Jeff Faulkner

Rules for Smooth Family Functioning in the Family Business
July 17, 2007

If you want your family business to survive for the long haul, you gotta work on your family issues. Eventually trouble arises in every family. The trigger for the trouble could be anything – business succession, death of a family member, marriage of a family member, birth of a child, divorce. Whatever it is, rest assured trouble will come. And the impact on the family business can be devastating. Why do some families seem to navigate these tumultuous waters with relative ease while others are destroyed by them? One simple reason – the family has worked on the things that will help them function smoothly no matter what happens. They have developed a great deal of flexibility with one another. They are not rigid in their roles and patterns. They generally give each other the benefit of the doubt. They have developed healthy communication patterns. There really is no magic to it. It’s just plain ol’ hard work.

To help your family work hard at functioning smoothly, as a family business consultant I recommend the following:

1.      Have family meetings – initiate a communication improvement program. Your family will not communicate effectively if you don’t intentionally do so with informal family meetings. Consider using personality/behavior inventories to provide insight into how to communicate more effectively with one another.

2.      Consider a Family Business Council – this is a more formal family meeting environment to communicate business issues impacting the family and family issues impacting the business.

3.      Develop a unified family vision for the utilization, growth, and succession of the business.

4.      Develop covenant agreements – this is basically a code of conduct that documents how you are going to act as family members in business together. How do you make decisions together? Resolve conflict? Hold each other accountable? What are the qualities and values by which your family leads the organization? What are the principles of teamwork that your family will adhere to?

5.      Develop a comprehensive family member employment policy that addresses the following:

a.      What makes a family member eligible for employment?

b.      What are the education/training requirements?

c.       What are the behavior and attitude expectations of family member employees?

d.      How are family members compensated?

e.       What are the perks that are available to family members?

f.        How do family members advance in the business?

6.      Do not place family member employees in a direct reporting relationship to another family member.

7.      Support the non-family managers who are supervising your family members. Let them know how much authority they have over your family members.

Instituting these functional structures will allow your family to navigate without dysfunctional outcomes. Recognize that you will probably need a skilled family business advisor to facilitate the development of an environment that will yield smooth family functioning.

Posted by Jeff Faulkner on July 17, 2007 | Comments (0)