Observations
Family Business can be a source of great pride to a family however, pride can get out of control – encouraging family members to create unjustified and unrealistic expectations of benefits they “should” receive from the business, including: cars, phones, travel and entertainment expenses, and credit cards for personal use.
Whether caused by unthinking insincerity (unwise, or undisclosed promises); the economically unsupportable generosity of parents; the hopeful aspirations of optimistic children, or a delusional sense of entitlement by progeny (of any age), it’s a common cause of conflict for business families.
Consider family employment: whenever a family member works in a family business (especially if they’re a favoured, or over-protected son or daughter), issues of Expected vs Acceptable Performance, and Expected vs Appropriate Remuneration, inevitably arise – at least, unless said family member is a genuine, hard-working super star, and is far beyond any form of reproach.
Excluding such rare progeny, opposing interests and different perspectives can create clashes between parents, amongst siblings, and with non-family employees.
An employment decision may also fly in the face of carefully crafted HR policies, designed to avoid exactly the type of problem it’s now fomented.
There’s a popular myth in family business circles that family members do / will / must put in 120% of the effort AND contribution expected of non-family employees. Experience suggests that this is rarely achieved, other than in founding generations. Of course, there are always exceptions.
Some parents create unrealistic expectations amongst their children regarding how the family business will support them. They do this for a variety of reasons:
- Genuinely innocent pride in the business they’re created or nurtured (in their minds at least), for the anticipated benefit of current and future generations.
- To earn brownie points with some or all of their children.
- To boost their own authority.
- To feed their egos, as providers.
- To bind their children (of any age) to them.
Children of Family Business owners generate may unrealistic expectations of what the family business does / can / will provide for them, for a wholly different collection of reasons:
- Receipt of actual, perceived, or constructed promises, sometimes over many years, from one or more parents.
- Encouragement by parents, family culture, considered self-motivation, or desperate delusion – to believe their family name trumps, or supplants the need for: talent, effort, and commercial contribution.
- They’ve grown up believing, or now have no other realistic alternative to believing, that job security in, and lifestyle support from the Family Business, is theirs by some form of “divine right”.
Solution
Be honest and realistic when parenting children (easier said than done!). By all means show pride in your Family Business, and use it to educate children in the ways of the world, but don’t turn it into a fairy tale, with Mum and Dad presented as the King and Queen, with all their dealings presided over by a fairy Godmother.
Within the business: establish HR systems that include clear policies and criteria for: (a) providing employment, based on objective qualifications and competencies; (b) setting and agreeing performance expectations and implementing processes for measuring performance and contribution; (c) setting appropriate remuneration, rewards and other benefits.
Within the family: create clear family policies covering the family’s requirements for seeking employment in the family business. Ensure that the family’s rules are congruent with the family’s values and with business policies, in general.
Eventually, enshrine your growing collection of relevant family policies into a formal Family Constitution – the family’s rule book for engagement between the family and its business. Then it’s a procedural matter, rather than a personal issue, when issues arise.
If any influential family member(s) feel the need to provide employment to family members who would struggle to obtain employment, and equivalent remuneration elsewhere, make it a family issue, rather than a business issue, and deal with it within the family, rather than within the business, using family resources reserved and available for that purpose.
This helps the business to operate efficiently as a genuinely commercial entity –making it more likely to be able to generate the financial returns owners need to be able to provide serious levels of family support.