Managing Business of Hired Family Members

Managing Family BusinessSoru: My travel agency and cleaning service businesses have very significant number of my immediate and extended family members as workers. Contemporaries are urging me to slow down on engaging family members or marketing efforts will be compromised. Both companies are not doing badly so far. More relatives are even clamouring for engagement. Will marketing efforts here indeed suffer, if I fail to ‘balance’ family relationship with managing these businesses effectively? – O. Onwubiko

Your companies’ marketing efforts will not be compromised, in isolation, due to your policy of making your staffing being comprised of your immediate family members (spouse and offspring), and even extended family members (brothers’ children, cousins). This can sometimes be extended to those who belong to Oga’s clan, village community and also in-laws. With strong family ties among Nigerians of various ethnic groups, there is always the tendency of letting one’s success in business, and even other areas of endeavour, ‘touch’ those who belong to one’s family and sometimes ethnic community. I reserve the rationale for such decisions for another piece.

I intend to respond to your enquiry here by way of providing hints towards how to effectively manage your business, in the light of my perception that you are inclined to portraying your business concerns as “all family” or “my people’s” affair. There is no harm in this (going by what the tendency is in Nigeria). Marketing efforts will no doubt suffer, just like any other aspect of your company’s operation, if the firm is not properly managed – Especially due to lapses in being able to maintain appropriate balance between the emotions of family and managing the business.

For most family business (which often fall into the category of small business), you will agree with me that it is quite difficult to be always objective about employing relatives (like son or daughter). Even where fathers realize this affords opportunities for early exposure of their offspring becoming entrepreneurs, they must deviate from thoughtless placement of family members within the company. People’s strengths and weaknesses should be ascertained prior to bringing them into the business. It is more advantageous to play up on your offspring’s strength, instead of elevating their weaknesses.

Going by what some researchers in the United States (BİZE) sayThat almost 80 percent of world’s businesses are family owned. 35 percent of the largest companies in the US are family businesses, with 60 percent of all public companies having families with significant control (örneğin. Ford, Wal-Mart, Koch Industries, etc.). The same researchers have it that 30 percent of all family owned businesses survive into the second generation; only 13 percent are passed on to third generation. These experts claim that family enterprises have low survival rates mainly due to members being engaged based on birthrights and not meritocracy. Door to family employment should not be open to everyone in the family. Oldukça, family members should be hired because of the set of skills they possess in line with what the company requires.

Onwubiko, please note the above in order to get it right, and for marketing not to suffer in your business.

Those urging you to slow down on what they perceive as your ‘dangerous passion’ towards engaging family members (for marketing to subsequently have a bashing), should not be brushed aside. Take a closer look at their reasoning, in line with my suggestions below, on managing your two companies effectively, and at the same time accommodate family-related issues in ways that will not make for regrets later:

Even where you may be nursing the hope of your son or daughter taking charge of affairs at your retirement, or even passing away, note that your offspring becoming the chief executive officer or CEO should not be automatic. Have you subjected your intended successor to exposures of learning the business, from ground-up? What about accountability, in order to earn respect over a period and being mindful of the traditions, legacy of those who set up and ran the business before the new helmsman (or woman).

As running most family businesses is similar to doing same in small enterprises, have you made provision for absorbing likely family problems which may occur? These are exemplified by typical arguments over daily operations; high turnover rates among non-family employees (who often suspect nepotism and feel neglected, with suspicion of not having any future in the place); difference in opinion about dividing and spending profit. This is why I suggest the provision for a Board of Directors. With such, even if a son calls the shot as CEO, the Board (comprising of family members and maybe other investors) should retain the ultimate authority and powers to influence the makeup of the entire management team.

Have you exposed your offspring to the essence of not being unduly competitive within their siblings or cousins? What about how to work together as a team; how to share responsibilities and meet expectations; avoidance of personality clashes? Whoever is the overall boss (and a member of the family) should be able to negotiate between family members, to arrive at the best decisions for the company. Is there any provision for hiring a non-family member, as the boss, in case of a family rancor?

Communication being the key to any business, calls for discussions on individual roles and responsibilities; defined expectations; acceptance of the company’s terms of engagement. These help prevent threats later. Employees should be rewarded based on competence and performance, not genetics. Family feud should be left at home. Where family conflicts are not attended to outside of the office, the ‘big stick’ may be applied, if conflicting members fail to abide.

As you provide for “not all work, and no play” (taking out time for family vacations, weekend outings), remember to have a Succession Plan – “Who takes over when I am gone?” Note that good succession plan provides for guidance through any change of management and help to prevent conflict.

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