They should have behaved better

Michael Best examines the pitfalls of working with family members, and how to negotiate them

In her Ted Talk on writing, best- selling author Anne Lamott articulates exactly why I dreaded tackling this character: “Families are hard, hard, hard, no matter how cherished and astonishing they may also be.” Now, if everyone in your extended family is an angel, if no one ever behaves badly, if never a terse word passes between you and your family members, if your siblings’ spouses encourage them to help you run your business in spite of the late hours and meagre and sporadic pay, then you may skip this. However, if you have a ‘normal’ family, this is for you.

It’s complicated

Family relationships can be complicated. When they overlap with business relationships, the potential for complications increases exponentially. And I’m not just talking about the relationship between you and the family member involved in your business. Often, business relationships draw in family members not directly involved in the business. Some family members may feel their opinions should be heard simply by virtue of their ‘family’ status – and this belief often overrides the tact, discretion and prudence generally exercised between non-family business associates. 

Even if at first you can run your business in harmony with a family member, there’s no guarantee this peace will last. It’s best to have a frank discussion before entering into a business relationship with any family member. Potentially contentious confrontations may be avoided if everyone is apprised of typical small- business challenges before they arise – ie, long hours and circumstances that might necessitate belt-tightening at home. If the business relationship proceeds after all the cards have been laid on the table, it will do so with a better chance of success. If it doesn’t proceed, this may be disappointing, but you will likely have avoided a long, drawn- out, acrimonious and damaging relationship that could permanently wreck a small business and a family.

Learning the hard way

My suggestions on how to handle family members in business relationships are born out of two unfortunate experiences. In both cases, we focused on the benefits and neglected to properly explore the challenges and pitfalls. Most importantly, we didn’t have a roundtable discussion with everyone involved directly or peripherally (particularly spouses). I now know that this discussion is essential. Subject family members to the same scrutiny and careful consideration as any other would-be employee or business partner. In fact, you should probably subject them to more – remember, you’re not just getting the family member in question. You’re also getting the family members holding axes they won’t hesitate to grind at thefirst sign that not everything is coming up roses.

Who’s in the family tree?

Spouse Spouses commonly own small businesses together. While I’ve known a number of successful spousal business partnerships, including my own, I’ve also known a number that ended badly – both the business relationship and the personal relationship. This is why it’s important for a couple to thoroughly explore all the pros and cons of working together before taking the plunge. At first blush, working together might seem like a romantic extension of your personal relationship. But don’t be surprised if upon closer examination it no longer looks that way. And don’t be dismayed if you decide that you’re not suited to working together – it’s not a reflection on your personal relationship.

If you do decide to work together, know that irritation and tension arising from incidents at home are invariably carried to the office, and vice versa. I know this from personal experience. And until my wife and I met a remarkable couple who had undertaken two driving adventures – from Cape Town to Cairo and from Alaska to the southern tip of Argentina – I didn’t come across a good solution to the problem of carrying irritations back and forth between the office and home.

Tom and Janet were cooped up with only each other for company in the confined space of a vehicle all day every day for months at a time. Irritation and disputes inevitably came up, and for both the sake of their marriage and the sake of the adventure, they needed to find a way to manage them. They devised the ‘twenty-minute solution’: either or both parties had twenty minutes after an ‘incident’ to sulk, blow off steam, or do whatever was necessary to restore peace. Apparently it worked very well for them – they’re still together and Janet is writing a book about their experience.

Sibling A business relationship with a sibling must comply with all the criteria required for a business partnership. But more importantly, the sibling relationship itself must be sound. Sibling relationships can bring with them years of accumulated baggage not conducive to a peaceful, productive business relationship. I talked with a number of siblings while writing this book, and all parties said that if their personal relationship hadn’t been sound, they wouldn’t have been able to conduct a business relationship. All also confirmed that it was necessary to distinctly divide duties and responsibilities to minimise conflict.

Parent-child I know of a few successful parent–child business relationships and, importantly, the individuals involved in them all stipulated one prerequisite for success: a harmonious personal relationship. Each pointed out that a generation gap with potentially significant implications should be anticipated, and that it must be managed carefully to avoid conflict. The younger generation is typically less experienced but more current when it comes to certain aspects of the business (eg, fashion trends, customer demands and technological developments). They also tend to be more energetic, more adventurous and less risk averse. Anyone contemplating a parent- child business relationship ignores generational differences at their peril.

You’re fired!

So, you’ve hired family members. Now what about getting rid of them? My friend Mac ran a successful business for many years, and at various times he employed a number of family members. Mac told me that his level of tolerance was the same for all employees. Being family didn’t guarantee tenure in Mac’s business. He fired at least two family members that I know of – a son and a nephew. No partner or employee should expect tenure just because he or she is family. Most small businesses can’t afford to carry underperformers. For the sake of your small business’s survival, hold family members to the same performance standards as every other employee.

Non-family fallout

The presence of family members in your business can create difficult working conditions for your non- family employees and partners. If you haven’t considered the situation from their perspective, you’ll likely want to do so once you read what I’ve been told by non-family employees in family businesses. Nobody I talked to cited any particular advantages of being a non-family employee in a family business, but there was no holding back on the disadvantages. Two disadvantages in particular came up every time.

The first was that while non-family employees understood that every family has its drama, they wished that family members would leave it at home. If your business is suffering from poor morale or high staff turnover, consider whether this could be the reason. The second disadvantage that came up repeatedly was the insubordination of family members in junior positions. For example, one person told me that she resigned from a company not long after the owner employed his young daughter as a trainee (the daughter knew nothing of the business or industry) and gave her a company car and gas allowance. No other employee received these benefits. The lesson here is to view the involvement of family members in your business from a non-family employee’s perspective. Otherwise, you may see poor morale or even lose valuable, contributing employees. And of course, both of these things can harm your small business.