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Getting More Family In the Family Business

Updated: May 28


A family business owner recently sought my advice on involving his family in his family business. One of his two sons and their spouse have been involved in the business for eleven years. The other son and his spouse have never been involved but are now pressing for an ownership role in the business. This has become a source of great tension in the family. The tension is so great that family get-togethers have become impossible. Distraught, they are seeking help.


He wants to be fair. Does that mean giving equal ownership to both children?


Here is what I have learned. Dividing up a family business equally is not always the most fair thing to do. Why is that?


When everyone is in charge, no one is.


In a business, if multiple people have equal ownership, authority or decision-making power, the result can be chaos or a lack of effective leadership. When multiple individuals have equal control or decision-making authority, there will be confusion, indecisiveness, and a lack of accountability.

Businesses must have a clear leadership hierarchy for making final decisions. The buck has to stop somewhere with one person. There must be someone in a position of authority who can make decisive choices and take responsibility. Without that, there will be a lack of direction and coordination that hinders effective action or decision-making.


Considering this, dividing up a family business equally may not be the most fair thing to do. It is a recipe for confusion and cruelty to everyone involved.


The path for family members to become involved in a family business should be clearly articulated beforehand. This illuminated path ensures new family leadership for generations.


Family businesses are notorious for over and underpaying family members. They are also notorious for being overly harsh or soft on family members. Guidelines for family involvement and buy-in should be clear.


What might these guidelines be?


1. Clear expectations and communications around how family members might be brought in. These should be clear before younger members seek to be involved.


2. Regular conversations around the type of leadership skills the business needs. These involve the leadership skills needed now and in the future.


3. A logical process for which the business might bring in a family member. Just because someone is born in the family does not guarantee their place. A family member should have three years of experience outside the family business, developing a skill that is valuable to the family business.


4. Accountability standards should be the same for family as for non-family members. Family members should be subject to the same evaluation processes as non-family members.


Setting a plan for the next generation of family leaders secures family businesses. When family businesses fail to illuminate that path, confusion follows.


Where are you in the process? Email me at harryt@cultivatingimpact.biz and let me know.


Harry T. Jones



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