The Key Issue That Affects Family-Owned Businesses

One of my favorite quotes is ‘If it wasn’t for dealing with people, this business would be a lot of fun!’. People are by far, one of the most challenging issues of running a business. Although the tongue in cheek quote is most likely aimed at the rare customer or employee situation, it is the challenge of finding great employees that presents a more realistic challenge; ones who will work hard and are a good fit with our culture. While most every business faces that challenge, what is the challenge that is specific to family business? Quite simply, it’s family.

Different Standards

We often talk about the family business oxymoron. Simply stated, individuals are generally accepted unconditionally in a family based on love while within a business, individuals are accepted based on performance. The problem begins with employed family members, as both of these factors are present. They are accepted within a family even if they occasionally screw up but within a business environment, there is a performance expectation just like any other employee or manager. We sometimes give our family members a pass when it comes to meeting the same performance standards without realizing what a disservice that is to them and to others within the dealership. If we accept different standards for our family members, then it calls into questions the standards for everyone. Plus, if family members know they will not be held accountable to similar standards, it breeds and feeds other behaviors that are not welcome in a business. Sometimes, even if we do hold family to strong standards, their natural behavioral traits do not allow them to accept these requirements.

Attitudes and Behaviors

Even if family members are stellar performers, they can bring attitudes and behaviors that are unbecoming, and which can undermine the attitudes and performance of others within the business. Additionally, they can negatively affect family relationships with parents, siblings, cousins, or others who either work at or have an ownership interest in the dealership(s).

Four Common Traits that Derail Relationships

Each of us brings our own beliefs and values to work and whether good or bad, they help form our attitudes and thus, our behaviors. While certainly not inclusive, we see four common attitudes that often derail relationships with family and with co-workers. With family, it tends to be issues of Ownership– wanting it all, and Control– controlling it all, often to the exclusion of other family members. As family members progress up the ranks, it is natural to begin expecting some percentage of ownership in the business, either by gifting or sale of stock. At some point, usually sometime after ascending to the position of GM of a single point or Director or president of a multi-point corporation, some expect to have full ownership. We have to keep in mind, however, that many parents continue to rely upon stock distributions from ownership to fund their retirement. While there are many ways to address this issue, demanding full ownership is not a way to endear one’s self with a parent.

Even clearing that hurdle, however, does not prevent one from wanting control.  The oldest child (or cousin or other relation) comes into the business and begins gaining experience. When the next family member enters, it is easy to assume they will always take a subordinate position to the first. As a client related one day, however, ‘ten or twenty years down the road, who cares who started first?’. Siblings and other family usually bring different skill sets that are often complimentary. Learning to utilize everyone’s skills and natural gifts is a basic tenant of servant leadership. The sooner we adopt that attitude, the more quickly we can learn to work together for the greater good of the business, our employees and our families.

There are two traits that tend to drive these expectations of Ownership and Control and those are Ego– knowing it all, and Entitlement– expecting it all. Ego is driven by what others think of us and some of us need our egos fed more than others. This may be manifested by a need to always be right, always win an argument, or always exert control. A little ego can be good, it provides confidence. But over-doing it in this area is a fast way to have subordinates and other family members simply roll their eyes and then do their own thing. Unearned entitlement is one of the more challenging traits. The other three discussed here can generally be managed with coaching but overcoming an entitlement attitude is a more difficult task as it can mask greed and arrogance, truly unlikeable traits. It is extremely difficult to lead well with an entitlement attitude and there can be a strong reluctance to listen and learn, key elements to developing an awareness and improvement of behaviors or attitudes. As one of my business associates likes to say, ‘If you see a turtle on a fencepost, you know someone put him there’.

Improvements in any of these areas takes time. Some general areas to work on include showing an interest in others, listening and asking questions. Getting to know those around us helps to form a better understanding of people and circumstances, fostering greater understanding. We learn from those interactions which also helps us gain experience. That experience over time helps us gain respect, a critical leadership trait. Although not an absolute, we have found that one of the more remarkable traits in leaders that helps with all relationships is humility. C.S. Lewis once penned, ‘humility is not thinking less of yourself but thinking of yourself less’. A feeling of entitlement can contribute to prolonged conflict, both with yourself and with others, so clearing that thinking helps clear impasses with others.

People will always present challenges and remain one of the most demanding facets of running a business. Understanding key behavioral elements that work within the framework of a family business, recognizing them in yourself and how best to address them, allows for a more productive and harmonious environment both inside and outside of the business. And that makes dealing with people a bit more fun!

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