Mixing Family and Business: Best Practices

Posted by John P. Palen, CEO of Allied Executives.

There are two general paths to working effectively with family in business. I’ve witnessed family members who work their way up in the business and demonstrate that they’ve earned their position. I’ve also witnessed family members who spend time out in the world working for other companies or organizations in order to bring that perspective and expertise back to the family business.

Either path can be effective. The main thing is to set aside family ties and emotions in the interests of a successful business. If family members truly offer the skills and strengths necessary in the role they seek, fine. If not, either they need to develop those skills and strengths or find another job.

If a family member is allowed to take a leadership position just because of their name and relationship with the founder, then there are problems. Some parents, for example, don’t have the courage to tell their kids they aren’t right or ready to join or take over the family business. Use these best practices gleaned from other successful family businesses to make that conversation easier.

1. Get real.

Check your family member’s attitude. Is there a sense of humility and willingness to follow a development plan, or a sense that the role is theirs regardless of their effort? Ensure that their attitude is right before anything else.

2. Conduct an interview.

Just like you would for any business partner or potential employee, interview the family member to find out why he or she wants the job. You will figure out pretty quickly whether this person is being truly realistic about their level of skill, responsibility and willingness to take direction.

3. Agree to a plan or trial period.

Whether it’s a 1-year, 3-year or 5-year plan, outline the steps this family member must take to develop skills, maturity and trust for the role he or she wants. This might include working outside the business for a while, or working in a less glamorous role to learn the industry literally from the ground up. In a construction company, for example, the family member might start in the field to learn about the people, processes and costs of construction.

Make the plan public, so that other leaders and employees know that the family member is earning a future role — especially if the plan is to groom this person as an executive or owner. This way, others can participate in supporting the plan and challenging it when necessary.

This plan, rather than the owner’s feelings or blood ties, will determine the family member’s potential in the business. If there is evident passion and a willingness to work, there is a way. It might not mean the family member becomes CEO, but it could mean a very satisfying way of life and sustained family legacy. 

Make sure to measure the family member’s progress along the way and have regular conversations. Things can change over time, and if it happens that the family member chooses another path, then your company should have a plan B.

Struggling with the family legacy of your company? Talk to Allied Executives about joining other family business owners and learning new ideas in a confidential, noncompetitive setting.