Dr. Val Farmer
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Rural Mental Health & Family Relationships

Advice For Family Businesses: Operate Like A Business

June 16, 2003

Being in business as a family is tricky. There is the usual goal of being competitive in a free market economy where winners and losers are decided by the bottom line. Family or not, the business needs to make money.

The family goal is to have lifelong loving and harmonious relationships with your business partners, regardless of whether the business does well. Business success or not, the family needs to get along.

Business thrives on conflict. Management tries to create an atmosphere where the best ideas win no matter the source. In a good business, conflict of ideas emerges while maintaining respect and dignity in the workplace. Successful businesses harness the cooperation, energy, creativity, accountability and loyalty of relatively autonomous individuals whose social lives do not intersect.

A successful business replaces individuals who do not measure up to their jobs. Under adverse circumstances, a successful business makes tough decisions on reducing the workforce to adjust to business realities. The bottom line is that business survival depends on unemotional decisions geared to bottom line considerations. Businesses may care, but that caring can only go so far.

We are family, no matter what. A successful family stays loyal to one another and cares about each other's well-being despite circumstances. Bottom line decisions are emotional and may not make much sense financially. It is precisely because of long term commitments and tenacious motivation that family businesses weather poor business cycles.

Well-run businesses take on the caring qualities of successful families. In family business, well-run families take on business sensibilities of successful businesses.

What is this middle ground that represents the best of both worlds? Good companies:

- have vision and commitment for long term goals. They value the human resources in the organization and invest money and time to improve the abilities and specialty skills of its associates.

- involve its associates in the a process of management and leadership. The vision and challenge of the business is shared and believed. Each worker has a vested interest in the future success of the organization.

- have systems of communication in place where ideas at the operational level are heard and make a difference. This takes mutual trust and respect. Assumptions are freely challenged in an atmosphere where criticism is given and taken without offense.

- delegate responsibility and decision making to the lowest level possible. Associates are trusted to do critical jobs and are provided with the information, resources and support to carry out their duties. Evaluations are infrequent and are based on results.

- give abundant recognition, encouragement and appreciation for the work being done. The human need for being distinct and unique is understood and met.

What can a family business do to create this kind of atmosphere?

Some family members aren't meant to be in business together. A domineering family member may not understand the need for the growth that comes with shared decision-making, personal accomplishment and recognition. The power and control of certain family members can rob others of their dignity, self-respect and chances for personal development.

Adult children or siblings who are lazy, selfish, rigid, dishonest, addicted or dependent rob the rest of the family members in the business of enthusiasm and motivation. Consistently working around someone while walking on egg shells or carrying their load is no fun. Teamwork requirements and long term commitments of a family business demand mutual trust and respect.

If the owner/operators have personality traits that interfere with team-building, fairness or personal growth, children should seriously review their options even if the business opportunity seems attractive. Over time, these abrasive interactions take a toll on family relationships and make the workplace a source of pain and frustration. In non-family employment, people exercise their option of quitting and moving on.

The partners in a family business can offer support and encouragement to a family member who has difficult personality traits or personal problems as long as they don’t saddle the business with those problems. The more families that are involved in the business, the more difficult it becomes to blend personalities and capabilities without ruffling feathers.

Even when families get along famously and have wonderful working arrangements, family goals and circumstances start to differ markedly when cousins start to enter the business. Before family businesses reach that point, they need to start preparations for splitting the business into independent or semi-independent enterprises. Because business relationships work well in one generation doesn’t mean that they will in the next.

Family business meetings important. Most family businesses don't have formalized family business meetings. In a family business meeting, issues like accountability, long term goals, roles, fairness and mutual expectations can be discussed in a free-wheeling, democratic fashion.

In the interest of being a loving family, family members stuff their ideas, feelings and resentments. Disagreements are confused with disloyalty. The lack of communication chokes off needed improvements. Without this communication format to surface and resolve conflict, the business suffers.

There is great power and commitment in a family business. Successful family businesses separate business and family concerns so that the business benefits from creativity and accountability that might be inhibited by the family’s need for harmony. If done well, usually in a family business meeting, a family business can have the best of both worlds.