Managing a Family Business - The Essential Steps, Relatively Speaking
When you put up your own money and run your own business, you value your independence. Its MY business, you tell yourself. And then the fun begins. In a family-run business you not only face the same challenges as the head of any small company but your job and life are further complicated by the dynamics of relatives in the business.
This could be good or bad depending on how you manage it. I know because I grew up working in a family business and have helped dozens of others over the years. When family members work together, family and personal issues can interfere with business decisions; conflicts and emotions arise having little to do with running the business and likely hampering operations.
Also solid employee management and teamwork is often made more difficult to achieve by relatives of the company founder employed without regard to their talent. Further, growth may be stymied when these relatives are in positions to hold back the business or there is a high turnover rate among good, non family employees due to family dynamics played out at work.
How do you avoid the bad and benefit the business with the good from having family in the business? First and foremost it starts with each family member in the business having the right attitude-or not being in the business! Family members must understand and accept that roles and responsibilities are different at work than at home.
At home family relationships and interests are the prime concern. At work, however, the goals and success of the business must be paramount. Decisions must become more objective, attitudes and communication less personal. Secondly, family members must follow the reporting relationships and chain of command as set forth by the head of the business.
Clear and written job descriptions and performance priorities for everyone are a must. The third step to prevent dysfunctions in a family business or any business for that matter is that you must formalize: • Mission and goals of the business
• Strategic plan for accomplishing the goals
• Sound operating plan with budget and controls
• Clear set of lines of authority and responsibility
• Plan for orderly succession In addition a family business must formalize:
• Estate plan which anticipates the transition of current owners
• Outside advisory council or consultant serving as a sounding board
• Communication among family and non family employees These steps are crucial in a family business because of the heightened emotions and confusion that will arise in their absence.
Family members who accept the family/business distinction not only avoid strained relationships, but also convey an important message to all employees that in the workplace business goals come first. This, of course, is the preferred situation.
Dr. Mark Frohman, president of Frohman Consulting Corp., is a recognized expert consultant in developing high performing leaders, teams and organizations. He has been engaged as a consultant, coach and facilitator by more than 500 clients.
Dr. Frohman works with nonprofit and for-profit organizations ranging from start-ups, small and many family-run businesses to international companies and members of the Fortune 500.