From the Desk of John Lisle
October 22, 2024 | John Lisle, Board Chair
Family Business "Do's and Don'ts"
The American family/business can be a rewarding and exciting place to work and it can provide many success stories. But, there are certain ‘Do’s and Don’ts’ that can help prevent family/business issues from figuratively “poisoning the well” and literally causing the business’s downfall.
Here are some of the important ones:
Do promote and nurture the family values within the company. This helps assure both family and non-family employees of the values that will keep the companies’ prosperity and longevity for generations of family ownership.
Don’t bring relatives into the business at an elevated level just to provide them a job. All employees (including family) need to earn their positions by starting at introductory levels (commensurate with their skills) and then proving their worth.
Also, don’t promote or pay any family members past their level of competence. That alone can cause disenchantment and discourage non-family employees, often causing the loss of talented non-family employees.
Do identify and strongly recruit interested family members and reward them for good work; but, don’t overcompensate or over promote them.
Do drop all family “pet names” at work. (Examples: Sis, Bro, Pops, etc.)
Do sharply and clearly define the job descriptions and responsibilities, especially for family employees.
Do keep all interactions between your business and family member employees at an “arm’s length” basis. This alone can positively affect non-family employees. This is especially important in a profit sharing company.
Don’t allow family members to personally overuse company property or to pay personal expenses by the company. This is important not just for legal reasons, but because of the negative effect on non-family employees.
Do form and utilize an Executive Committee to discuss and vet all major decisions of the company. The CEO ultimately makes the decisions, but he/she should actively seek Exec. Comm. Input. The CEO is not “king” and should actively try to manage by consensus.
Do strive to keep all shareholders informed and “in the loop”. In many ways, they are more important to the longevity of the company than individual customers.
Do utilize a Compensation Committee composed of outside directors as well as head of HR to set compensation levels of upper management … especially for family members.
Don’t try to avoid conflict on company decisions. Instead, try to see the reason for everyone’s viewpoint and try to remain extremely objective in making decisions for the sake of “feeding the goose that is laying the golden eggs”.
Do enjoy the many benefits of a family business and try very hard not to “poison the well” with selfish or uncaring decisions and thereby helping the family business to thrive for generations.
John Lisle 2024