A common challenge in a family enterprise is that of relatives who lack an aptitude for the business, or any apparent usable talent or skill, but also who must be hired. The emotional pressure is hard to resist when your sister says, Bob needs a job, badly!
Accept the challenge with your eyes open, because it will be hard to fire Bob, even if his employment costs the company more than it earns. Moreover, he could demoralize other employees if he loafs on the job, avoids unpleasant tasks, takes special
privileges or otherwise exhibits a poor attitude.
Training Bob may require extra effort, but few people are totally
unskilled.
* Endeavor to cultivate a talent he possesses that will contribute to the business.
* Provide special training.
* Assign him to special projects to reduce negative contact with other employees and to provide an opportunity for developing skills.
* Arrange for him to work under a non-family supervisor who is a top producer.
The key is to transform the untalented, minimally skilled relative into a productive employee, as quickly as possible.
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Tuesday, September 25, 2007
Family Business Succession Planning
An important issue that requires early planning is Who will take over when the family member managing the business dies or retires?
Planning is especially critical when the top family member approaches retirement age or is in poor health, but the best time to prepare for orderly succession is before transition looms.
A family meeting in a neutral setting away from interruptions can help focus discussion, perhaps with the assistance of a professional consultant to guide the agenda.
Consideration on the agenda should be given to
* Family goals for the future.
* Plans of next-generation family members.
-- Who is interested in staying with the business?
-- Who has the most aptitude for leadership?
-- What if several able younger family members aspire to lead the business?
-- What role will other younger members play?
-- What if next-generation family members are not interested in the business?
* Grooming of future leaders.
* The most likely times major transitions will occur, barring unexpected illness or death.
* Preparations of present leaders for stepping down.
* Financial aspects of leadership transitions.
The importance of preparing for succession before a new leader must take over cannot be emphasized too strongly.
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Planning is especially critical when the top family member approaches retirement age or is in poor health, but the best time to prepare for orderly succession is before transition looms.
A family meeting in a neutral setting away from interruptions can help focus discussion, perhaps with the assistance of a professional consultant to guide the agenda.
Consideration on the agenda should be given to
* Family goals for the future.
* Plans of next-generation family members.
-- Who is interested in staying with the business?
-- Who has the most aptitude for leadership?
-- What if several able younger family members aspire to lead the business?
-- What role will other younger members play?
-- What if next-generation family members are not interested in the business?
* Grooming of future leaders.
* The most likely times major transitions will occur, barring unexpected illness or death.
* Preparations of present leaders for stepping down.
* Financial aspects of leadership transitions.
The importance of preparing for succession before a new leader must take over cannot be emphasized too strongly.
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Who is Really in Charge of a Family Business?
* The president of a small family-owned company is not necessarily the person in charge. The family elder statesman may be president or chairman of the board of directors, but day-to-day management may be in the hands of other family members.
* The ceiling may be too low on the amount of money that can be spent without permission from too many members. Unrealistic or unnecessary clearance procedures may result in missed opportunities for increased profits, such as failing to take advantage of a good price on raw materials or sales inventory.
* Personalities and emotional reactions work against efficient operation. For example, even routine matters must be authorized by family members because Uncle Bill
never lets you forget your mistakes.
* Efficiency may be reduced by relatives' engaging in excessive family talk during working hours. The manager must set an example and insist relatives refrain from chit-chat on the job.
* Managers may owe their positions to their age or to the amount of capital they have invested and may lack leadership ability.
* Some family managers may hinder progress because they do not know how to listen.
Family members in charge of operations must be
* Capable of using efficient management techniques.
* Thick-skinned enough to live with family bickering.
* Tough enough to make decisions stick.
Definite lines of authority are essential when a member of the family manages operations and other relatives fill various jobs.
Family employees must discipline themselves to work within the lines of authority and the responsibilities of family members should be spelled out. Even then, it is wise to have a nonfamily employee highly involved in operations, to help resolve problems.
One solution to management problems is to let someone else -- a hired manager -- run the day-to-day show. The family member retains a title and some authority, but the hired assistant acts as a buffer between the family and the organization. The
assistant might be executive vice president or chief operating officer and the family member, president or chief executive officer.
With a hired manager, the family leaders are free to work on future strategy, basic policy and growth, while the nonfamily employee guides day-to-day operations.
The authority of the manager, whether family or nonfamily, to suspend or discharge flagrant violators of company rules must be clear. Management control is weakened if family employees are exempt from rules.
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* The ceiling may be too low on the amount of money that can be spent without permission from too many members. Unrealistic or unnecessary clearance procedures may result in missed opportunities for increased profits, such as failing to take advantage of a good price on raw materials or sales inventory.
* Personalities and emotional reactions work against efficient operation. For example, even routine matters must be authorized by family members because Uncle Bill
never lets you forget your mistakes.
* Efficiency may be reduced by relatives' engaging in excessive family talk during working hours. The manager must set an example and insist relatives refrain from chit-chat on the job.
* Managers may owe their positions to their age or to the amount of capital they have invested and may lack leadership ability.
* Some family managers may hinder progress because they do not know how to listen.
Family members in charge of operations must be
* Capable of using efficient management techniques.
* Thick-skinned enough to live with family bickering.
* Tough enough to make decisions stick.
Definite lines of authority are essential when a member of the family manages operations and other relatives fill various jobs.
Family employees must discipline themselves to work within the lines of authority and the responsibilities of family members should be spelled out. Even then, it is wise to have a nonfamily employee highly involved in operations, to help resolve problems.
One solution to management problems is to let someone else -- a hired manager -- run the day-to-day show. The family member retains a title and some authority, but the hired assistant acts as a buffer between the family and the organization. The
assistant might be executive vice president or chief operating officer and the family member, president or chief executive officer.
With a hired manager, the family leaders are free to work on future strategy, basic policy and growth, while the nonfamily employee guides day-to-day operations.
The authority of the manager, whether family or nonfamily, to suspend or discharge flagrant violators of company rules must be clear. Management control is weakened if family employees are exempt from rules.
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Family and Business - When They Don't Mix
What happens when family behavior in the workplace falls short of
the ideal? Differing opinions do not always produce discord in a
family-owned company, but they are more apt to cause sparks to
fly. Emotion is the added dimension as brothers and sisters,
uncles and aunts, nephews and nieces, and parents and children
work together.
The individual managing such a company must recognize the
emotional dimension and make the necessary objective decisions to
ensure smooth functioning. Among members of a family who are
active in a business, it may be hard to be objective about one
another's skills and abilities. He was lazy when we were kids,
and he's still lazy. What does Aunt Bess know about the business?
She's only here because of her father's money.
If emotional outbursts affected only the family, the manager
might knock a few heads together and move along. But quarrels and
ill feelings among relatives affect nonfamily employees as well.
The manager's challenge is to keep the bickering from interfering
with work. In an emotional atmosphere nonfamily employees may be
tempted to base their decisions on family tensions -- they know
how their bosses react and are influenced by this knowledge. But
the company cannot become a warring camp. All employees must
understand that their interests are best served by a profitable
organization, not by allegiance to particular family members.
The leader of the family business must not take sides with any
member of the family, but rather must demonstrate that
disagreements will not be permitted to affect the business. This
attitude discourages nonfamily employees from politicking for
position. When the family leader demonstrates respect for the
family and an understanding of the differences, nonfamily
employees are not tempted to play politics.
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the ideal? Differing opinions do not always produce discord in a
family-owned company, but they are more apt to cause sparks to
fly. Emotion is the added dimension as brothers and sisters,
uncles and aunts, nephews and nieces, and parents and children
work together.
The individual managing such a company must recognize the
emotional dimension and make the necessary objective decisions to
ensure smooth functioning. Among members of a family who are
active in a business, it may be hard to be objective about one
another's skills and abilities. He was lazy when we were kids,
and he's still lazy. What does Aunt Bess know about the business?
She's only here because of her father's money.
If emotional outbursts affected only the family, the manager
might knock a few heads together and move along. But quarrels and
ill feelings among relatives affect nonfamily employees as well.
The manager's challenge is to keep the bickering from interfering
with work. In an emotional atmosphere nonfamily employees may be
tempted to base their decisions on family tensions -- they know
how their bosses react and are influenced by this knowledge. But
the company cannot become a warring camp. All employees must
understand that their interests are best served by a profitable
organization, not by allegiance to particular family members.
The leader of the family business must not take sides with any
member of the family, but rather must demonstrate that
disagreements will not be permitted to affect the business. This
attitude discourages nonfamily employees from politicking for
position. When the family leader demonstrates respect for the
family and an understanding of the differences, nonfamily
employees are not tempted to play politics.
Small Business Content and Small Business Media
Monday, September 24, 2007
Family Businesses: Clearly Defined Roles
Like any successful organization, it is essential that a family business have
A clear mission, a statement of purpose and goals.
* A clear chain of command -- lines of authority -- for
decision making.
* A clear plan to accomplish goals and provide for orderly
succession.
* Good communication among family members and with nonfamily
employees.
These factors are doubly important in a family business because of the strong motions that can arise and the confusion that can occur in their absence.
Rights and responsibilities are different at home than at work, and it is imperative that family members keep this fact in mind.
At home family relationships and goals are the prime concern. Language is personal, attitudes are subjective, roles -- husband/wife, parent/child, family/relatives/in-laws -- are all traditionally defined.
At work, however, the success of the business must be paramount.
Language becomes more impersonal, attitudes more objective.
Family members who work in the business must accept the boss/employee relationship, as they would in any other business.
Their job descriptions must be clear, in writing and adhered to. So there can be no disagreement.
Problems arising at home should be left there when the workday begins and workplace problems should not encroach on home life.
Family members who accept and observe the home/business dichotomies not only avoid strained personal relationships, but also convey an important message to all employees that in the workplace business goals come first.
This, of course, is the ideal situation. :-)
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A clear mission, a statement of purpose and goals.
* A clear chain of command -- lines of authority -- for
decision making.
* A clear plan to accomplish goals and provide for orderly
succession.
* Good communication among family members and with nonfamily
employees.
These factors are doubly important in a family business because of the strong motions that can arise and the confusion that can occur in their absence.
Rights and responsibilities are different at home than at work, and it is imperative that family members keep this fact in mind.
At home family relationships and goals are the prime concern. Language is personal, attitudes are subjective, roles -- husband/wife, parent/child, family/relatives/in-laws -- are all traditionally defined.
At work, however, the success of the business must be paramount.
Language becomes more impersonal, attitudes more objective.
Family members who work in the business must accept the boss/employee relationship, as they would in any other business.
Their job descriptions must be clear, in writing and adhered to. So there can be no disagreement.
Problems arising at home should be left there when the workday begins and workplace problems should not encroach on home life.
Family members who accept and observe the home/business dichotomies not only avoid strained personal relationships, but also convey an important message to all employees that in the workplace business goals come first.
This, of course, is the ideal situation. :-)
Small Business Content, Small Business SEO and Small Business Media
Who's Business Is It Anyway?
When you put up your own money and operate your own business, you
prize your independence. It's MY business, you can tell yourself,
in good times and in bad.
In a family company, however, it's OUR business.
When family members work together, emotions may interfere with
business decisions. Conflicts may arise as relatives see the
business from different perspectives. Those who are silent
partners, stockholders and directors are likely to judge capital
expenditures, growth and other critical matters primarily by
dollar signs. Those engaged in daily operations are more likely
to be concerned about production and sales figures and personnel
matters. Obviously, there is potential for conflict.
In some family companies, daily operations are hampered by
conflict; in others, the challenge is a high turnover rate among
nonfamily employees. Growth also may be a dilemma if some
relatives are reluctant to plow profits back into the business.
Conflict in the business also can be aggravated by family members
who have little talent for money or business -- the offspring of
company founders who lack business acumen or in-laws who must be
employed without regard to their ability or the company's needs.
The manager of a family-owned business faces the same challenges
as the owner-manager of any small company. However, the job of
family manager may be complicated by relatives who must be
reconciled to working together in a business.
(courtesy of SBA.gov)
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