Many contractors have at least one family member “in the business.” The company I ran for 15 years, Roth Bros. Inc., had the family recipe contained in the name of the company. We had brothers working for brothers, husbands working for wives, sons working for fathers, daughters working for mothers, etc. I have also spent time with several CEOs who run businesses with similar familial situations.
If you think this sounds like a recipe for disaster, I’m hear to tell you family working for family can work. You simply need to be aware of the potential pitfalls and avoid them with best practices.
Here are seven best practices–based on my experiences–that can increase the likelihood of success when family works for family, while also making sure Thanksgiving dinner remains an enjoyable event.
Tip 1: The boss must have the willingness to fire the family member
The elder or related boss has to be able, if deserved, to fire the related subordinate. I am not saying he or she should fire the relative. I’m only saying he or she must be able and willing to do it if necessary. This requires complete honesty and transparency.
Tip 2: Treat everyone equally no matter the relationship
Please do not discount the equal treatment side of the equation. Rightly or wrongly, you should know all the non-related employees think the relative got the sale, promotion or recognition because of their last name. It is a burden for successful subordinate relatives. However, a characteristic of a successful relative subordinate is that they hold themselves to a higher standard than their related boss does because they would do anything not to disappoint him or her. It’s at the intersection of equal treatment, higher expectations and not wanting to disappoint where a successful situation can emerge.
You can also ensure equal treatment of relatives by engaging a coach to evaluate related subordinates. Or have compensation, bonus and promotions decided by a non-family member or independent team.
Tip 3: The relative has to be held to the same or higher standards as others
The elder/boss has to hold the related subordinate to the same or higher standards as non-family members without exception. It is very important to create a level playing field both in perception and reality. Holding family to a lower standard will negatively impact the performance of your company. A related subordinate who feels entitled to the benefits his or her related boss worked so hard for does not understand the embarrassment he or she causes the related boss nor the negative impact to company morale. To reduce the likelihood of getting into this situation, I recommend developing a process before family members join the business.
Tip 4: Have a process in place before they join the family business
Developing a plan before a young family member joins the business only makes sense. This is a big move in both of your lives, so it should be well thought out and discussed. I don’t think you can start too early. Conversations can begin with junior high age kids followed by meaningful summer internships in the company while they are in high school and the early years of college. You will be able to gauge their interest level and passion from these internships.
Tip 5: Have them work outside of the business first
I recommend that family members work outside the business for three to five years before joining. This will allow them to see the business from an objective perspective, and to develop skills and confidence while gaining a sense of who they are without their last name getting involved. You will then get a family member joining the business who is self confident with proven business skills.
Tip 6: Engage an outside party
For some families the parent/child, brother/brother, etc. relationship is hard enough without complicating it by working together. Therefore, given the family dynamics involved in this process and to increase the likelihood of a successful outcome, consider engaging a coach or outside trusted party. They can facilitate sensitive conversations between the future related boss and subordinate about expectations, timing, role and opportunity of future ownership. In the end, to make it successful, the young relative has to want to join the family business for the right reasons. If they do not want to join, your relationship and your business is better off if they work elsewhere.
Tip 7: Keep tabs on how it’s going
As a CEO coach, I encourage real conversations between related parties about how things are working and what can be improved at least three times a year. When it works well, everyone knows it. Likewise, when the related boss-subordinate relationship does not work well, everyone knows it and talks about it–which negatively impacts company morale and overall performance. The key is keeping the dialog open and ongoing.
It’s really that simple—and that doable. Follow these seven best practices to improve your chances of success at work while reducing the likelihood of indigestion after Thanksgiving dinner. Choose not to follow them and pass the Tums!