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Business Observer Friday, Apr. 19, 2013 8 years ago

Caught in the Middle

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The perks and perils of being a non-family leader in a family business.
by: Denise Federer Bottom-line Behavior

As the owner of your business, do you sign the paycheck of one or more relatives? If so, do you have key individuals in leadership roles who are not family members? Do you believe they are comfortable being totally honest with you or that working with your children or spouse creates difficulties for them? If you answered “yes” and “no,” respectively, then perhaps you are not appreciating some of the challenges non-family members face when working in a family business.

No matter how friendly and cohesive your senior management team may appear, it would be a mistake to underestimate the differing perspective of a valued employee who is “outside” the family. It is essential that you are aware of the issues that are relevant to this group of people in your company. In fact, miscalculating the significance of a key non-family employee's concerns could have a negative impact of the success and sustainability of your company.

Conversely, if you are in a leadership role in a company where many of the main players are related to one another, are you cognizant of the issues you are reluctant to discuss with family members?

Or perhaps you enjoy working for the current owner of your company, but have serious concerns about the possibility of answering to the next generation. Understanding the underlying dynamics in a family business, and learning strategies for working effectively in this type of system, are critical for your long-term career growth and satisfaction.

Non-family members:
How to navigate your role

The first step in understanding the decisions and dynamics that occur in a family business is to identify the family business philosophy. Specifically, it will benefit you to know which of the following three underlying philosophies drive the business:

-Family First— the happiness of family members comes before everything else. Unity is favored, even if it results in negative business consequences.
-Business First— what's best for the business is put ahead of everything else. Professional business practices are followed and stringent rules are in place.
-Family Business Enterprise — striking a balance between the family- and business-first philosophies is the goal. Family satisfaction is created while the economic health of the business is supported.

In business-first family businesses and family enterprises, not being a member of the family may be irrelevant, since advancement will typically be based on competency rather than bloodline. The fact remains, however, that it can be daunting to work next to the wife, son or niece of your boss, and you may believe they receive favorable treatment.

If you work for a family-first business, you may face more challenges, along with career limitations. You must ask yourself whether you're OK with the fact that family members with less ability and/or experience than you may advance to leadership positions not because of the value they bring, but who they are.

As a family business consultant, I have often witnessed family-first businesses, in which family members may be financially compensated or given promotions and privileges that have not been necessarily “earned.” Inevitably this creates frustration and job dissatisfaction amongst non-family employees. However, when this situation is brought to the owners' attention, more often than not they are unwilling to confront these issues objectively, prioritizing family unity over business considerations.

Tips to EXCEL as a Non-Family Leader in a Family Business
Research suggests there are common behaviors patterns in those non-family individuals who are highly successful in leadership roles in a family business. Some of keys to work toward are:

-Be highly competent at what you do and strive to enhance your expertise in essential issues related to the business. An outside objective perspective can be invaluable to a business owner who trusts and respects you.
-Be validated by your own sense of accomplishment; find joy in your work.
-Know the “unspoken rules” of the family and the family business.
-Know when to take a stand and when to say nothing.
-Be steadfastly loyal. Ensure your colleagues know you're proud to be associated with the business.

Working at a family business can be incredibly rewarding for non-family members. The key to success is understanding and accepting the family dynamics, the scope and limitations of your role and being committed to both the success of the family and the business. Employees who excel at their jobs, genuinely care about the family for which they work, and demonstrate a commitment to the business, offer priceless value to a family business.

Denise P. Federer, Ph.D. is founder and principal of Federer Performance Management Group. She has 27 years of experience working with key executives, business leaders and Fortune 500 companies as a behavioral psychologist, consultant, coach and trainer. Contact her at: [email protected]

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