managing a family business when your relatives are slacking off

A reader writes:

How should one go about managing a company with relatives being the majority of its staff? I am on route to succeed my father as managing director, but lately there have been lots of issues with members of the staff (they’re my relatives) who are not doing their jobs responsibly. It’s not easy to tell them off, fearing that any small, misplaced comment would spark off a family feud. My father would rather dismiss the issues so as to prevent confrontation.

Family businesses are often management nightmares because they have two conflicting missions: turning a profit and providing jobs for family members.

Here’s the most important rule for family businesses to follow:  The business owners must make a clear decision about whether they want the business to be a high-peforming organization or whether they want it to be a source of jobs for family.

Either one of these is a legitimate decision, but you’ve got to make it deliberately, not just let it happen by default. (If it happens by default, it will nearly always be in favor of providing jobs for family at the expense of the business’s performance.)

If the business wants to be high-performing, then everyone needs to be clear on the fact that every employee, including relatives, will be held to the same high bar, and some might be fired. You’ve got to make sure that you understand the ramifications of that — potential hurt feelings, family feuds, etc. (And once you get clear on those ramifications, you might realize that you don’t want to hire relatives at all.)

Or, if the business wants to be mainly a source of jobs for family, then you need to realize that that means you might be accepting lower quality work than you’d otherwise get. Again, this is a legitimate decision if you decide that’s how you want to order your priorities — just make sure that you’re thinking it through and making a conscious choice. Also, if you make this choice, you owe it any non-family employees to be up-front with them before hiring them that this is how you work. Because it really sucks to take a job at a family-run business and then discover that things aren’t done on merit. Tell people ahead of time, so they can decide if they want to sign up for that or not.

Clarity of mission and getting everyone on the same page are what’s key here.

{ 18 comments… read them below }

  1. Mike C.

    I would just like to reiterate that if you as a family member think things are bad, imagine the folks working there who don’t get to benefit from your nepotism. I was there, and it’s terrible. The head of the family was a tyrant, his wife didn’t know what she was doing and all the upper management where his brothers or sisters. I can’t stand “family run small businesses” because of this crap – everyone ducks their head when problems arise because it might turn into a family fight at Sunday dinner and so on and nothing ever gets fixed or changed.

    1. HL

      I think that Alison’s advice to the OP is significant; it all boils down to good management (as usual). If the “boss” doesn’t possess the courage to do what is best for the business, the organization will implode.

      This kind of thing can also happen at a business in support of a “membership organization” where one or more of the members are employees (and one of those employees is incompetent). In this case, it could be the non-member employees who are denied resources, given skewed information, or outright blamed for any and all errors, while the inept employee who is a “member” functions with impunity. Then when the business begins to lose financial support, it is the non-member employees who lose their jobs first.

      So, when interviewing at an organization that is either family-owned/operated or member/operated, it’s important to ask good questions about the culture of the business should they extend an offer – you may find it’s a good fit after all!

      1. Jo

        This could be said of giving family friends positions as well. I worked for a small company that was run by a husband and wife. While they didn’t give the son any extra benefits, going so far as chewing him out for parking in my spot, they did give preference to the other office person. She was a long time family friend. She was able to take company time and do personal things at her desk, but if I took my lunch time at my desk and did something personal it was a no no. I only stayed 3 months.

  2. Anonymous

    It is possible to treat family members just like any other employee and not have it turn into cold glares over the dinner table. My parents ran a company together for nearly 30 years– at one point my dad actually fired my mom (she was stretched too thin, with a new baby, two other kids, and her own projects and responsibilities and the work was suffering). His reason was at that point in their lives, they needed someone who could focus on the x y and z of family life, and someone who could equally focus on the x y and z of what had to be done at work: the same person couldn’t do both. They’re still married, and in fact a couple of years later my mom was back at the office like always.

    All my siblings and I, at various times, did fill in secretarial phone answering stuff at the office on school holidays: and it was always made very clear that in fact, we were held to a higher standard because we were the boss’ kids, not the other way around. Everyone just has to be clear that it’s alright to feel personally bad about things that happen at work some times (that happens even in non family workplaces), but in a family business you can’t vent those feelings until you’re at home.

    1. KellyK

      I think that the happier and more “functional” a family is, the better chances they have of doing this successfully. People with good communication skills, who don’t hold grudges or drag other people into their disagreements can probably make it work, moreso than a family whose annual Thanksgiving get-together always results in screaming and swearing.

      The OP might have to ask himself if he has that kind of family or not, because the relationship dynamics aren’t going to change.

  3. JT

    I’m curious if there is a way to bridge those two goals as follows: the business will be high-performing and family members will get jobs but the job descriptions, including time commitments and relative pay, will be explicitly designed around their strengths, weaknesses and interests. And then they have to perform and be accountable in those roles just like everyone else is in theirs.

    It seems like successful family businesses are like this, with family members slotted into roles that it might be strange to advertise for, and doing a good job in those roles.

    1. Bridgette

      “..then they have to perform and be accountable in those roles just like everyone else is in theirs.” I think that’s the key right there. No matter how you go about doing it, everyone needs to be made accountable, whether or not they are family members. I worked for my father as an office assistant for a few years while I was going to school, and he absolutely made sure I was held accountable in my role, even when I was just answering phones and sorting files. So maybe the jobs don’t necessarily need to be designed around the family member’s strengths and weaknesses, but just make sure each person understands that they are doing a JOB, not receiving a free ride.

  4. Anonymous

    I worked at a company where my boss employed his mom as a manager. The majority of the time, she talked to him as his mother (and vice versa). This meant that they also argued like family would and not co workers. It was very awkward as an employee to be hearing a family argument in a professional setting. And he probably never thought of firing her no matter how bad it got.

  5. Charles

    To AAM’s excellent advice I would add; do all this FIRST thing! Don’t wait until you have your first issue; it will be too late then.

    I would also suggest that you have some sort of kick-off meeting explaining to everyone how things are going to be run now. During which you remind everyone that you are NOT your father, and that you will be operating differently. You might even say that they are working for a different company now (okay, that might go over like a lead balloon; but if it is true, it needs to be said!)

    Also, to expand on AAM’s advice for giving a heads up to outsiders; please, PLEASE, make sure that neither you nor family members try to get others to take sides in your family disputes. It doesn’t matter if the dispute is business related. It already sucks to be an outsider and held to a different standard, we do not need to be a pawn in your family drama. That is one sure fire way of killing any shread of morale that is left.

    This includes making sure that each employee has only ONE boss to listen to. No one needs to have two family-member bosses giving contradictory directions. If you have a problem with what your brother – my boss – told me to do; go take it up with him, don’t blame me and tell me to do something differently. Think about what happens to me when your brother – my boss – comes back and sees me doing something other than what he commanded me to do. If you do this kind of crap; don’t wonder why you have a high turn-over rate.

    Lastly, family-businesses can take a toll on one; afterall, just look at the UK’s royal family – is it really any wonder that they all seem so dysfunctional? Good Luck!

  6. Student

    OP, are you really sure that you want this job? Is it possible that the family business might be a bad fit for you? Honestly, despite everyone’s advice, I don’t think you’re going to have a lot of luck coming in and trying to change the entire office culture if it’s already focused on family employment rather than performance, even if you are the boss, especially when you are inheriting the job title.

  7. Katie

    Does anyone have an resources (books/blogs/etc.) for small family run businesses? I work in a family business – my FIL owns the company and both my husband and I work/help manage it. We are definitely focused on performance, and we continue to grow as a result. As we grow, I know we’ll continue to encounter problems unique to both small businesses (less than 10 employees) and family businesses. I’ve been looking for resources about businesses like ours for a little while and haven’t come across anything, so I’m open to any suggestions.

    1. Mike C.

      I would be curious about this as well. I still remember stories from my boss (son in law of the owner) spending Thanksgiving dinner arguing over the need for expensive equipment. How in the hell do you keep business and family separate?

      1. Rana

        I would expect that it requires good communication and an agreement by everyone to set clear boundaries – sort of like how a couple who works at the same company might agree to not talk about work after hours, and to not talk about personal stuff at work.

        But it won’t work if all parties aren’t on board, or if people expect it to “just work out” without talking about it first.

    2. Alisha

      Caveat: This is a general management book series, but I really like Bruce Tulgan’s management books/tips. If you get just one, get It’s Okay to Be The Boss. I found it to be a life-saver for managing departments of 12-15 people, and it seems especially on point for small business owners too. Tulgan wrote a book about managing Gen-X and later, a sequel on managing the Millennials, but much of the content overlaps with what he says best in It’s Okay…

  8. Jamie

    There is only one thing I’d add to Alison’s advice, and it’s to keep in mind that employees, no matter how much you like them personally and respect their work, are still employees.

    They will not, as a rule, give feedback with the same degree of freedom as the family members will. Even those employees who you think should feel they have total job security will never feel as secure as family – that’s just part of being an employee. So if you want their feedback solicit it and make it safe from repercussions.

    That said, I have been employed at two family businesses and the one where I’m at now has been the best place I’ve ever worked in terms of fit and culture. I think that’s because it’s a business which just happens to be run by people who are related to each other. The family members have been, and could easily be again, quite successful in other companies so no one is here on the charity job plan.

    The problem in some family businesses is the sense of entitlement. Kids who feel entitled to certain perks or positions without earning them, or parents who feel entitled to co-opt their grown children’s careers which can breed resentment. When people are working together voluntarily to build and maintain a family business that is a completely different scenario and can be really healthy.

  9. Two-cents

    For an example of a family business that focuses on making the business successful while still being able to provide jobs to many in the family, check out this article from Fortune: http://management.fortune.cnn.com/2012/07/09/family-business-succession/
    This link is to a great article on the Mitchell’s family and their clothing stores and how they’ve managed to work through succession and management issues. They hired an outside consultant to help them with their planning. This might have some useful ideas for the OP.

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