All in the family

Family sitting at dinner table smiling (high key)

Five top tips on working with your family.

When working with your relatives, family dynamics can spill over into the workplace, and likewise work disputes can sow discord in the family if not managed carefully. This can strain the individuals, but also the larger family, the company, and the employees.

On the other hand, when family members work effectively together they often say there is no greater enjoyment in their professional lives. If they feel they are working together to build something meaningful for future generations, the level of fulfillment is even higher.

I recently travelled to Australia to discuss the intricacies of working with family at the WOBI on Family Business events in Sydney and Melbourne. Here is the advice I shared at those events on how to successfully work with your relatives and increase the satisfaction of owning a business with your family.

1. Agree upon ways to make decisions

Families often have a hard time making tough decisions. However because families, by their nature, prefer to avoid conflict, it can be especially hard to confront or raise sensitive issues in a family business. To further complicate matters, families often prefer to make unanimous decisions; they will stall or punt a decision if one or two people do not agree, giving tremendous power to those who protest a decision. These and other inherent dynamics in families can slow decision-making in a family business, and in today’s fast-changing world businesses need to be able to make decisions quickly.

“One of the unique complexities of a family business is the role confusion that can take place.”

A family business is well served by having a decision-making protocol that describes who makes what types of decisions. Discuss them, collectively agree to them, write them down, and inform people. Most people want to do the right thing and stay within the guardrails, and a good leader will remind those who overstep. This type of formality in decision-making helps a family business maintain momentum to press ahead when needed, and also helps develop a professional mindset among family members.

2. Have clear and distinct roles – and the right business structure

Often in a family business, family members are asked to step in to solve problems, fix a crisis or fill in where needed. Sometimes their job title bears little resemblance to their actual job duties. This is often chalked up to the “nature of family businesses”.

It is natural to want to turn to trusted family members to step in when needed, but this has its downsides. It can lead family members to feel stretched and unclear about their always-changing role, and it can be difficult to measure their performance or give adequate feedback.

The solution is to add structure to job functions, reporting relationships and career paths. Start by documenting specific job responsibilities and performance goals for each role (for family and non-family employees). Next, define reporting relationships and communicate them transparently. Give non-family managers permission to supervise and mentor family employees and give appropriate performance feedback without retribution. And give performance reviews and have talent development conversations with all employees; don’t exempt family employees from this. Adopt performance-based criteria for compensation and career advancement for family and non-family employees.

3. Wear the right hat at the right time

In a family business setting, family members often occupy two or three (or more) roles simultaneously. One of the unique complexities of a family business is the role confusion that can take place by the intrinsic nature of family members having multiple roles in the system. The solution is not to stop wearing multiple hats, but rather to have the right conversations with the right people, and then to wear the right hat at the right time. This means having management conversations with managers where you wear your manager hat; having ownership conversations with the owners where you lead with your owner mindset; and having family conversations with your family members where you lead with your family mindset. It takes discipline to do, and may feel artificial at first, but delineating like this is effective.

4. Build unity in your family, and express appreciation

There are many triggers that can lead a family to fragment over time. Family relationships have natural patterns and established tensions that will give rise to conflict. It is not the conflict that is problematic; it is the way a family manages the disagreement and recovers from it that distinguishes a resilient family from a conflicted one.

Family unity is one of the foundation stones of an enduring family enterprise. The success of the business depends on the owners and the family being united and contributing. This does not mean that family members must agree on everything, but rather that they agree on where they are going, their approach for getting there, and how they will treat people. Your family needs unity day-to-day so that when in crisis, you have built strong bonds to get you through.

Building family unity is never finished. It is the result of ongoing effort. Here are some recommendations for building family unity:

  • Do not avoid tough conversations; have them civilly. If you need help, invite a neutral third-party to facilitate.
  • Communication has two dimensions: what is being said and how it is being said. Do both well.
  • Families are diverse groups by their nature. Give others permission to express themselves and voice their points of view. Listen to them, even if you have the power to decide.
  • Draw boundaries around conversations (business versus owner versus family conversations).
  • Apologise with sincerity.
  • Convey appreciation. Tell your family members what you appreciate about them on a regular basis.

5. Be clear on why you’re in this together

If a family aspires for its business to endure after the founder, the family needs a motivating purpose for staying together and owning the assets jointly. It is hard to work together, design a good organisation, excite and retain good talent, and be motivated to remain united if the family does not agree on what they’re trying to accomplish. This higher-level purpose is called a family mission. It gives the family the sense that “we’re in this together, in pursuit of the same things, and in the same way”.

Convene your family to have these important conversations about your family mission. Together, develop a family mission statement and write it down. To get started, answer these questions:

  • What do we want to build together?
  • What are we fundamentally trying to accomplish together?
  • What do we stand for?

Dr. John A. Davis, Professor of family enterprise, M.I.T. Sloan School of Management

This story first appeared in issue 27 of the Inside Small Business quarterly magazine.