Resolving Family Business Problems

Resolving Family Business Problems


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Expert Author Denise Federer

While some people can't fathom having their mom or dad as their boss, or working side-by-side with a sibling, others really enjoy building a successful business as a family. In fact, loyalty and trust are what make family businesses distinct and thriving in today's market. However, as you might suspect, family businesses also face unique challenges that are absent when colleagues and management aren't related.

The following Top 10 list might not make you chuckle like one created by David Letterman, but it's worth reviewing if you work in a family business or are considering joining one. I believe knowledge gives you power so, here are the top 10 reasons that family businesses get derailed:

  1. Fear of conflict
  2. Avoidance behavior
  3. Undefined/non-discussed expectations
  4. Unmet expectations
  5. Sense of entitlement
  6. Differences in business philosophy
  7. Lack of predictability and consistency
  8. Lack of accountability
  9. Different rules for family and non-family employees
  10. Discrepancy in work values

As you can imagine, it's fairly easy to run into any number of these pitfalls-and the result is going to be dysfunction. That causes chaos at the office that often spills over into family members' personal lives, since the boundary between time on and off the clock can be a little hazy.

What causes the problems noted above? Communication breakdowns-such as not talking specifically about critical employment issues-are the biggest culprit. Oftentimes, too many assumptions are made or parents expect their kids to "trust" that everything will be taken care of-but nobody discusses the hard stuff about money or expectations. This lack of direct, honest communication can result in:

  • Difficulty respecting boundaries
  • Power struggles
  • Hidden agendas
  • Compensation issues
  • Entry and promotion issues
  • Succession planning challenges
  • Ownership challenges/who has power
  • Communication issues/who's included and excluded

These concerns can be addressed as simply as adult children not calling their parents/bosses mom and dad on the job to verbally create needed boundaries, or they may be as deep-seated as trying to stop a sibling from having anything to do with the future of the business. The important thing is to deal with things upfront-talk about "the elephant in the living room"-so both simple and complex problems can be dealt with in a proactive way. Regardless of the issue, the behaviors or feelings that lead to it are usually the same, and can include:

  • Feeling patronized or not taken seriously
  • Needing love and recognition
  • Lack of trust
  • Lack of respect
  • Favoritism
  • Fairness issues

Is your head spinning yet? Are you wondering how any family business can survive in the face of all these potential issues? Good news! There are a number of strategies that can be used to overcome these challenges.

All families have their own ways to communicate with each other (or not), but the behaviors that might work around the dinner table don't necessarily translate into the workplace. As a matter of fact, without some form of behavior modification, family businesses can quickly find themselves in peril.

At the root of the solution to overcoming the issues I pointed out in the previous blog is communication. Yes, it's not rocket science; you may be amazed at what happens when open and honest dialogue takes place and everyone knows "the score."

    Every family business should incorporate the following two practices into its operating procedures:

  • Regular communication. This sounds like a no-brainer, but it's surprising how many times family members feel out of the loop with respect to what's going on in the business. Communication can occur through formal family councils and meetings, where the agenda is business-focused, as well as through informal channels like family retreats, dinners and vacations, where business and non-business topics are discussed.
  • Regular education. Never assume that family members have the requisite skills in effective communication, conflict resolution, listening, negotiation, assertiveness and other areas that are crucial to business success. Provide ongoing training to ensure that all family members have the knowledge they need to add value to the business and do their jobs well.

When conflict does occur-as it invariably will-it's important to separate the person from the problem. This is true when resolving a conflict with anyone, but it's especially critical when dealing with a family member. Attack the problem rather than the individual and focus on your interests rather than your position; make your interests known, but also understand those of the other person... and make it your goal to create a win-win situation based on mutual gain.

When you're faced with simple conflicts, those occurring in the "here and now," you can often resolve them quickly and move on. More complicated conflicts-those that have a lot of history behind them and are more likely to revolve around family issues-need to be approached in a more structured manner, and this is where rules of governance can come into play.

You'll find there will be fewer opportunities for conflict if you've clearly spelled out business "rules" such as:

  • Entrance requirements
  • Paths to promotion
  • Salary schedules

These rules of governance provide you with documentation to back up your positions and they also promote a sense of fairness, something that's especially important to the non-family members of the business. Above all, you must treat family members like any other employee, with one major exception: it might be to your benefit to find another way to compensate-such as leaving an inheritance-family members who need to stay home because they're non-functional at the business.

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