Family business challenge: hiring outside the family

When you head a family business, you face a number of challenges absent in non-family businesses. One of the most trying can be determining whether family members have the skills and experience to be productive employees, or you need to look outside the family to staff your team.

If it sounds like this is a slippery slope, believe me, it is. Family dynamics aren't the same as business dynamics, and a combination of the two can be a disaster or a blessing — depending on how proactive and transparent you are.

Your first challenge is to identify the philosophy of your family business. Having clear focus as to what really drives the business will assist you tremendously in making decisions and dealing with office dynamics, so think about which of the following three philosophies resonates with you:

Family first. The happiness of family members comes before everything else. Unity is favored, even if it results in negative business consequences.

Business first. What's best for the business is put ahead of everything else. Professional business practices are followed and stringent rules are in place.

Family business enterprise. Striking a balance between the family and business first philosophies is the goal. Family satisfaction is created while the health of the business is supported.

There is no “right” philosophy, but you must understand the consequences that can result from each one. Let's consider what you may face and how you can overcome it.

If you choose family first, that means you're willing to live with the possibility of family members filling positions they're not qualified for — and that can be hard for non-family employees to swallow (especially when they report to those family members). It's important to be upfront with non-family members so they understand the lay of the land, so to speak, and can decide whether they feel your business is the right environment for them.

If you choose business first, that means you're willing to live with the possibility that you'll have to tell family members they're not up to snuff. The best way to approach this is to develop criteria for success that are applicable to all team members — family and non-family alike — and be clear that family members will not benefit from favoritism. Sometimes the price may be too high to operate this way, i.e., if you're dealing with your spouse or adult children.

If you choose family business enterprise, that means you want to ensure business success while keeping family members happy. This can be the most difficult way to operate because there's a bit more “gray” involved. You need to placate family members while ensuring that non-family members don't feel slighted and thus are not as apt to give it their all. The best course to take in this situation is to be honest and keep personal issues outside the business as best you can.

In my work with family business, I often ask non-family leaders what is the biggest challenge that they face working in a family business. The most frequent response is the feeling of “exclusion.” While these leaders intellectually understand that company issues will be discussed at the family dinner table, there is often a sense of frustration of being “out of the loop.” One executive described it as feeling as if you are always walking in on the middle of a conversation and the family assumes you know all the facts, when in reality you don't have a clue. That can be frustrating, especially when the decisions being made impact your work and responsibilities.

Another challenge I have observed in my work is that non-family business leaders often what I call the “Prince Charles Effect.” Essentially they have responsibility with very little authority in their role. A seasoned manager expressed that it is hard not to begin to question yourself and your ability, but the key to being successful in a leadership role in a family business is to “not take it personally.”

For all three philosophies, it's important to ensure that non-family members understand the parameters of their power and that they are valued team members. You need to keep your finger on the pulse of the business to determine whether resentment, jealously or even anger is present in non-family employees — something that can harm your business and your family. In the best situations, family and non-family members work well together toward a common goal that benefits them all.

Denise P. Federer, Ph.D. is founder and principal of Federer Performance Management Group. She has 27 years of experience working with key executives, business leaders and Fortune 500 companies as a behavioral psychologist, consultant, coach and trainer. Contact her at: [email protected]