03 Apr, 2012
Top Tips For Safeguarding The Family Business – Bev James
Family businesses are common in the UK, according to the Institute for Family Business (IFB) the UK has over three million family firms accounting for 40% of private sector employment and generating £73bn per annum.
Frequently, these are businesses that have been built from ground up, with little borrowing. Some 70% have fewer than 9 employees; 17% have been in business for three or more generations. they play a huge role in supporting the economy – in every country.
Top Tips For Safeguarding The Family Business:
Selecting and preparing successors
In family business it is often taken for granted that there will always be a family member at the helm of the company. However, this may not be good for the business nor actually what the heir apparent truly wants.
There is a difference between a family-owned business and a family-led business. Company survival depends upon having the best person for the job running the business. That may well mean bringing in a CEO with experience from outside.
Who will run your business if it is to be passed on to a family member?
Does this family member want it?
Have they the right experience or skills?
Creating productive roles for family members
When jobs elsewhere are hard to find, families tend to protect and look after their own; which is why family business often absorb family members as employees during an economic downturn.
If jobs are created for family members without interview or the necessary skills and experience, it can cause conflict with colleagues – especially if they are put into management positions.
Beware the perception that the business is ‘carrying’ family members who are not necessarily up to the job.
Defining roles and responsibilities
Management in a family business can sometimes resemble an episode of Fawlty Towers where everyone does everything and a fire-fighting approach becomes the norm. Job descriptions are a valuable way to establish boundaries and ensure a distinction is drawn between work and the home environment.
Clearly define the positions and decision-making powers of family members and make sure that they are as accountable as any other member of staff.
Family members are often expected to work for the business above and beyond the call of duty, with little compensation or recognition. Pay may be low, with no annual review. Typically, there is also greater willingness to take a pay cut when times are hard; but harsh judgement if an individual wants to leave.
Make sure that employment contracts, pay scales and responsibilities are in line with those of non-family employees working at the same level.
Develop a shared vision for the business
In my experience, many family businesses lack a clear vision. All too often, time spent developing a strategy is seen as unnecessary. A professional coach or facilitator can be invaluable to help the family focus constructively not only on what the vision is, but also how to take it forward in three, five or 10 years. However, a shared vision is only worthwhile if it becomes a plan for action that is used and reviewed regularly by all concerned.
A clear vision and an agreed business plan are better for the business – and for the family as well.
The guiding ethos in a family business if often ‘do whatever it takes’, and family members will often do just that – because they care about each other as well as the business. The high level of loyalty means that mountains can be moved when necessary.
Communication can be almost telepathic when people know each other well, and share values and understanding. A family business that encourages mutual respect, clear goals and respectful communication is uniquely placed for long-term success and survival.
Bev is CEO of The Academy Group which includes The Entrepreneurs’ Business Academy (EBA) & EBA for Coaches which are both joint ventures with James Caan. Her book “Do It! or Ditch It” has already been listed as a bestselling business title and she is ready to pass on her success to your organisation.
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