A family business is one of the oldest forms of businesses. It revolves around the members of one family, so it is an intersection of two organizations – the founding/ owning family and the business. The majority of the ownership lies with the members of the family such as spouses, children and parents, and relatives, who play the roles of stakeholders, managers, Board Directors, advisors and employees.
The owners of family businesses usually pass ownership from generation to generation for decades which can be a blessing, as it brings such families closer in day-to-day life. It is generally accepted that family businesses are more resilient than most other businesses. This happens when the owners are committed to building up the business and passing it over to the next generation in a better condition than they received it. Such instances are perfect combinations of tradition and change. However, family businesses are not immune to problems. Here are a few challenges that are common in family businesses.
Accusations of nepotism
In family businesses, most of the time the family members are given their jobs based on their relationship with the owner. In such organisations that also hire non-family members, they will constantly feel the need to prove themselves over the ‘family heirs’, who would, otherwise ‘steal’ the promotions or benefits that they have ‘gained’. To prevent this from happening, the owners of family businesses should enforce policies that are fair by the non-family members. It is important that the family members are not just parachuted into the business but gradually introduced to the business with a proper plan, and made to prove themselves. It is also important that the new family members join the business with a good understanding on the business domain as well as the existing workforce.
“Who is going to take over the company next?”
Deciding on this at the earliest possible convenience, gives more time and space for the grooming of the next generation. It will give them exposure to experience the processes within the company and adapt accordingly. However, while determining that, the members of the family and non-family members might face conflict. ‘Are you going to put the family first?’ ‘Is succession exclusively for family members?’ ‘What value is placed on the qualifications and experience of non-family members?’
How do we deal with this issue? Here are a few tips:
- Having a family retreat to discuss and agree all matters in a relaxed and undisturbed environment
- Preparing the new generation earlier hand
- Having a meeting on a neutral ground without conflicts
Separating Business and Emotions
Separating family ties from the business is almost impossible in all negative and positive things. For instance, if your family member is going through a hectic time, you might consider giving him / her more flexibility at work, which might really affect professional decisions. If there is a mismatch of ideas between two or more family members, they might flare up randomly on vacations or even at the dinner table. If you own a family business, you need to realise the importance of setting sentimental attachments aside during working hours and keeping away from discussing work during family time.