Last Updated: Jul 30, 2018
Don’t let the inevitable conflicts between family members get in the way of your family-run business’ success. Follow these tips to keep the peace and avoid problems caused by working with relatives.
It seems like such a great idea, doesn’t it? You’ve known your family all of your life—you trust them, you love them, and you admire them. But they’re also family and that tends to amplify things. Arguing with your business partner is one thing but having to sit at the family dinner table with them makes things even worse.
Talk to anybody involved in a family business—even the non-family employees—and you’ll hear the stories of conflict, fighting, and sometimes a toxic environment. How do you avoid the conflicts that can spell doom for the family business?
The subject of family dynamics might seem like a small problem in the scope of business sustainability but nearly 70% of all family owned businesses don’t survive when it transitions from the founder to the next generation of owners. One of the major reasons is the lack of formality. The founder may fail to leave a clear succession plan that gives one child clear authority leaving a leadership structure that is unclear.
They may fail to account for income, estate, and gift taxes that trigger upon the death of the founder or understand how to cash-out correctly.
The transition should include advice from tax attorneys, CPAs, financial planners, and other professionals specific to your business. Succession planning is not a do-it-yourself endeavor.
Plan to revisit the plans at least once per year to keep them up to date until the actually succession takes place.
Keep the Books Open
If somebody else holds stock in the company, they have the right to demand transparency—even your children. You should be fine with letting them see the business’s books or its bank account balances. Secrecy breeds discontent. If you aren’t transparent, people will think you have something to hide. It’s their business too. They have the right to see the books.
Employees are Employees
Any time relationships are involved, keep one important word in mind: boundaries. Just because they’re family doesn’t mean they’re in charge. If your children are working in the family business, they’re employees and should be treated that way. They should have a contract, be held to the standards of the employee handbook, and their pay should be equal to other employees.
And if you have other employees that aren’t family members, they should see you hold the same standards for everybody. This will help to keep morale higher.
Family Time Isn’t Business Time
It’s not easy to do but it’s essential. When you’re at work, you’re not family; you’re coworkers. You’re united together with the goal of making the business thrive. When you’re outside of the business, you’re family. You love each other unconditionally, you laugh together, you’re there for each other when times are tough, and you help each other in whatever way is needed.
As much as possible, keep clear lines between these conflicting roles. Talk about work at the office—not during family times. Don’t make the business into what defines your relationship.
Give Somebody Else Authority
Arguments are going to happen but family drama cannot enter into the workplace. It’s a surefire way to ruin the business. Behind every good leader is somebody who has permission to tell them when they’re off track. If there’s a non-family employee in the business that you trust, give them permission to tell you when the family dynamic is interfering with work operations.
Establish a Board of Directors
As your business grows, that one trusted person could become a Board of Directors—a mix of family and non-family people who bring a specific skillset to the company. Not only will they lend fresh perspective, non-family board members should have an appropriate amount of votes that give them real power at meetings.
Take the Arguments to Lunch
You can’t bring the drama to work but that doesn’t mean it shouldn’t be resolved right away. If that’s the case, gather the affected family members and head out to lunch. Everybody is more agreeable when they eat and since it’s outside of the office, having tough conversations about family problems is completely appropriate.
Family Isn’t Necessarily the Best Choice
As your business grows, you have the responsibility to protect the business because employees rely on it to feed their own families. Just because certain employees are family doesn’t mean they’re qualified. Bring them into the business, and later let them run the business, because they’re the best person for the job. If a non-family member is better for the health of the company, give a portion of the company to the family as a silent, non-majority partner and let the truly skilled people run the business. Worse than hurting a family member’s feelings might be watching them run the business into failure.
You can have plenty of friends but only so much family. Ruining a family relationships over what may be petty arguments isn’t worth it in the end. Talk about things while they’re small concerns. Once they get large and everybody gets emotional, it’s hard to come together on much of anything. Cultivating positive family relationships outside of the office will help create a positive atmosphere at work.
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