voice we have. Dad didn’t even ask us our opinion before inviting Jack in as a top executive.”
One day Dad brings Bob and Dave into his office. “Jack has accepted my offer,” Dad says. “This will really help our expansion. He has promised to join us as director of marketing in three months.”
The next month, after much discussion with his wife, Dave announces his resignation. Dad is shocked and furious. At home, Dad says to his wife, “I can’t understand it — I’ve built this entire business, we’re about to go through substantial growth and now Dave wants to leave. I bet his wife is behind this. Maybe I’ll offer him a bonus to encourage him to stay.”
This scenario resulted from a communication breakdown among family members. If communication had been better, much of the family’s anguish could have been avoided.
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