Approximately 65% of our clients are family-owned and run. As we have been in business as long as we have – that means we are working now with third and fourth generation businesses. We know, more than most, the challenges that come with working with family members. In this post I hope to discuss some of these and help you with your family business.
Family business challenges you can expect
I will start by saying that of course all businesses face challenges, but running a family owned business adds a few more to the pot. We all have to face things like changes in the economy, recruiting the right people, tackling competition and balancing our books.
There are a unique set of added trials and tribulations that family businesses face.
While I say “trials” – remember that if you identify these early on, you can put things in place to help mitigate them over time. (And make your business all the stronger for it).
- Inter-family ‘issues’
There will be physical, emotional and sometimes financial problems amongst family members that can have an effect on day-to-day running of the business.
Tips to overcome these:
– Establish boundaries as to what is ‘business’ and what is in fact ‘personal’ (and needs to be settled outside of the office)
– Try to keep personal discussions outside of work hours (and hopefully also at home and not in the office)
– Identify issues early on, and tackle them head on
– Remind everyone about their roles and responsibilities within the business which need to be fulfilled (much like if they worked for any other employer)
- Culture and structure
Be wary of having too loose a structure in the business – while having a friendly, laid back workplace is a positive – keep in mind you still need consistency and structure for a business to work.
Tips to overcome a loose “laidback” culture:
– Instil systems and processes that you all buy into and commit to keeping to
– Keep strategies, goals and documentation as the core to keeping the business on track (and refer back to these in reviews during the year)
– Decide on a positive, casual atmosphere that is motivating, but also productive to all concerned. (You don’t want certain members of staff – family or not – taking up the slack where others are dipping in their tasks).
- Recruiting based on family relationships
This is a tricky one – sometimes businesses get to a point where there are multiple members of the family involved in the business and the perception is that any other can just “come on board”. As a business – you need to do what all other have to: assess the business needs and recruit the right skills accordingly. You will have to build bravery into your suit of business armour.
Remember – experience and an outside view is highly valuable to your team – so make sure you are recruiting with that in mind as well.
Tips to overcome feeling the pressure to hire family:
– Ensure that you have operating procedures (including handbooks) and performance appraisals in place. This way all staff (regardless of being family) are being acknowledge for performance (and training if needed to improve)
– Make sure you do not fall into the trap of hiring a family member, knowing full well that they don’t have the skills or experience for the role that the business needs. If you do – work with an HR professional to find a way to amicably reverse your decision.
– Implement a recruitment process so that there is definitely a route from advertising a role, interviewing and a qualification process. Follow the same route you would do for any new recruit. This way – somehow through the process it will become clear to you and/or the family member that this role may well not be for him/her.
– Consider hiring an external company to do the recruitment process for you if need be and you only come in for the 2nd or 3rd round of interviews. This way – you are not completely the decision maker on validity of candidates.
- Training (or lack thereof)
It is common in family businesses to ignore proper induction or training for incoming family members. This could be because of a laidback culture (discussed above) or just too informal a structure. This can lead to many, many problems including heightened tensions with the incoming family member not understanding their role or what is needed of them – and then the leading family member in charge – getting frustrated because this family member is not “toeing the line” so to speak.
Tips to overcome a lack of training:
As with the above tips – make a conscious effort to systemise the business – by doing this, you will create content that will then show people how to use those systems. This gives you groundwork already for training anyone new to the business (family or not)
Sit down and plan a good path for inducting a new member of staff (regardless of family relationship) – and look at things that you would like if you were coming on-board for the first time. Think about things like:
– Company information (what goes on during the day, what’s expected in terms of call answering, any customer service requirements, who is in the business and what they do, numbers to call, etc)
– Local information (for lunchtimes – what’s available locally for some downtime at lunch time)
– Breaks and internet usage
– Storage – what are the networks that they need to be familiar with to help do their job? (Admin, emails, Dropbox, etc)
Ensure that you have a good employee contract and handbook, which is matched with a good job description (outlines of responsibilities). This should work together with your performance appraisal process – which will help to highlight when there are training needs.
- High turnover of non-family employees
Depending on the size of the business and how many people are employed. You could end up with a culture where you only get promoted or additional responsibility if you are a family member. If you seem to be losing non-family member staff a lot – this could be a factor. Try to ensure that, again, you are recruiting based on skill. If your family members are fantastic at what they do and deserve the additional acknowledgement they get- that will go a long way to retaining other staff.
If you only acknowledge family members though (by way of salary increases, promotions, additional responsibilities) – then you will get yourself into recruitment pickle – which can prove expensive.
- Who will take over the business?
This is something that does need proper discussion and thoughtful planning. It can cause heated debate, resentment and frustration – none of which help the business to thrive for the future.
Tips to overcome this one:
– If you are the head of the family business, take an honest view of the business and its future – write down what the “perfect” next stage to the business would be if you had to handover the reigns.
– Then, review all the already-in-place options for who that next head might be. Include some notes on existing staff (family or not) and make some preliminary notes on strengths and weaknesses for each individual. Also try to note down who would work well together to complement these skillsets.
– Start to have some honest conversations with family members to establish their interest level in continuing into the future with the business. This way you can eliminate any candidates who are actually not interested in taking over.
– Make an honest judgement of the things that will need to be put in place in order to secure the business going forward and possibly an idea of how that will happen.
- No exit plan
This is a big one that I come across time and again. While the head of the family business will want to retire at some point and exit the business – more often than not this is only thought of in the space of the 12months from which he/she wants to exit.
Along with point 6 above (succession planning) – planning a proper, sustainable exit for the head of the business is necessary. This can take up to 5 years, so make sure you start to think about it sooner rather than later. I have worked with many family businesses on their exit plans – as it affects pay-outs, taxes and company structure going forward. It’s a process that is structured so that the business and its contingent of staff are left in the best possible position for the future.
Also – it’s important to acknowledge the hard work and commitment of the outgoing head of the business and this is usually through some kind of financial arrangement (amongst other things). Give me call if you want to ask more about this.
Are you in a family run business and looking to take over from your parents or grandparents? What kind of challenges have you faced within your family business? I’d love to hear what’s worked and potentially not worked for you.