Set Standards for Family Business Success

Set Standards for Family Business Success

Ask Andi: Our family business success has a lot of tension. We need to learn to work together so that we don’t tear the family apart. Disagreement happens when it’s not clear who is in charge. Or what is or isn’t acceptable to be doing. How do we strike the right balance?

Thoughts of the Day: Family business success is about striking the right balance. Just about every privately-held business is family-owned in some aspect, and therefore open to conflict. Laying out clear lines of authority can help. Allow people room to make their own decisions, backed up by charging everyone with responsibility for fixing their mistakes. Consider rules to clarify the level of authority and decision-making power. Get everyone on the same page with goals.

Set Standards for Family-Owned Business Success

Whether the business gets discussed at the breakfast table or at staff meetings, anytime that family members weigh in with their opinions there’s an opportunity for conflict. Conflict can be deep-seated, loaded with family baggage, and complicated. Assessing a family member’s ability to perform can be clouded by your relationship with them. Add in the challenges and pressure that go with running a business and you could be sitting on a powder keg.

Surveys indicate that over half of all privately held businesses have 2 or more family members working together in the business. While the majority of business owners indicate they’d like to have a family member take over, only around 1/3 believe that will actually happen.

With the odds so much against making a great success of employing family members, why do so many try and make a go of it? There are lots of reasons: Build something together. Keep family members close. Succeed at a common purpose. Create possibilities for family members to try their wings. The trick is to remain focused on the opportunities and avoid the downsides. Start by agreeing on who is in charge of what. Draw up an organization chart. Assign duties and create individual job descriptions. Where there’s overlap, decide ahead of time who will be in charge in case of disagreement.

Establish clear communication

Learn when to keep your mouth shut. Most people are way too free in the way they dispense advice to others in the family. Doubly so, when working together in the family business. Avoid laying blame, demanding answers, or otherwise communicating in anything other than a totally professional manner, especially when talking with other members of the family.

Set up separate workspaces, so that each family member has a place to go to. In times of conflict, encourage the use of space to cool off. Instead of forcing family members to continue engaging, walk away. Learn to table discussions before they become heated. Come back to debate topics when all participants have cooled off.

Hand out assignments. Expect all family members to step up and tackle what’s on their plates. If they’re not ready for the responsibility, consider the options – reduce duties, get training, assign a mentor. If mistakes get made, hold family members accountable for fixing the problems they created. Don’t step over them to take charge.

Create opportunities

When you first start working together, or by the end of today if you’re already working together, set up rules on how decisions get made. For example, if the decision falls in an area that reports to an individual, they get total support from other family members for any decisions they make related to that area. Decisions that cross departments need agreement by both department heads. Define how far any one family member can go in binding the company, spending money, giving out orders to employees, hiring, firing, etc. Set up a committee to arbitrate disputes.

Family members generally want what’s best for the company. They want the company to thrive, and it’s in their best interests to make that happen. Conflict usually erupts around the tactics of how to get from here to there.

Brainstorm, and use goals to create a picture of what the future can look like. Post those goals, and refer to them regularly. Check that everyone is clear on the next steps that need to happen in order to work towards goals. Review progress regularly to identify what’s working, and where people may need additional support.

Looking for a good book? Family Business Governance: Maximizing Family and Business Potential, by John L. Ward and Craig E. Aronoff.

Andi Gray is president of Strategy Leaders Inc.,, a business consulting firm that specializes in helping small to mid-size, privately-held businesses achieve doubled revenues and tripled profits in repetitive growth cycles. Interested in learning how Strategy Leaders can help your business? Call now for a free consultation and diagnostic process: 877-238-3535.