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Establishing an Open-Door Policy

When nonfamily employees talk, listen.
January 1, 2001
URL: http://www.entrepreneur.com/article/35698

Just because nonfamily employees don't share the same last name as the people who own the business doesn't mean they don't have ideas, comments or even criticisms that would be beneficial to your success. But do they share these with you? And if they do, do you really listen to what they're saying?

"If the family business culture is closed, and employees sense that the family thinks it can do no wrong or that it's not open to constructive input, employees stop talking," says Paul Karofsky, executive director of the Northeastern University Center for Family Business in Boston. What ends up resulting from the lack of communication is a decrease in morale, people leaving the company for other jobs and little long-term commitment. Karofsky asks, "Who'd want to work for such a company?"


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).

All Ears

Fortunately, most family businesses do look for input from nonfamily employees, says Tom Kaplan, assistant professor of entrepreneurial studies at Fairleigh Dickinson University in Madison, New Jersey. Small and midsized family firms typically do it informally. Nonfamily employees working side by side with family managers talk about their concerns throughout the day or over lunch. "The exchanges aren't planned, but they work," says Kaplan, "and over time, people feel comfortable talking about the little things and getting them straightened out before they become big issues."

Given the nature of their business, the Mosers of Thos. Moser Cabinetmakers in Auburn, Maine, have to listen especially carefully to employee comments, suggestions and criticism. "We handcraft furniture, and each person working on a piece has to have a high level of pride in workmanship and in the company," says David Moser, son of the founder, Thomas, and head of designs for the company. "Morale is incredibly important to us, and we're on the pulse of it all the time."

Although no formal system is in place other than the weekly operational meeting of senior managers and supervisors, "our 167 employees know it's incumbent upon them to come forward with criticisms and suggestions," Moser says. One of the ways the company reinforces that tacit policy is by giving recognition in the form of kudos, gift certificates and bonuses to people whose suggestions are implemented or whose critical observations lead to positive change.

Other Ways To Actively Listen

As companies grow and the distance between family managers and nonfamily employees widens, more formal processes are needed to solidify the listening process, such as management committees and councils. If you provide a safe place for nonfamily managers to address issues of concern within the company, by extension, you'll give all non-family employees a voice.

Another way to get useful feedback from nonfamily members is to institute a 360-degree performance review. This relies on all the people working with someone to assess how the person is doing in his or her job.

"The key to the success of this evaluation," says Karofsky, "is that it be simple, well explained, and begin at the top of the organization. The family member at the helm has to be able to ask him or herself three questions: 'What am I doing right?' 'What do I need to improve?' and 'What am I going to do about it?' Those questions then have to be asked of peers, siblings and other family members, and then asked once again of direct reports, who are all assured of anonymity."

Karofsky says the family business head has to amass the information gathered from others and see how it matches his or her own perception of performance and the action plan he or she has developed. "If a CEO models this type of evaluation and it has no repercussions for people doing the assessment, others will go along with it too," he says.

Still, under some circumstances, a culture of openness has to be coupled with the ability to actively listen. Otherwise, it's of little value. For example, if you're a family manager and an employee says to you, "You're making it hard on me if your nephew takes the week of Christmas and New Year's off," you have to find out what he means. Is he complaining of unequal practices because he's been refused the time off, but the nephew hasn't been? Or is he saying that he's going to have too much work during that period and he'd like some additional help? You need to ask the person to elaborate on the comment and then check out your interpretation with him before taking any action.

Another example of misusing open communication is if, after encouraging input, you pay no attention to it, never act on suggestions, or allow employees' input to negatively affect their standing in the company. Then you're sabotaging your own efforts. "The business has to be run rationally," Kaplan says. "There can't be a gap between what you say you want and what you really want. People figure that out immediately."

If you really want nonfamily employees to open up and communicate with you, but you can't figure out how to do this, Karofsky suggests calling in a third party. That person needs to be a skilled, impartial interviewer who can speak to nonfamily employees to find out why they're not opening up, and someone who can help you set up structures to facilitate communication between family managers and other non-family employees.

Looking for your own family business consultant? Try the Boston-based Family Firm Institute, a nonprofit organization of family business advisors. Call (617) 789-4200 or visit www.ffi.org.


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