3 Ways to Turn Stress Into Success for Your Family Business
Communication and decision-making are key to unlocking a namesake business that extends for generations.
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They aren't just your mom and pop shops. According to the Center for Family Business at University of St. Gallen, roughly 90 percent of all U.S. companies are family owned. Wal-Mart is a family business, founded by the Walton family. So is Ford. And each one has its own unique set of challenges.
There are many levels of decision-making that go into running a business. To be successful, your decisions need to be well-informed. They also need to be rational.
Imagine making serious decisions about management and finances with your parents or siblings. If you picture yourself sitting at the family dinner table, those conversations might be emotionally charged. Or there might be a noticeable lack of conversation. These behavioral patterns show up in the office as well.
In addition to the challenges of dealing with day-to-day operations, you have the added dimension of succession planning. According to the Conway Center for Family Business, less than one third of family businesses succeed the transition from first to second generation, about 12 percent from second to third generation and less than three percent into the fourth generation. Yet they still have better track records than businesses that are not family run because of shared commitments to the family and business, and longer-term focus on future generations and not the next quarter's results.
If you're managing a family business or thinking of starting one, there are three actions you can take to foster more effective communication and decision-making in the office and at home:
1. Set up clear procedures.
You may have a tendency to be less formal or let things slide because you're working with family, but it does not serve the family or your business in the end. From my experience, successful family businesses have two clear processes and procedures in place.
First, they know when and how to communicate. This is equally important whether communicating something as simple as an updated meeting time or a high-level business decision.
Second, they set clear roles and responsibilities. These guidelines need to be clearly articulated so that everyone knows their responsibilities and can avoid any gaps in work flow.
2. Provide straightforward and specific feedback.
When a family member in business makes a mistake or does something you don't agree with, it is really tempting to bring up past resentments. You also know from past experience that dumping years of frustration all at once is not a productive way to address the issue.
When giving feedback, be specific about the actual comment or behavior so that the person receiving it knows exactly what they did and its impact. Use "I" statements to put the emphasis on your experience of the behavior. They take away the blaming effect of "you" statements.
There are three parts to an "I" statement: behavior, impact, and result. An example: "When you made the decision to change vendors without consulting me, it put me in an awkward situation with our current vendor. As a result, I didn't know how to respond to the current vendor's request to renew the contract."
3. Hold each other accountable.
You put the procedures in place. Everyone knows and agrees to them. Or so you thought. Inevitably someone is going to slip up and once again you are dealing with old resentments and complaints about the workload not being fair.
Include measures of accountability. Everyone needs to know the consequences of straying from the operational protocol. Everyone also needs to know how to bring mistakes to a family member's attention in a respectful way without dredging up the past.
Applying an "I" statement here also works well. For example, holding a family member accountable for missing a meeting could sound like this: "When you did not show up for the 9:00 meeting on Tuesday, the information you would have been able to provide on the call to the client was missing. As a result, it reflected badly on the company and may affect our ability to do future business with them."
Family businesses can be incredibly rewarding when run smoothly because you are creating something positive and successful with your family. Follow these three rules and you'll be moving in the right direction.