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Home > Management > Management Strategies > Avoiding Family Business Turmoil
Guide to Avoiding Family Business Turmoil
Strategies for keeping the peace in a family business
By Frances Sharpe
Every family has its share of issues. Combine the emotional elements of
family relationships with the demands of running a business and it's no
surprise that turmoil is a common outcome in family businesses. However,
with the right approach, you can help keep your family business free from
explosive situations. A well-managed family business boasts numerous
benefits, including:
1. Decreased start-up costs.
2. Potential tax savings.
3. Employee loyalty.
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4. A shared vision.
5. A long-term commitment to success.
Action Steps
The best contacts and resources to help you get it done
Outline job qualifications and requirements
Giving a family member a job simply because they're a relative is sure to create problems within your
organization. Without proper qualifications, family employees are doomed to fail, creating tension and
frustration. Avoid trouble by insisting that family members be qualified for their jobs with the proper
education, training and experience. And hold them accountable for their job performance.
I recommend: The Job Results Management Institute provides forms that can help you pinpoint job
qualifications, conduct performance reviews and measure performance. Find performance measurement
resources from the Zigon Performance Group.
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Define roles
Snuff turmoil by giving family workers clearly defined roles within the company. By outlining the specific
parameters of each person's job, your family employees will understand the scope of their responsibilities
and will be less likely to tread on each other's toes.
I recommend: SBA.gov provides tips on how to write a great job description. Get a look at some common
duties included in various job descriptions in Monster.com's job profiles.
Compensate fairly
Just because someone is family doesn't mean they should be paid an exorbitant salary. This can lead to
tension among the ranks of your non-family employees.
I recommend: Use Salary.com's free Salary Wizard to find average salaries, including bonuses, for
dozens of job categories. Job valuation reports that give you a complete look at salaries, bonuses and
raises for a variety of positions are also available for a fee from Salary.com.
Schedule family meetings and retreats
To make sure that all family members are on the same page in terms of business strategies, operations
and future plans, hold regular family meetings. Consider an annual retreat to encourage family bonding,
which plays an important role in the ongoing success of a family firm.
I recommend: The Family Business Consulting Group, authors of Family Meetings: How to Build a
Stronger Family and a Stronger Business, offers family business meeting resources to ensure that you
get the most out of your meetings.
Select an advisor or consultant
Since family enterprises face unique challenges, it may be beneficial to hire a family business expert as
an advisor or consultant. Outside advisors can assist you in making sound business decisions while
taking into account the emotions and personal relationships involved in a family endeavor.
I recommend: The Family Business Consulting Group outlines the benefits of working with a consultant.
Review questions to ask a potential advisor at the Family Firm Institute, which also offers links to
consultants who specialize in a host of family business topics.
Guide to Operating a
Successful Family
Business
Guide to Planning an
Exit Strategy
Guide to Succession
Planning
Guide to Working Well
with Partners
Browse All
Related Topics
Accounting
Business Advisors
Business Contracts
Business Financing
Business Taxes
Create a succession plan
A succession plan can help ensure the smooth transition of your business to the next generation. By
choosing a successor and communicating your succession plans with all family workers, you can avoid
power struggles.
I recommend: SuccessFactors.com offers success management software and succession planning
Webinars. Familiarize yourself with the documents necessary for transferring the business, such as
buy-sell agreements.
Tips & Tactics
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Helpful advice for making the most of this Guide
In spite of your efforts to keep the peace, conflicts may arise. Your best bet is to deal with them head
on rather than hope they go away on their own.
Encourage family members to keep business and personal lives separate.
Featured Vendors
Bonuses and incentives should only be given if predetermined objectives are met.
Non-family members performing the same work as family members should be paid equally.
Provide opportunities for advancement for non-family employees to avoid frustration and improve
employee retention.
Red Rock Corporate
Solutions: Family-Owned
Business Consults
Recommended Solution Providers
Back to top
IMD: Family Business Center
Helps family-owned businesses with
financial planning, business plans,
tax consulting, estate planning and
general legal consulting.
www.redrockcorporatesolutions.com
Lycos: Business Cards
Offers programs on family business issues like governance, transition and relationships.
Find business cards and more at
Lycos Search. No clutter, just
answers. Lycos - Go Get It!
www.lycos.com
Mediate.com: Conflict Solutions
Conflict solution assistance for family businesses.
Metropolitan Group: Relative Solutions
Consultant group offering help with challenges and dilemmas of families who share business assets.
Family Business Management Services
Consulting service for family businesses and farms.
Thomas D. Davidow & Associates
Consultant firm offering management assistance to family businesses, foundations and offices.
Best Sites to Learn More
Back to top
Microsoft: Small Business Employee Relations
Collection of tips on employee relations for small business. Includes advice for family business.
Entrepreneur.com: Family Business
Family business resource center offering management articles and tips.
UMass Family Business Center: Articles
Educational resource site for family business wisdom and advice.
Blackwell Publishing: Family Business Review
News and research papers on the dynamics of the family firm.
Biz Journals: Family Business Advice
Extensive collection of advice from James Lea, a family business author and speaker.
UNH Center for Family Business: Articles
Offers articles and resources for family business success.
Business Link: Family Run Businesses
Covers family business issues like compensation, succession and conflict management.
Online Organizing: Working With Family
Articles and tips for running a healthy family business.
Family Business Magazine: Guide for Family Companies
This is the official site of Family Magazine, which strives to helpd family business owners make informed
decisions about managing their own businesses and families.
Best Blogs and Forums
Back to top
Family Business Blog
Success stories, profiles and management advice for family owned businesses.
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11/1/06 5:05 PM
Avoiding Family Business Turmoil | How-to Guides for running you...
http://www.work.com/Avoiding-Family-Business-Turmoil-273/
The most successful family businesses I know require members of the succeeding generation to work
elsewhere before taking their place in the family business. When kids earn their chops on unfamiliar
territory, they gain confidence from knowing that they can succeed independently, they bring new
ideas back to the family business, and they gain the respect of employees who may otherwise be
resentful of junior's entitlement to a job.
Posted by: Donna Fenn
09/28/2006 05:53 AM
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