Balance and structure in business is hard, right? It’s even harder when family is involved. These expert tips will help you keep peace with the relatives even when you work with them.
Research has shown that 90% of family businesses do not make it to the third generation. There is great struggle with these businesses for a variety of reasons. Overlap of personal and professional relationships, not knowing which family member to hire for a position, being hired because you are family whether you have talent or not, or just general lack of interest from one generation to the next.
And let’s not forget all the drama…titles, power, authority, salaries, seniority…and the list goes on and on.
Family dysfunction can far exceed challenges in strategy and operations management typical in "normal" businesses. In addition to impacting the business, family disruptions can impact the family as a whole for years to come. Sometimes causing irreparable damage.
Here are some tips on how to successfully grow a family business and keep everyone on track and happy.
1- Actively manage family drama.
In a family business drama is rarely left at home. This is why setting business and personal boundaries is vital, otherwise you risk destroying the work environment for everyone in the company. You have to be proactive and vigilant about this at all times. Establish protocols and policies both onsite and offsite to handle and resolve conflict. Research shows that most conflicts revolve around the four C's for Success: Consideration, Communication, Connectivity and Compensation.
2- Changeability and adaptability are key when focusing on family and business.
Be ready to change your focus in a family business. Whether it’s a family matter that required urgent attention, or a business issue that overrides any family ties that require your attention. Clear structures need to be put in place so you can be ready and willing to straddle this line and shift your focus interchangeably from family to business as needed.
3- Establish non-family business governance.
While different family members will be involved in the governance of the business, it is highly recommended to have an independent board of directors or advisors that include non-family members to shore up missing skills and experience and help balance interests when family members come into conflict. This helps bring an objective point of view and a different level of professionalism that may be compromised when dealing with a family only board.
4- Get to know each family members’ needs and wants.
Family members involved in the business are individuals who have their own priorities, needs and vision for the future. These often change as life events and normal aging impact individual family members. If you view them as investors, where their investment needs are evaluated from time to time, it will give you a better read on how and if their objectives are being met without having to deal with any surprises down the line.
5- Hire because of competence, not inheritance.
It's easy when running a family business to put family members in desired positions to avoid conflict in the short term. But not everyone is suited to handle positions well, and there may be other talent outside the family that may help the company perform better. Run your business as a meritocracy. It will improve performance and keep overall employee resentment to a minimum.
6- Every generation involved needs to evaluate their direction and purpose.
Each generation needs to be mindful as to how the business should be positioned in ever changing markets. What once was, does not necessarily mean can be successful today or tomorrow. New strategies need to be continuously implemented to protect and grow a business. Market requirements and investment goals are never static. A culture of growing the business is a good way to keep your business healthy and a management team engaged and committed.
7- Remember to have family time, and do it with love
Just because you run a business together does not mean that work should be the primary focus with your family away from the office. In fact, living as a family with outside interests is critical for keeping everyone sane and grounded as people. Set up specific networking and family time to just enjoy and appreciate one another on a human level. Create a family council whereby family gets to address the needs and wants of the family, particularly for multi-generational family businesses. This way you won't forget the familial bonds that will keep you together regardless of the world of business.