Family Run Business – Some Tips On How To Keep It Just A Business

Family businesses are still an integral part of commerce. Often found as small and local they can be more sizeable and reaching out across national and global. Major global firms such as Ford Motor Inc, Walmart, all started as family run businesses with successive generations coming into the organization.

When the business is small and developing it makes sense to keep it in the family. You know what’s happening and there is a common purpose.

But there are difficulties in families, and “personality clashes” can spill over from the family into the business. To assist in avoiding potential problems here are seven key tips on keeping the business pure.

1. Never forget: it’s a business

Establish a level of professionalism standards typical of what would be expected in any company. Then ensure adherence to those standards by all participating family members in the business.

2. Non-family employees have a right to know their prospects

Non-family members employed in the business may have career ambitions. This is especially true of those who hold key management roles or those with expertise essential to the business. If succession to senior roles is always “family only” then make that clear. If you create a false impression then the business runs the risk of alienating its staff. And a disgruntled employee will leave, possibly at a time which could be disruptive to the business

3. Even family members should have formal written contracts

This is important on several counts. In the first place it lets family know what their position is within the company hierarchy. As we all know hierarchy is important especially where it defines decision-making and identifies responsibility. Secondly, it is important for equity allocation and overall control of the business. The vested interest of a family member is important for incentive and what their stake is worth should they decide to leave.

4. Avoid killing employee morale by showing favoritism

Family employees in a business still have to be capable If overt favoritism is shown, or poor performance ignored, or even rewarded, then employees may see no opportunity for themselves. The result would be potentially fatal for the company as good employees will leave.

5. Keep family members incentivized and trained.

Whereas point 4 avoids unnecessary favoritism it does not mean that any family employee should miss out on incentives. They need a fair wage and benefits to reward them for the good work they do. It would be wrong to treat family as “lucky to have a job” and then treat them unfairly. Relying on their loyalty alone to ignore such treatment would lead to future trouble.

6. Do not have one family member reporting directly to another.

This is best avoided as objective decision-making could prove awkward. Sometimes the size of the company might make this difficult. Or there is a natural hierarchy within the business where the senior members of the family have key positions. But if possible keep separate.

7. Non-employed family should be kept away from the business.

Non-employed family may see the business premises as somewhere to hang out. Idle people have the potential to damage morale. What tends to happen is they end up wasting people’s time. And they have a habit of asking employees to do things for them. Moreover employees often feel they are under scrutiny. It may be a little paranoid but employees will often have the sensation of “being watched”.