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Business Observer Friday, Jul. 4, 2014 6 years ago

Look before you leap

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What parents should know before asking their children to join the family business.
by: Denise Federer Bottom-line Behavior

Having the opportunity to bring your children into the family business can result in the best of times — or the worst. Similarly, from the adult “child's” perspective, having a chance to join a family business can be a dream come true or quite the opposite, a horrible nightmare.

What I find is that many parents and children involved in family businesses wished in hindsight that they had done more due diligence before making this potentially life-altering commitment. Not surprisingly, family dynamics can be significantly affected by the choice to work together. Some families grow closer as a result of working side by side, and others get torn apart.

The key factor that determines the successful outcome of this critical decision is having an open, honest dialogue about everyone's expectations. The first step in this process is to explore your own motives.

Before you invite your children to join the family business, parents need to ask themselves some tough questions. Although the questions presented below are meant as a guideline for those family members contemplating working together, they can also raise relevant issues for parents and children already working together to discuss.

Consider the following:

Why are you doing it? Has it always been assumed that your children will join the business? Are you seeking to continue your legacy and/or do you think your children won't be able to secure a “real” job?

What do you expect? It's very important to provide specifics — in writing — with respect to your children's pay, benefits, responsibilities and title. These items are often vaguely outlined, and that can cause problems down the line.

What's the end game? Are you going to give your children the chance to buy the business at some point, or will you gift it to them? To ensure no misunderstandings occur — between you and your children and between multiple siblings, if applicable, ownership opportunities should be defined upfront.

What value proposition do your children have? Do they have the qualifications for the job, from both a skills and education perspective? Have they worked elsewhere for a minimum of two years? Additionally, for those who may be leaders one day, do they have the personality qualities to be successful?

Will communication be an issue? It's very important not to patronize your children at work, taking care to use the same language with family and non-family employees. Also consider how you already communicate with your children; if the relationship is strained, would it be a mistake to move that dysfunction into the work environment?

It is just as important that children make a thoughtful decision as to whether they will join the family business. Ask them to reflect on these same questions, from their perspective:

Why are you doing it? Your motivation is important, whether it's for sentimental reasons, you want to own the business someday or you're passionate about what is being sold. Minus the proper motivation, i.e., fulfilling someone else's dream, you may be in for an unhappy work life.

What's expected of you? “Trust me” is not an appropriate response to a query about job specifics. Like any other employee, you need to have your pay, benefits, responsibilities and title spelled out in writing.

What's the end game? Will you have the chance to buy the business at some point, or will it be gifted to you? To ensure no misunderstandings occur, define ownership opportunities from the get-go.

What's your value proposition? Do you have the appropriate education and business acumen? It's best to gain industry experience by working for at least two years at another company, and it's also invaluable to learn entrepreneurial skills.

Will your ideas be heard? If you already have a hard time communicating with your parents, what makes you think things will be different in a business environment? You don't want to feel ignored or misunderstood at work.

If, after some soul-searching, you decide to ask your child to join the family business, be sure that transparency is maintained at all times. You also need to create guidelines for personal and professional boundaries, for instance, being called by your first name at work, rather than mom or dad.

Once you have all agreed to make this commitment, don't overlook the impact of this decision on non-family employees of the company. To maintain credibility, it is important that you be objective when it comes to your child and hold them accountable as you would any other employee. However it is equally important that you acknowledge their accomplishments as well, so there is no doubt that their new role in the company was earned, not just a birthright.

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: {encode="[email protected]" title="[email protected]"}

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