I’m sure we’ve all seen the movies or TV shows where the son or daughter gets a job inside the company, and everyone resists their new role. Every media representation of this scenario I’ve seen, tells a very sad or troubling story.
Unfortunately, these poor results have similarly played out in companies across the country. Many times, when a family member is brought into the business, there are several warning signs typically ignored beforehand. In working with business owners over the years, I have learned it’s very hard to have an employee, that’s related to you, succeed in your business.
We have served many families in this situation and have spent numerous hours helping them work through personal issues that come up and distract from the business. It becomes even more difficult when the family member is one of your children.
This topic is an important consideration for many families, and I encourage you to think intentionally about how you bring family into the company. Specifically, I have three recommendations for you to consider, that have been helpful to others in your situation.
First, encourage your son or daughter to start with employment outside the company.
Have them go work for someone else and learn what it’s like to have a boss that doesn’t know them on a personal level. This is important, because even if we don’t recognize it, we tend to treat our family differently than we treat others inside our company. Sometimes we are easier on them; other times we are harder on them. Either way, it’s important to recognize, they haven’t had an unbiased employment experience until they step outside.
Many businesses choose to have their heirs go work for a direct or indirect competitor, so they can learn what it’s like to work in the industry. While others, encourage their children to go work in a completely different industry. Success is not determined by where they work as much as helping them understand what it’s like to be accountable, to someone unfamiliar, for their actions and responsibilities.
Second, lay out a clear path of advancement that would work for anyone inside the organization. In other words, make sure the path doesn’t show favoritism toward them, but requires them to understand the responsibilities of each role inside the company.
The most successful organizations I’ve seen do this, had their family member(s) work in all areas of the company and required them to master the entry level positions before advancing. They also partnered their heirs with mentors in each position who can help them maneuver the joys and frustrations that come with the work. (Don’t underestimate how this time can help you discover hidden blind spots that have entered your company as you’ve grown.)
I would recommend using a non‑family board or consultant to help advise and give you counsel on the development of your child’s career path. This outside viewpoint can assist you in looking objectively at their performance and give you constructive feedback.
Third, coordinate a path that limits the possibility that a family member will report directly to you. This hierarchy will help to minimize any views of favoritism toward your heirs among other employees in the company and help protect your relationship if long term employment doesn’t work out.
This separation will also help to ensure that they are truly developing the skills they need to be successful in the job. This isn’t always possible for all families, but emphasizes the role of a non-family board or consultant to help you discern the best development path for your children.
As parents, our desire is often to share our success with our children. When it comes to a business, it’s important that we recognize the people who have been with us on the journey and have helped us achieve the success we have today. As you walk this fine line of bringing your children into the business you must be careful that your desire to reward your children doesn’t short circuit their own path to success and frustrate your other employees.
Begin with long term plans and parameters around how you will make decisions to hire, advance ‑‑ and if necessary, let go of – any related employees. The families who have thought it out ahead of time and are prepared to have the hard discussions along the way, have the most success. If your business can succeed the same way we’ve watched other businesses navigate this difficult area, then perhaps these Hollywood outcomes will be harder to believe.
At Paradiem, we believe money doesn’t cause problems, but it certainly has the power to reveal and magnify issues you may have been ignoring. We’ve found helping business owners begin with a different perspective, creates outcomes beyond anything their current professionals have helped them consider. I encourage you to get a copy of our whitepaper, “Are there unintended consequences hidden inside your current estate or business plans?” If you would like a copy, email email@example.com with the subject “Unintended Consequences” or give us a call at (985) 727-0770.