Family-owned businesses must balance work, ownership and family roles
Each June, family business owners interview with a panel of peers to compete in the Excellence in Family Business Awards.
Judges consistently ask each CEO how they carve out time for their family. To date, the most memorable — and perhaps practical — “policy” came from a father with three very accomplished sons. He replied, “If my boys and I start talking about business at the house, my wife will take away our alcohol.”
Talking about the business, even after the long workday has ended, is an occupational hazard of running a family business. Every family has a unique way to implement their self-imposed rule to shift from business to family concerns.
Aside from preserving cocktail privileges, focusing on the family not only strengthens relationships but can also have positive benefits for the business in the long run. The challenge is to recognize how your many roles blend together and can lose the balance of the family to the urgency of the business.
Distinct but overlapping roles
Family business has been described as “one big root ball,” with tangled boundaries making it unclear where the business ends and the family begins. However, around each family business is a system of three distinct but overlapping roles: owner, business and family.
Defining and then distinguishing personal responsibilities as a president (business), a shareholder (owner) and as a parent (family) is typically the first step to untangle the root ball and achieve the clarity needed to prepare plans or solve conflicts. Each role has unique responsibilities that together build a foundation of a united family ownership for generations.
In this overarching system family and nonfamily employees with responsibilities in the business are part of the business circle. Their roles encompass production, employee recruitment and training, accounting and the operational functions. Upper management leaders make decisions and policy, based on input from all levels of operations that are communicated throughout the business.
Members in the ownership circle are shareholders who may or may not work in the business. Owners share responsibilities for determining the strategic direction and capitalization of the business, succession planning and hiring the best leadership team to execute the strategy. Regular and formal meetings of shareholder groups, boards of directors or advisory boards monitor business performance and assess external advice to steward the enterprise. Even in smaller first generation operations the president, who may be the sole owner, will acknowledge the importance of working “on the business, not just in the business.”
The family circle of the system includes the blood relatives of the owners as well as spouses. All of the branches are recognized on this broader view of family because of the demands and stresses that a business can place on a family. There are more opportunities for conflict and misunderstanding.
The benefit of meetings dedicated to building family unity is evident in many business families. Developing a forum to share family histories and business updates and where families learn and play together creates stronger bonds.
The overlap of these roles was evident in one Willamette Valley family business. Among two generations of owners in a small service firm, the succession plan was amicably discussed, documented and signed. However, Dad never left his position when the retirement transition was scheduled. The business was stressed because Dad was less attentive to the customers and other managers were picking up the slack.
A year later the shareholders asked their consultant to return for conversations about this unexpected turn of events. It turned out that Dad was willing to retire but Mom, who enjoyed years as a community organizer, delayed his departure. She feared losing her civic leader status if Dad stepped down from the business. In other words, Mom was uncomfortable with the transition and what it would mean for her.
Fortunately, the owners had implemented a forum for succession planning, allowing them to realize that the impact on all family members needed to be considered. Once Mom’s concerns were recognized, the family was able to support her interest in maintaining a civic leadership role even after her nephew officially became the company president.
Looking for balance
Defining your roles is a way to monitor how you balance each. Differentiating your roles as CEO, shareholder, or parent can have lasting effects to both your family harmony and your business bottom line. In fact, there is a strong business case for more family in the balance of your life.
Using family time to strengthen connections to next generation family members builds the human capital of the family. Tensions and late nights in the office leave lasting negative impressions. Children will be more willing to consider the business in their career choices if they observe a balance in work obligations and family engagement. Human capital, with strong relationships, harmony and trust, provides a foundation of respect for the company and the willingness to make sacrifices if needed.
A central Oregon family company board chair felt that the time spent building family relationships was a key contributor to the family’s decision to proceed with a complicated lawsuit. The young generation members were passing up dividends for the long-term success of the company. The chair was impressed with the commitment of the young generation, particularly because they didn’t work in the business and the cash would be useful for home down payments and student loan debt.
Estate attorneys have advised, “You never really know someone until you share an inheritance.” Time with your children and family members dedicated to sharing your religious faith, values, sacrifices and wishes can minimize future misunderstandings. Your succession and estate planning decisions and the potentially difficult inheritance conversations have a greater chance of being understood and accepted if children have developed trusting relationships with the family members in the system.
If you feel you may be at risk for losing your business, owner and family balance, here are ideas for keeping the family prominent in your schedule.
• Structure mandatory downtime or family meals into your schedule. In one founder’s retail company these planned weeknight evenings are affectionately known as “Forced Family Fun.” Another couple developed their personal policy to end all business conversation by 9 p.m.
• Unplug from emails and set aside screens during the family time. Email auto responses can help. An OSU College of Business course instructor automatically schedules an afterhours email reply that notes he typically doesn’t read email after 6 p.m. at night “to spend more time with my family.”
• Beware of the industry trade show substituting for a family vacation. If you are bringing the family, and many family business students count trade shows as an important experience in their professional education, take time away from the corporate hospitality for your family.
• Take vacations as often as feasible. When Calvin and Debbie Kearns started C & D Landscape Company they scheduled every Fourth of July as the Kearns Family Holiday. My personal habit is to decide my next vacation before I finish my current vacation.
• Explore philanthropic service projects to connect the generations and support important social causes in the community.
• Make birthdays and wedding anniversaries exclusively about family. These milestones are family-centered reasons to enjoy special meals, capture portraits and celebrate the people behind the business.
If these ideas don’t seem feasible and more help is needed, then call on your other CEO — your “chief emotional officer.”
In every family there is a family CEO who keeps everyone connected, stewards the history, and values harmony more than most. They are considered leaders of the family circle and they may or may not be involved in the business. Seek out your family’s leader for insights on keeping the balance between business and family.
All businesses require attention to be successful. Family businesses demand thoughtful stewardship of the business, the shareholders and the family. Loosening the root ball to define opportunities for balance secures the future of the company.
Sherri Noxel directs the Austin Family Business Program at Oregon State University’s College of Business. She can be reached at 541-737-6019 or firstname.lastname@example.org.