If your company is “a family tradition” you are numbered in the 80% to 90% of companies in North America (large and small) that continue to be a powerful influence*. Since the majority of the wealth in the U.S. comes from family businesses, that makes your family matter no small matter when it comes to your bottom line.
It is perfectly normal that a family-owned company’s management style is more informal in the beginning. Conflicts, especially in a family owned business, are also normal. A few typical challenges faced in family businesses:
- The quickest way to alienate your employees is to create or accept a company culture based on nepotism. Even if nepotism is perceived, non- family employees may lose motivation to work for you and at the same time family employees may become complacent because they think they won’t have to suffer the consequences of poor performance: both will affect your company’s financial health.
- Talented potential leaders may not be attracted to your company due to the perception that only family members will be promoted to management or senior positions.
- Pressure to hire relatives who aren’t qualified
- Let’s be realistic: In a family business “it is always personal”; accepting (or giving) feedback on the job involving someone you love is tough. However, if emotions interfere, and the boss does not take corrective action, he or she will be ineffective.
- Family members may waste time while on the job discussing family events or family conflicts during working time
- Family members versus non family members on your staff – factions or ”us versus them” mentality or relative in conflict with relative – interferes with teamwork and workplace harmony
- Two main reasons employees leave a family business? Perceived limits on growth potential and family conflict (feeling like they are in the middle of a family feud).
Here are a few of the ways Human Resources by TBC, LLC can be valuable:
- Improve communication, develop formal employment policies that are applicable to all
- Set and apply compensation rules
- Create/update job descriptions that outline roles and responsibilities clearly
- Create and establish a performance review system that requires family members to compete with non-family members for advancement
- Establish a welcome plan for family members who want to join the company
- Serve as an outside third party to handle conflicts
- Provide management training to include how to separate emotions on a personal level from business managing
“Mom & pop stores are not about something small; they are about something big. Ninety percent of all U.S. businesses are family owned or controlled. They are important not only for the food, drink, clothing, and tools they sell us, but also for providing us with intellectual stimulation, social interaction, and connection to our communities. We must have mom & pop stores because we are social animals. We crave to be part of the marketplace.” ― Robert Spector, The Mom & Pop Store: How the Unsung Heroes of the American Economy Are Surviving and Thriving
*Astrachan, J. H. and Shanker, M. C. (2003), Family Businesses’ Contribution to the U.S. Economy: A Closer Look. Family Business Review, 16: 211-219.