Succession Planning – Part 8: Different Opinions

Different Opinions

Different opinions do not always produce discord, but sometimes they cause the sparks to fly -especially in a family-owned company. Emotion is an added dimension as brothers and sisters, uncles and aunts, nephews and nieces and fathers and children work together in such a small business.

 For the individual who must head such a company, the important thing is to recognize this dimension of emotions and to make objective decisions that are difficult to come by in such situations.

 Many times when members of a family are active in the business, it is hard to make objective decisions about the skills and abilities of each other. For example, one says about another relative, “He was lazy when we were kids, and he’s still lazy.” Or a disgruntled wife says about an aunt. “What does she know about the business? She’s only here because of her father’s money.”

 If such emotional outbursts affected only the family, the manager might “knock a few heads together” and move along. But often it is not that easy. The quarrels and ill feelings of relatives have a way of spreading out to include non-family employees.

 Then the manager’s problem is to keep the bickering from interfering with work. You cannot afford to let the company become divided into warring camps. You have to convince non-family employees that their interests are best served by a profitable organization rather than by allegiance to particular members of the family.

 Another aspect of the emotional atmosphere is that often non-family employees tend to base their decisions on the family’s tensions. They know how their bosses react and are influenced by this knowledge.

Is the Manager Really in Control?

The president of a small company is not always necessarily the person in charge. In many family-owned businesses, the elder statesman of the family becomes president or chairman of the board of directors. But day-to-day management is in the hands of other members of the family.

 In some cases, even the best hands are tied as the family member tries to manage the business. For example, the ceiling on the amount of money that can be spent without permission from the rest of the family may be too low for the situation confronting the company. Having to clear operating expenditures may mean missing opportunities for increased profits, such as taking advantage of a good price on raw materials or sales inventory.

 In other cases, a manager may be in a bind because of emotional involvement. For example, you may feel that you have to clear routine matters with top family members because “Uncle Bill never lets you forget your mistakes.” Personalities and emotional reactions create bottlenecks that work against an efficient operation.

 Efficiency may be reduced also by relatives who indulge in excessive family talk during working hours. The manager should set the example and insist that relatives refrain from family chit-chat on the job.

 In some family-owned companies, the day-to-day manager may be a bottleneck. You may be a bottleneck because you do not have the ability to delegate work and authority. You may be the manager because of age or the amount of capital you have in the business without regard to your qualifications. In other instances, you may hold up progress because you do not listen to others in the company.

 One solution is for other members of the family to persuade such a manager to let someone else run the day-to-day show, perhaps a hired manager.

 If a member of the family has to be in charge of operations, he or she should be capable of using efficient management techniques and be thick-skinned enough to live with family bickering and tough enough to make his or her decisions stick.

 One way to obtain objective control in a family-owned business is to hire an outside advisor to help advise on, and implement changes needed to the day-to-day operations. An efficient hired advisor will see to it that all employees – family and non-family alike – know to whom to report at all times and that emotions are kept from effecting the profitable operation of the enterprise..

 Definite lines of authority are even more important when a member of the family manages operations with other relatives filling various jobs. The responsibilities of family members should be spelled out. “Family employees” should discipline themselves to work within the bounds of these lines of authority. Even then, it is wise to have a non-family employee high in the organization so that he or she can be involved in operations and help smooth out any emotional decisions which family members may make.  If this is not possible…. Hire an outside advisor to perform this fuction.

 The manager’s authority to suspend or discharge flagrant violators of company rules should also be spelled out. Management control is weakened if special allowances are made for “family employees”.

 An important question connected with authority is: Who takes over when something happens to the family member who heads the business? A position may be “up for grabs” if the family hasn’t provided for an orderly succession. This need is especially critical when the top family member is approaching retirement age or is in poor health.

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