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Bottom-Line Behavior

Mitigate the impact of key employee departures in a family businesses

A departure of a key employee in any company can sting, more so in a family business. But there are steps companies can take to guard against that kind of turnover.

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Employee turnover in a family business generally happens less than in larger public businesses — as the executive team is often made up of family members who aren’t going anywhere. Even individual contributors with no managerial aspirations tend to stay around longer due to the family-like atmosphere. 

But turnover does happen in family businesses, even at the executive level. And when it does, it can cause a mini-crisis. When a long-time employee leaves the family business, it can hit hard — especially if they leave for a competitor. Aside from the obvious business implications, the employee leaving can feel almost like a betrayal, especially if the employee was well-liked and respected. It can lower morale and if you’re not careful, damage the culture as well. Employees leave for many reasons, and some are out of a business owner’s control — higher salaries the company can’t match, more room for advancement, etc. But in many cases, the reasons for a long-time employee leaving are completely preventable, with actions that happen long before the employee even considers looking around for greener pastures. 

It starts with a commitment to employee engagement. 

Understanding human capital 

The talent management firm Talogy’s internationally researched report, "Leading in the Future World of Work" delved into the subject of human capital, and found that inspiring, motivating and engaging people was the No. 1 attribute for achieving results. The report also found that enabling a positive employee experience was the most important behavior that leaders need to demonstrate both for a positive employee experience and organizational success.

The findings, while illuminating, were not necessarily surprising to me, as I have had decades of experience consulting with family businesses. But many family businesses never even think about these things, as they are generally busy running the business. Most large corporations understand the nuances of human capital, but family business have been slower to catch on to a constantly changing world. 

The following is an example of the type of unintended personnel error I have encountered in working with a family business (the names and specific situations have been altered to protect the innocent): A talented employee at one family business was on track for a big promotion — only she didn’t know it and left the company before it happened. This shocked the company, but it shouldn’t have. They dragged their feet on their plans, assuming they’d get to it eventually. And they never told the employee of their plans. Active communication and employee engagement would have prevented this. 

Here’s the lesson — consistent employee engagement will help your business retain employees by keeping them happy, and help you determine if the right person is in the right seat. Employee engagement impacts the extent to which employees commit to someone or something in the organization, how hard they work and how long they stay in the company because of that commitment. 

Improve employee engagement

The first step in successful employee engagement is to engage yourself. To inspire, motivate and engage others, you must first understand what drives and motivates you as a leader. Take a good look in the mirror, and put yourself into an emotional space where you understand yourself. This will help you understand the team. 

After reflection, start talking to people. Learn what motivates them — maybe it’s competition or compensation. Maybe it’s a great culture. Maybe it’s a clear path to career advancement. Everyone will be different, but once you get a sense of your employees, you’ll be able to start building your company environment and processes around what will motivate them. 

There are some functional aspects every company should implement as well:

  • Set expectations: Don’t leave your employees in a vacuum. If you want results, make clear to them the expectations you have of them both individually and collectively. With these in hand, employees will work to achieve them. They will also feel empowered by having a clear goal.
  • Provide a growth plan: Your employees want to know their hard work will be rewarded. Every employee — but in particular ones you know are fast risers — should have a clear path to advancement ahead. This will keep them working toward getting to the next level and improving the business at the same time.
  • Embrace change: Too many family businesses are slow to catch up with the changing world around them. By embracing change and listening to new ideas, you’ll be able to show your employees the business is built for the future — including their future. 

Investing in the individual growth and goals of your employees will positively impact the bottom line of your company. And if you can enhance their skills to match what the company needs, it can be priceless. The time and money you spend making changes to your culture and your process will be well spent. It will have the immeasurable benefit of increasing the positivity of employees, their long-term commitment — and the bottom line.



Denise Federer

Denise Federer is a contributing columnist to the Business Observer. She is the founder and principal of Federer Performance Management Group with more than 30 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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