All in the Family – Part 1

By Grey Williams

Many if not most businesses have been family businesses, all the way back to the original, Zug’s wheel and fire.  Why is it then that this form continues to be a challenge, both for the family and for the business?  Is it the combination of roles- sometimes employee, sometimes owner, sometimes board member, sometimes manager?  Is it the intricate connection between business and personal success and satisfaction?

Many “legacy” family firms also have some of these characteristics, from privately held firms to Fortune 500 such as Ford, or local examples such as Dillard’s, Tyson, and even Alltel.  The overlap of roles becomes especially complex when some of the “family” report to non-family/non-owners.  This situation has many special characteristics that we can all learn something from.  This column will focus on the more positive and pleasant among them; later columns will deal with issues that may need attention.

The positives fall into three main categories, based on the natural alignment between business success and family prosperity.

First, family members tend to view the company profitability from the perspective of an owner, not that of an employee.  They understand that unnecessary costs, supplies, etc affect the bottom line, and they seem to be more conscious of their spending as well as that of others.

Second, family members are very likely to take pride in the company and getting the job done.  They are usually willing to pitch in and do other jobs that are not necessarily part of their job description.

Third, an indirect impact of having a family member around the workplace is that the non-family members view the family member as an owner, that is, as someone who is very interested in seeing that they do their job well and efficiently.  This can also create fear and distrust, if it is abused, but that’s an issue for the next column.

Along with these “natural” effects, there are some intentional activities that can be very helpful.  One father who was transitioning company leadership to his son kept their relationship positive by acknowledging that “there’s only one boss, and he’s right over there.”  The son continues to acknowledge and respect the father, even while maintaining final decision authority and accepting responsibility for company performance.  A married couple of our acquaintance has a rule, now 15 years strong, not to discuss work at home.  Another good idea is to have a specific succession plan for generational transfer of the business, and work through that carefully and with frequent communication.

In the next post, we’ll deal with some of the less pleasant issues involved in family businesses.