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Advancing your business

Creating a clique with family members may brew resentment amongst non-family employees and senior management.

  • Run the family business with conventional governance and management structures.
  • Invest in non-family members.
  • Appreciate that non-family members may represent and ultimately bring continuity to the business.

When you are in business with family members, you are working with people with whom you have a lifetime of shared experiences. This inevitably breeds a familiarity that is difficult to replicate with “outsiders”.

This familiarity can present itself in several ways within the family business. It can impact the way that people within the family business communicate with one another.

For example, decisions may be agreed upon informally between family members but not shared with the rest of the team. Family members may speak to one another in one way, but to other team members in another.

For example, decisions may be agreed upon informally between family members but not shared with the rest of the team. Family members may speak to one another in one way but to other group members in another.

Dare we even mention the dreaded word; nepotism?

The problem is that this can create a culture of “us and them” within the workplace. Resentment builds amongst the non-family employees, and before long, you have a staff retention problem or, worse, a potential mutiny on your hands.

There are many ways that a disciplined approach to team management can help to reduce the risk of or minimise the perception of family members being treated differently. However, this approach must be appropriately documented in policies and procedures. When explaining to a disappointed staff member why they have been passed over for a promotion, your life may be easier if you have previously circulated a written job specification.

Structure and forward-thinking are always necessary, even with a progressive and up-to-the-minute business. In this case, Mr and Mrs King should have made wills and entered into a shareholders agreement and employment contracts with their sons, Prince and Duke, considering their habits to regulate their wilder tendencies. Successful succession could have been achieved in a shareholders agreement compulsorily engaging a trusted third party’s advice and consent is required for major decisions or, in the extreme, the payment of cash from the business over a certain amount. Further, staff should have been trained, promoted and given an interest in the industry but not necessarily any control to invoke loyalty and continuity. This could easily have been achieved using government-approved or non-government-approved schemes. One wonders what, if any, the advice they took, and if so, did they keep to it?