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Managing in a Family Business

Managing in a Family Business

Family businesses are quite common. According to the National Federation of Independent Business, 1.2 million husband-and-wife teams ran companies in 2003. And 34 percent of the companies listed on the Standard & Poor's 500 Index are family businesses.

How do you manage when work and family mix? This expert advice will help you navigate this potentially complex situation successfully.

More than Management Skills Required

As a manager within a family-owned or operated business, the reality is you will likely spend just as much time finessing family dynamics as doing your actual job, according to Dr. Janet Scarborough, psychologist and career coach with Bridgeway Career Development. If that sounds overly burdensome, you'd be better off finding a new job rather than trying to learn how to successfully navigate the extra complexities of such an environment, Scarborough says.

Managers can be put in tough situations if, for example, the owner's son keeps showing up late for work or the president's daughter isn't meeting sales quotas. It's especially difficult to manage employees who have a sense of job security because of their family status.

Backlash from other employees emerges when family members receive special treatment or aren't reprimanded for unacceptable performance or behavior. This presents another set of issues for the manager, who has to worry not only about relationships with superiors but also relationships with those they supervise and depend upon to do their job -- and ultimately make them look good as a manager.

"Watch to see how such situations have been handled in the past," Scarborough advises. "If you observe that there is a cultural norm against disciplining family members, you cannot proceed in an unreflective way, because you might end up being the person hurt most by the pushback. The smart thing to do is to assess who really has the power in the organization and then to approach that person with a carefully worded statement about the costs to the company if the problem employee continues to misbehave. Say something like, ‘I'd like your ideas for what to do about John. When he misses deadlines, our best client becomes upset.'"

It's often difficult for managers to discuss internal issues when peers are family members of those being discussed. That's why owners and leaders should establish what messages they want to send to family members about pushing their influence within the company, says Jan Ferri-Reed, PhD, president of KEYGroup, a company specializing in creating productive workplace cultures.

Family Business Infrastructure Makes a Difference

Someone in the company other than a family member should serve as human resources director or manager and be given the latitude to take the lead on disciplinary matters, says Ferri-Reed. "Behavioral ground rules should be established on issues and performance that the human resources person can refer to when calling a family member on a problem," she adds. "Of course, all disciplinary matters should be held in the strictest confidence. This holds for family members and nonfamily members as well."

Scarborough says the most important thing is to get buy-in from the highest-ranking family member so disciplinary action isn't seen as coming from an isolated manager who might not understand the business's history and cultural norms.

"Managers should be aware when family members might be manipulating family relationships for personal ends instead of focusing on what's good and appropriate for the business," Ferri-Reed says. "Managers should establish ground rules with family members in relation to which they can call family members on when manipulation appears to be occurring. Most importantly, tying positions in the company to results helps to build personal accountability into the management process."

Scarborough adds that every company has unspoken rules for how people earn rewards and respect. Clarify what is expected of you and what the reward will be if you meet your business objectives. If the company fails to honor its promises to everyone but family members, consider this a signal to hunt for a new job.

"You cannot separate the family from the business, because families who start businesses usually have their identities completely wrapped up in the business," says Scarborough. "If you harbor the fantasy that the two can be separated, you will be frustrated. It would be far better to accept the situation for what it is and to seek additional training and education in how to thrive in a family-owned business."

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