Theory of Un-Relativity
Unless your family has an endless supply of bright, hard-working, well-rounded relatives, you'll have to go outside the familial circle to find good managers to help run your expanding business. This isn't always easy for family businesses, however, because outsiders are often skeptical about how much decision-making responsibility they'll have and what the job growth potential is in a family-run enterprise. Finding out what draws potential employees to a family company and keeps them there could be an important part of your overall business success.
Entrepreneur interviewed a number of nonfamily managers who work for a family business now or have worked for one in the past. Each one's experience was different, of course, but here's a compendium of what they said is most important for workers not attached to the family tree.
"Give us something we can believe in."
Many managers who were baptized in the sea of accounting that engulfs most public companies are looking for something to celebrate other than the bottom line. While they understand how important profits are, they want to identify with a business that has been built on strong core values, one with both vision and a commitment to its mission. They also want to work for a company that openly appreciates its work force.
Part of what drew Brad McKee, director of corporate development for the Batra Group, an Ontario Internet and information technologies developer run by the Batra family, to the company was the family's dedication to their mission. "Paul and Susan [whose father, S.C. Batra, is company president ] work harder than anybody else. I've come to realize that it's more than profits on the line--it's the reputation and tradition the family has established," McKee says. To him, being part of a team that upholds the same values he has is more important that becoming company president.
"Help us overcome our fears that nepotism will always rule."
Talented outsiders recruited to help a family run and grow a business need to know the family has company policies that govern the operation. They also need to know the authority and level of involvement of each family member.
David Bassiri recalls a time when he was the sales and marketing director for a family-owned printing company. Although he enjoyed working there, Bassiri left the company because he was offered what he felt was a better opportunity as general manager for Cougar Mountain Software in Boise, Idaho. (Today Bassiri is that company's president.) "The two brothers who owned the [printing] business had ironed out a policy on hiring family members before I got there: Managers would be asked to interview family members for positions they might be qualified for, but they didn't have to hire them."
The incident that almost broke the well-established policy occurred when Bassiri chose not to buy from one of the brothers' children, who had previously been a supplier for the printing firm. "The quality, price and service he provided were not up to par," Bassiri recalls. "The brother whose son ran the company got angry with me, but I didn't back off. What I did say was that if he wanted me to buy from this child because he was family, I would. But if he wanted me to make a business decision, I was going to give the business to another supplier."
The dispute didn't escalate due to another family business policy: Each brother made final business decisions regarding the other's children. "The uncle agreed with me," says Bassiri, "and worked with the nephew to help him improve his product and service."
"Treat us like distant relatives."
Almost all managers appreciate the warm family values that often permeate family businesses. They also like the access and close personal relationship they enjoy with the heads of the business. Still, as important as this part of the business is to them, most realize they aren't actually part of the family.
Meryl Ginsberg, now director of communications for the California School of Professional Psychology, admits she got too involved with a family when she was director of marketing for a husband-and-wife event-planning business. "It was probably my fault that I began feeling more like family than an employee, Ginsberg admits. "These people were friends before they were my employers. I was single at the time and hungry for family." Although Ginsberg went skiing and camping with the owners' family and her input was often sought regarding business decisions, Ginsberg's involvement in shaping company policies remained limited and she wasn't given a piece of ownership. Although she was upset by the exclusions at the time, in retrospect, Ginsberg is more understanding. "If we had clearly defined boundaries," she says, "I might still be there [today]."
"Keep us out of your family disputes."
Every family occasionally has disagreements among its members, and every business has differences of opinion among its leaders. When the two overlap, disputes can not only grow fierce but become destructive. Family in-fighting demoralizes nonfamily employees who may be forced to take sides or face conflicting instructions from the different factions.
Rhonda and Glenn Shaw, president and general manager, respectively, of Trinity Valley Erectors, an Emory, Texas, provider of passenger boarding bridges and baggage carriers for airports, shared their operating style with Judy Luckett when she was hired as the company's bookkeeper. "They warned me that sometimes when they don't agree it could get loud. I assured them that as long as they didn't yell at me or drag me into their disagreements, it was okay," Luckett says. "They never have."
"Let us show you what we can do, and then reward us."
Compensation paid to nonfamily managers has to be commensurate with the going rate for a similar position in a public company. But family firms do have the edge in speedy acknowledgment of a job well-done.
One thing Brad McKee asked for in his pre-employment interview with Paul Batra was "the opportunity to prove myself within a specified period of time, and having done so, [for them] to let me know--both with compensation and with words." In the two years he's been with the company, McKee says he always notices and appreciates the owners fast acknowledgments of employees' contributions.
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).
When flukes suddenly spawn a family business.
Most people don't start a business because they envision a family dynasty down the road. In truth, most businesses don't survive into the next generation.
Nevertheless, some entrepreneurs do spawn a family business. It can happen by tragic accident: The entrepreneur dies suddenly, and children swarm in to save their inheritance. Or by happenstance, when relatives who had previously shunned the firm suddenly decide they want into the family fold.
How can an entrepreneur prepare for the possibility that a fluke might turn his or her enterprise into a family business?
- Expose your children to what you do for a living. "Even if you prefer that your child go in another direction," says Ira Bryck, director of the Family Business Center at the University of Massachusetts, Amherst, "it's valuable to understand how the business is run." Give kids summer jobs; take them with you to work.
- Balance your complaints about the business by telling children about the positive challenges and benefits of ownership.
- Talk with the family about the business. "You never know when something may intrigue them," says Bryck. You can do this informally or under the umbrella of a family meeting. Even if they never enter the business, knowing about it will be important if anything happens to you and they need to sell it.
Don't assume you know how your children or other relatives feel about joining the business just because they express no interest in it at one stage of their lives. Their final decision may be yet to come.
Cougar Mountain Software, (800) 388-3038, http://www.cougarmtn.com
Trinity Valley Erectors,email@example.com