One of the greatest joys in being a parent is that your children cannot sack you and find another. You can repeatedly make mistakes time and time again and still keep the jobs of “Mum” or “Dad”. You’re there for life.
Sadly you cannot sack your children – no matter how tempting that might be.
However in a family business, there is an expected level of conduct from the family towards the business that is critical towards its ongoing success. And this applies to both the family members employed in the business and the family members who are not employed in the business.
Because like it or not – children of “the big boss” have an element of power that staff do not have. And this needs to be acknowledge and respected.
A starting point (and an easier point) is to give the non-family members some written guidelines about how they should act – a “job description” if you like. We are not talking about a prescriptive list of table manners – but an acknowledgement that certain actions by a family member will impact on the business irrespective of how the family members feels about the connection.
So what is in the “job description”? Well you could talk about behaviour that fits into the family values and behaviour that does not. You could give examples of how some type of behaviour will affect the family business.
So what about personal relationships with family members and family business employees? If the son starts, and stops, a relationship with the head of research: the backlash against family business performance could be significant. Even further, while the child may not have any contact with the business the risk of harassment, by virtue of the family relationship or a perceived position of power, could make things difficult for unfair dismissal cases.
Or that family members should try to avoid, or disclose, if they are making investments with employees of the family business. What if the daughter undertook a property development in Maylands with the CEO and the development failed? Would the CEO look to the family to “bail out” the project due to the employment relationship?
Simple matters like a family members conduct on social media, or becoming “friends” with the employees of the family business, should be clearly articulated. If a child has a disagreement with their parents – should that be discussed online? What about if the two family heads become divorced – how will that impact clients and their views about the quality of the family business operations.
What about disclosure of the family’s activities and lifestyle? It is quite difficult for “the boss” to terminate staff because of an economic downturn if a child is seen travelling in luxury hotels world-wide. The truth might be that the “luxury hotels” are not that expensive (or luxurious) and the trip might be boring drudgery – but if they are not clearly communicated to the world at large the actions of the non-family member will reflect on the family business.
For family members employed in the family business their role is even more complex. The line between entitlement and employment is often very difficult to differentiate. And the level of influence and hierarchy of a junior family member for other employees, often in more senior positions, to understand is difficult.
If a senior manager gives a junior family member a written warning about performance – does the junior family member complain to the family head in the evening? Can the senior manager terminate the family member or is their job to “babysit” that person?
A document that starts to outline different positions in a family is a great way to start. And this charter, constitution, or governing statement, is an evolving animal. Start with a simple small document and then continue to add to it. Family members will ordinarily resist this process so acknowledge it will take many years to get buy-in by different people.
Getting a third party to facilitate this process is critical. If a family tries to “sort it out” by themselves the process generally gets traction for about 4 months and then stops. An outsiders makes a difference in that you introduce some type of system to lock in the development.
The choice of this person is also critical. The person should be paid to make sure the professional relationship is enduring (a friend will often lose energy). And the person facilitating must be independent of what the family does – if the person is taking success fees from say, investments or property development, the influence, or perceived influence, of the facilitator will undermine the process.
For third-party guidance and advice on managing family in your business the professional way, get in touch with Westcourts accountants in Perth, make your family business become great.