Managing a Family Business
You can choose your friends, but you can't choose your family, as the saying goes. Funny enough, some people like their family so much that they choose them to do business with.
A family business can be a very emotionally intense operation. It can work brilliantly or it can open up opportunities for a unique set of business disasters. It may also mean working in a rich emotional environment, full of close personal relationships, good humor and intimate understanding. It can be like a year-long lunch with the Simpsons. It just depends.
It depends partly on whether the focus is on working with the family and merely making a bit of money, or whether it's on running a successful business and bringing some of the family along for the ride. The two approaches entail different management priorities, though the priorities tend to get tangled up in practice.
That's because family businesses are personal and carry a lot of emotional weight. Loyalty and commitment are often high in a family business. People will put in long hours. And they'll be fiercely defensive about the image of the firm.
Strong commitment is fine. But sometimes it helps to be a little less personal. You don't want everyone taking a personal stake in every business outcome. For example, you don't necessarily want to seek broad consensus on every marketing strategy.
A family business can get into trouble when it hires people because they are family, rather than because of any specific set of skills. And if they do hire non-family members, they tend to hire people because they fit in somehow.
You can end up with a company where everyone is employed because they are either well connected or likeable. Clearly, this can lead to organizational skill gaps. It means the business may not have a healthy diversity of experience and opinion to draw on.
A family business can also get into trouble for the opposite reason. Suppose 'outsiders' are hired to plug skill gaps. This may get family noses out of joint. You might get the indignant response, "You promoted that 'outsider' over my head, merely because he's better qualified!"
Or suppose a family member is not performing. You decide you need to get tough. Except that you can't figure out how to discipline or even fire your uncle. Or worse, what if you need to fire your own wife? Or your husband? Is there an instruction manual for doing that? At least one that does not involve dissolving both the marriage and the business?
Family businesses often have other areas of special complexity. For example, succession planning often raises thorny issues. Succession is commonly a much more complex issue in a family business than in any other business. A family business needs to be carved up for a whole extra layer of priorities. And succession generally doesn't go well. A minority of family businesses actually make it through to the next generation and very, very few make it to a third.
So a little perspective can be a valuable thing for a family business. It can be useful to seek advice from an outsider-that is, someone who has no idea of the relative golf handicaps of all the company directors.
Such a person will be able to look at your operation from a purely business perspective. They will run an objective eye over your business and operational structure and make sure that money is flowing in a way that makes good commercial sense. Many of our clients are family businesses going through the same issues you are. Ask about our Business Diagnostic Service, which is specifically aimed at family businesses. It involves working with you to analyze the strengths and weaknesses of your business, as well as the opportunities and threats, and you'll leave with an Action Plan that is tailored specifically for your business and prioritized for your immediate needs.
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