CEO Coaching: Family Business or Monkey Business?

Families are mostly wonderful but somewhat disturbing. They’re a place of great joy and great pain. Sometimes supportive and nurturing, sometimes competitive, petty and a psychological shitstorm. Work environments have the same attributes.

Whichever god created the concept of business one day woke in a foul mood and said, “Hey, I know! Let’s combine them and see what happens!”

For every Ford Motor Company, Walmart and Cargill, there are many more Bob and Sons struggling to hold it together because of the challenges that both business and family bring — in fact, multiply.

Here are a few issues you must address if you’re mixing family and business.

1 Decide now whether you’ll value bloodline over competence. Does a last name get you promoted? The market doesn’t reward incompetence, nor does it give a damn that your lazy VP of Sales shares your last name. The chances that your brother is the best person to fill your opening are small. If you own the business and want to take a financial hit to employ relatives, go right ahead — just do it consciously, and realize what you’re sacrificing. If you want a relationship with your brother, invite him to Sunday dinners!

2 Don’t wait until your retirement party to work out the change of control and transition issues that will ensue. If Barbara is smarter and more industrious than Billy, are you going to make them equal partners, ensuring a lifetime of family confusion and strain? (That’s just the family members; think about the employees!) Do the kids or your niece/nephew want to be in the business? A passion for poetry or snowboarding is not one of the top three attributes to run a company.

3 When push comes to shove, will you ask, “What’s the right decision for the business?” or will it always devolve to larger dividends. Your customers will surely keep buying from you because you have a bigger boat and a bigger house, right?!

4 Decisions about people are tough; decisions about family members are even tougher. You might easily fire Fred Smith who has violated company policy too many times, but what about Aunt Sue? If you fire a family member, can the personal relationship survive at a healthy level? If you’re the one being fired, do you think that’d be the case?

Too often, founders are unwilling to think through these tough issues, and the result is a great deal of family pain. Failure in business is a tough thing, but screwing up the family as well … 

The right structure, the correct governance policies and good operating practices can avoid much of this. You can have a successful multigenerational family business, but the odds aren’t great, and you have to do it in a planful, nonemotional way.