This archive report was first published on 1 July 2020.
According to the Harvard Business Review, family businesses are stronger financially, have higher stakeholders, live longer, and are more trusted by the public. However, they can also be messy, with family issues spilling over into the workplace and causing resentments among employees.
One of the biggest challenges for family businesses is creating separation between work and home affairs. Meetings can quickly become an avenue to discuss family issues, and family members may have a sense of entitlement that offends non-family members of the team. To be successful, family businesses must find a way to create separation between family and business.
“Drop the use of dad, mom, sis, and sweetheart in the office,” advises Kathy Kolbe, the author of Business in Business: The Reality Checks for Family-Owned Companies. This simple rule can help family members maintain a professional relationship with each other at work.
Another challenge family businesses face is developing fair employment policies. Placing inexperienced and clueless family members in charge of departments can breed resentment and demotivate non-family employees. To thrive, family businesses must create clear policies about hiring family members, including minimum requirements for leadership roles and performance standards.
Non-family employee turnover is also a common complaint in family businesses. Employees may feel stifled by the family culture spilling into the business or feel that they don’t have an opportunity for growth. To counter this problem, family businesses must ensure that non-family employees are fairly compensated and have job security, such as giving them multiple-year contracts.
Finally, family businesses must plan for business succession. Planning for the survival of the business into the next generation can cause rifts, especially if family members have different opinions on who should take over. A well-defined plan that establishes leadership and succession can help mitigate disputes and ensure a smooth transition.
