Most people in family businesses have more trouble separating personal from personnel issues than they have figuring out how each of the words is spelled. Lots more.
And with good reason: It's not entirely possible--nor desirable. "The personal relationship you have with a relative may be the very reason you're working together," says Paul Storfer, 44, president of HR Technologies Inc., a human resources software developer in Purchase, New York.
Storfer should know. He could have stayed in his executive position in the high-tech industry, but he chose instead to go to work for his father in Herb Storfer's executive search firm for three years. Then he and his dad founded HR Technologies in 1995. He wouldn't have joined forces with Herb (who had also worked for his father) if he hadn't valued the personal as well as the business relationship.
Personal relationships are also essential to the family members and friends who compose the 12 full-time and 30 contract employees of The Virtual Marketing Group (VMG), a full service technology-focused marketing communications firm in Atlanta. "By working together, we have the benefit of seeing each other every day," says president and CEO John DeWitt, who, with his wife, COO Lisa Paterno, heads the group.
While most people in family firms agree that you don't want to lose the best of what a family company has to offer, there's also an acknowledgement that the personal relationship can be abused. One way to counter that is to make sure everyone knows the rules of operation and what is expected of them. "Families don't need written guidelines to operate, but family businesses do," says Dr. David Gage, clinical psychologist and founder of Business Mediation Associates in Washington, DC.
It isn't viable for a firm of, say, 10 people to have a human resources department, of course. But it should have formal personnel policies. And Gage urges the family to think through the details of each policy, noting that's where the problems usually arise. Here's how to get started:
- Outline basic business behavior. What are the basic rules of behavior all employees--family or not--must observe in the workplace? Shouldn't they all be expected to come in on time, not take off without notice, be respectful of others, and do what they say they will do, among other things?
"Sometimes people think just because they're family, they can take advantage of the rules," says Leon Eastmond, president of A.L. Eastmond & Sons Inc., a second-generation, family-run boiler/tank manufacturing and repair company in New York City. "But I won't tolerate such foolishness. Business is business, and I tell them that I don't dictate the terms of their behavior; the business does. If they don't act properly on the job, they'll be on a slippery banana with this company--even if they're members of the family."
- The benefits of personnel policies should be applicable to everyone. Just as a certain standard of workplace behavior is expected of all employees, benefits afforded family members should be applicable to nonfamily employees as well. According to DeWitt, who runs a decidedly family-friendly firm, "We set up a flexible-schedule work arrangement initially because Lisa was pregnant. But it's not just for our benefit. Everyone here can flex their work time and place, as long as the results meet the company's high expectations. That's company policy."
- Map out skill expectations. Family members, like others working for the company, should have regular performance reviews and should know what level of skill is required of them before they're eligible for raises and promotions. They need to agree on a training schedule and target dates for proficiency. If all that doesn't happen, family members may develop unrealistic expectations. They might count on the fact that just because they show up for work on time and have the same last name as the owner, they're entitled to regular advancement and an escalating salary.
- Develop a procedure to express objections. In small family businesses, who to complain to can become a real issue. Under normal circumstances, if an employee has a gripe, he or she brings it to an immediate supervisor rather than the head of the company. That procedure often becomes blurred when it's a family business and the griper is the son or daughter of the owner--even if the parent isn't the child's immediate supervisor. So how will a disagreement with a relative's boss be handled? Will you establish a procedure for complaints that will bypass the family business head? How will you separate personality issues from management issues and ownership issues?
- Talk about the "What if" scenarios. No matter how businesslike you get in a family business, some personal issues defy cut-and-dried, across-the-board personnel policies. What happens if someone in the family can't work for a year because of a serious illness or accident, for example? A well-defined company policy dealing with this issue may seem appropriate for others, but most family businesses alter the policy considerably if the problem affects a family member. The question is, how? Gage urges all family members in the business to discuss this before it actually happens. "Then people personalize the problem and make their judgments based on `What would I want the company to do if this were to happen to me?' " he says. "If you wait until you're in the midst of it, the problem is either `yours or mine.' That's when judgments get polarized."
Among other strictly family business what-ifs: Should a family member who isn't carrying his or her weight in the organization be treated differently from other employees? What happens if someone in the family wants to borrow money from the business--something other employees can't do? Will a family member have to be on the job for a year before being eligible for vacation time, as might be the case with other employees? The list goes on and on.
Standard personnel policies are important to the running of any business, but they're even more essential in a family business. Don't avoid or neglect developing them. They serve to deflect any entitlement attitude family members might have, provide nonfamily employees with a sense that the business is being fairly operated, and take away some of the fractious issues that can crop up when family members work together.
Patricia Schiff Estess writes family business histories and is the author of two books: Managing Alternative Work Arrangements (Crisp Publishing) and Money Advice for Your Successful Remarriage (Betterway Press).
Contact SourcesBusiness Mediation Associates, (888) 922-1262, BusMed@aol.com
HR Technologies, (914) 251-4940, firstname.lastname@example.org
The Virtual Marketing Group Inc., (404) 705-4570, ext. 18, email@example.com