When family businesses treat non-family employees like second class citizens, morale and productivity can suffer. This article offers insights into workplace practices that make “outsiders” feel like part of the team.
“Welcome to the family business. Take a back seat.”
Does that sound friendly? Maybe not, but too often family business employees with a politically incorrect last name hear something similar. These non-family workers often get the short end of the stick. Some get shouldered out of important meetings. Others get passed over when promotion time rolls around. And the company parking lot? Family “outsiders” often get assigned the worst spots.
It all highlights a critical fact: People beyond the bloodline are critical to any family business. “Unless one has a huge family with members possessing the competences for every phase of the business, outsiders are needed,” says Ian Jacobsen, a management consultant based in Morgan Hill, Ca. (jacobsenconsulting.com).
How about your own family business? Do non-family workers feel like part of the team—or like unwelcome intruders? If the latter, you can take steps now to create a more welcoming work environment.
The first attitude is typical of what is called a “family first” organization. Such a business, says Jacobsen, is really “a social welfare organization for family members.” The second attitude characterizes the “business first” organization, which is “a real business that includes family members and outsiders.”
Perhaps it’s not surprising that Jacobsen, like most other family business consultants, advises creating a “business first” environment.
Hire as needed
All this is not to say that a “business first” organization can never promote a family member to a top job. “Family members will be brought in from time to time and promoted,” says Jacobsen. “That is part of what makes up a family business. People who are not a part of the family need to understand this and appreciate it in order to succeed and not to be discouraged when this happens.”
Even so, family business counselors advise carefully preparing any family member who wants to join the business.
“We advise family members earn their stripes by working three to five years outside the family business,” says John Joseph Paul, a Portland, Oregon-based family business consultant (familybusinesscounsel.com). “This allows them to bring something of value to the organization. Non-family employees are more likely to recognize that they have paid their dues.” It can be smart also to obtain a degree that adds value to the company.
And don’t hire a family member just to give the person a paycheck: There must be a valid position to fill. “The business should make sure that the role the person is filling is really needed and that there is a general recognition of that need,” says Jacobsen. “Those non-family people who sought the job and did not get it should be assured that they are respected and valued and should be encouraged to continue at the business.”
Once the hiring decision is made, conduct a careful transition to the workplace. “This goes back to transparency,” says Wayne Rivers, president of The Family Business Institute, Raleigh, NC (familybusinessinstitute.com). “Suppose daughter Sally got an MBA and worked for a corporate giant somewhere. Now she says ‘I might want to be back in the family business.’ If you bring her into the business, don’t let her arrival be a secret. Don’t just lock the door on Saturday and then let everyone see Sally working in her corner office on Monday. That just creates gossip and morale problems. Run her hire by folks first and see what their ideas are.”
Finally, says Rivers,
A sure thing
What’s to be avoided, say these consultants, is gratuitous assignment of a second generation sibling to a top post absent any meaningful preparation or vetting.
There is certainly a temptation to set family members into high positions without sufficient preparation, since they are known quantities. “Family members have a great built in advantage,” says Aronoff. “They grew up with the business. They heard it talked about over the dinner table and so they have 20 years of training before they come into the business.
Why so? “It’s good for neither the family member nor the non-family employees when there is such special treatment,” says Aronoff. “It fails to encourage the best performance from family members, who know they will get good jobs no matter what their performance. And it demoralizes the non-family personnel who might otherwise compete for the positions.”
Tell it straight
While a simple dichotomy between “family first” and “business first” is a convenient way to describe company styles, the fact is that most family organizations will lie along a continuum of family priorities. One company, for example, may assign department heads strictly by performance rather than by pedigree. The same firm, though, might put one of the founding family’s second generation siblings into all of the top management positions.
In such cases, non-family employees can become confused about their long term opportunities. That can lead to frustration and poor morale. That’s why it is so important clearly communicate company promotion policies.
“You have to be straight and honest with folks and let them know what their possibilities are,” says Aronoff. “If it’s been decided up front that family members will lead the business, then that should be known by everyone.
Certainly, if there is a perception that there is a glass ceiling beyond which non-family employees can’t go, says Aronoff, then there will be a limit to the enthusiasms of non-family employees. In such a case, he says, the best of such workers might be offered good remunerative positions even if they are not given top management jobs.
“Many family business owners are exceedingly thrifty,” says Rivers. “They cannot bear the thought of paying people what the current market demands.” But that attitude can be penny wise and pound foolish.
While tightwads exist throughout the business spectrum, they are more of an issue at family businesses, says Rivers, because public companies tend to gather and consider all the available market information before establishing pay scales.
"Family first" businesses, in contrast, says Rivers, “tend to rationalize low pay rates it because they want more money for the family members.
“In family businesses, it’s often unclear where one family member’s interest starts and another ends,” says Rivers. He gives an example: One brother, Sam, hires Andy for his department under the understanding that Sam will be his supervisor and evaluator. One day another brother, Bill, who owns an equal portion of the company, decides he does not like Andy and starts criticizing his performance. Now all of a sudden Andy, who expected a single avenue of supervision, finds himself whipsawed between two competing family members.
As this story suggests,
Too often, family businesses give short shrift to civility and kindness. But it’s important to show appreciation to non-family workers.
“Family business owners tend to be very nice people, but they often do not cultivate appreciative cultures,” says Rivers. “One reason is that they typically work too hard, running from one meeting or one customer to the next. They get so harried that niceties go out the window.”
Why so busy? “Family businesses often look at hiring people as a cost rather than an investment,” says Rivers. “So they under-staff. They cut payroll when things are down but are reluctant to add staff when things get busier because they do not want to have unproductive people.”
And there is also a psychological aspect. “Owners of family businesses typically want to control things,” says Rivers. “
Treat them well
It all starts with the attitude of the owners, says Rivers: “The most successful family businesses treat their non-family employees as associates rather than as outsiders, motivating them by responding enthusiastically to their ideas, involving them with leadership issues, and recognizing their achievements.”