This is especially difficult with family-owned and -operated businesses. Not only do you have the regular business people issues, you have the family people issues.

The successful family businesses who make it to the third or fourth generation are those that can separate the family issues from the company issues.

Playing favorites?

Too often I see an owner with a son or daughter in the business who is just collecting a paycheck, not earning it.

He gets promoted because he is a family member, not because he can do the job or has earned the right to be promoted. Many times he doesn’t even want to be there. He’s there because “it is expected.”

And you certainly don’t have to be in a family business to witness favoritism.

In a non-family-business situation, employees may get promoted because they’ve been there a long time rather than earning the promotion. They’ve become “like family.”

Waffling

In other situations, an owner may have two or more family members in the business and won’t make a decision as to which will be boss when he retires.

Yes, it’s a difficult decision. However, it’s a necessary one if the business is to survive.

I know of one situation where two brothers owned the business. It was a traditional family hierarchy, where the older brother was in charge and it was understood that the older brother was in charge.

The owners left the business equally to their two sons, who are cousins. They were smart enough to hire an outside advisor to “break ties” and resolve disputes. However, it wasn’t enough.

The cousins didn’t get along well in business; the tensions were impossible and each could do nothing because there was equal ownership. The advisor quit after being frustrated at the lack of execution for many years.

I know of other positive family transitions where the father (or grandfather who taught the father) made painful personal decisions as to who was better equipped to run the business. It was accepted and the business transitions were relatively smooth.

These types of decisions are very difficult when they involve family or employees who feel like family. But you, the owner, must make these tough choices. It’s only fair to your employees, your company, and yourself.

Hard questions

As an owner, here are some questions that you should ask yourself:

1. Does everyone have a clear understanding of the goals of the company?

I’ve written about this in the past. The company needs to be pulling in one direction. Solicit input from employees and create goals that everyone buys into. They are company goals, not your goals.

2. Does everyone have a clear understanding of his or her role in the company and in making sure the goals are achieved?

If you don’t have an organizational chart, create one so that people understand the hierarchy of the organization.

3. Are you and your managers capable of making hard or unpopular decisions?

If you have to wait for a situation to “resolve itself” rather than taking action where appropriate, you may have the wrong person in that job. Sometimes management classes will help — if the person really wants to change for the better.

4. Is the “grapevine” talking about someone who seems to get away with not doing his or her job?

Keep an ear to the ground to pick up what your employees are saying about others. There’s often some truth in office talk.

One of my favorite sayings is that you have to be fair; you don’t have to be nice.

Sometimes in order to execute properly, you have to make unpopular decisions that affect your employees and their families. Good executives and managers do this for the survival of the business.

Links

• American Contractors Exchange