Family Business Decisions

The good part about family business is that many of your co-workers, including management, are family members. 

The bad part about family business is that many of your co-workers, especially management, are family members.

When business decisions are made among unrelated businesspeople, there is usually discussion among senior management, and then the Boss (the CEO, the President, the Big Kahuna) makes the ultimate decision, and everyone goes along with it, if they wish to remain employed at this company.

In family businesses, the business decision-making dynamic is often blurred with the family dynamic.  Family roles were defined and ingrained long before most of the family members became part of the business team.  These roles often reveal themselves in business decisions, whether consciously or sub-consciously.

Oftentimes, there is consensus about a decision, be it a new technology, or entering a new market, or creating a new product, or moving to a new location.  But maybe it’s not a unanimous decision.  In the corporate world, such decisions are made, and if certain parties cannot abide by said decision, then maybe they look to work elsewhere.

But what if the lone dissenter is the patriarch, the owner, the founder?  Or what if the dissenting vote comes from the “favored” offspring?  Does a father tell his oldest child to find work elsewhere?  Does a daughter tell her father to get out of the way, because he’s standing in the way of progress?

These are sticky situations, for both the business AND the family.  These kinds of situations put some tough personal issues on the table.  Like, what is more important, a successful business or a unified family?

To avoid having business and family roles bleed into one another, smart businesses have an agreed-upon decision-making process in place, including what to do in the event of a divided vote.  If the resolution process of these types of issues is accepted and in place before a business decision is put on the table, then resolving them is a much smoother, less emotional ordeal.

In their 2005 paper, Ludo Van der Heyden and associates pointed out four distinct elements that should be in place to enable fair process in business decision-making:

·         Communication - Each person impacted by the decision on the table should be given an opportunity to share their views, and have their questions answered.

·         Clarity - Accurate details of what the decision entails should be provided, including perimeters and any changes it will create.

·         Consistency - A roll-out plan for each taken decision should be in place, so that when changes are made, the integration process is already familiar to the company.

·     Changeability - Flexibility around revisiting previously taken decisions and rules should be facilitated, to ensure that the business, and the rules it lives by, have the opportunity to evolve as the business climate changes.

If these four elements are the cornerstone of every business decision a family business makes, it will go a long way in making the process a smoother, more professional, less emotional one.  I believe these elements are important for all businesses, but with the additional baggage of previously-established family roles and relationships, they are imperative for the continued development of successful family businesses.