Going into business with family members can be tough. Switching gears between personal and professional life is challenging, non-family employees may accuse others of nepotism and family relationships can strain under the pressure of running a business.
Despite this, it’s something that thousands of business owners do. In fact, according to the Institute for Family Business, there are over 18,000 family-owned businesses in the UK, generating over a quarter of the UK’s GDP each year.
In any business, profitability is paramount. But in a family business, maintaining relationships is also essential, perhaps more so than in an ordinary business. After all, if you part ways with an employee or business partner, that may be disappointing in the short-term, but manageable in the long-term. But the breakdown of a family relationship because of a professional dispute may stay with you for years to come, if not forever.
What can business owners do to sustain and nourish family relationships in a business context? And how can they make sure that the pressures of running a business don’t result in breakdowns in communication?
Keep personal and professional matters separate
If you were to reduce all of the advice in this piece down to one statement, it would be to manage the professional relationship - whether you’re managing a family member or going into business with them - as if they weren’t a family member.
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The easiest way to do this is to separate your personal relationship from your professional relationship and to set clear ground rules from the outset about how this will be done. The key here is intentionality. Be upfront, from the outset, about the fact that this is a business relationship during working hours and a personal relationship outside of working hours. And maintain that separation as much as possible.
This requires practice and commitment. At first it may feel a little odd, but in the long run it will help protect both the personal and professional relationships, preventing one from bleeding into or damaging the other.
Organisational hierarchy is different from family hierarchy
Every family is different. In some families, the parents make the bulk of the decisions, even into old age. In others, certain family members end up making decisions on the part of the rest of the family simply because they are more decisive, irrespective of their age.
Whatever the hierarchy of your family, it’s important to separate it from the professional hierarchy of the business. Your role in the family is separate from your role in the workplace. You may be the youngest sibling in the family by ten years, but if you’re the CEO then you’re the decision-maker, irrespective of any family dynamics.
It’s also important to consider, when deciding whether to hire a family member, whether one of you will be able to effectively manage the other. And if this isn’t the case, is such a hire a wise move?
Resist nepotism and maintain a meritocracy
Decisions around roles, promotions and pay rises should be based on skills, experience and achievements. Maintaining objectivity is difficult, but factoring relationships into how you remunerate staff will create a range of problems.
Firstly, it can send out the wrong signal to non-family staff, who may accuse management of nepotism and be left feeling undervalued. This can lead to a drop in morale and people leaving the business.
Second, it sets an unhealthy precedent for the employee receiving preferential treatment. Pay rises and promotions are incentives and are designed to encourage hard work and professional development. Staff who feel they are able to receive the former without the latter may be more likely to put less effort in going forward.
Offer new roles to the public
On a similar note, unless you decide from the outset to only hire family as staff, new roles should be advertised to the public and interviews conducted as normal, even if family members are in the running.
Opening the roles up to the public gives you the greatest chance of finding the best possible talent. If you only hire family, you’re limiting your available pool of talent to a tiny group of people, which will inevitably limit the quality and diversity of your people.
Also, as mentioned in the previous point, handing new roles to family members without opening the process up to the public can attract accusations of nepotism - perhaps fairly.
Maintain legal standards
One of the benefits of going into business with family is trust - we trust our family and we assume they have our best interests at heart.
While this may be true, business is business and it’s important to maintain legal standards. Contracts should be drawn up in the same way as you would with any other business partner or employee. Making decisions or agreements that involve money without putting things in writing is a recipe for disaster. If anything, having a contract in place will reduce the chance of a dispute further down the line, because both parties have a record of the agreement in writing that they can refer to.
Manage disagreements carefully
Disagreements between business partners are inevitable. Differences of opinion are just one of the ways that business partners, managers and employees arrive at the best possible solution. Learning to manage differences of opinion is a key skill for any manager.
Unfortunately, managing differences of opinion or disputes with family members can be even harder than with non-family members. Professional disputes can quickly become personal disputes. Moments of tension from years ago can resurface when things become strained.
For this reason, it’s crucial to manage disagreements and disputes carefully. Not only because family relationships have an emotional dynamic that professional relationships don’t. But also because family relationships are precious and you don’t want to damage or lose them over a workplace disagreement.
Treat one another with respect, communicate calmly and clearly and, most importantly, keep the discussion in the present. Bringing up the past is a surefire way to derail the conversation and potentially enter emotionally-charged territory.
Make time for one another outside of work
So far we’ve mostly focused on how to manage the professional relationship, but it’s also important to make time for the personal relationship. If the professional relationship supersedes the personal one, that’s a big problem.
One good way to do this is to make time together outside of work and try to set work to one side when you do so. Focus on the things that you would discuss if you didn’t work together. This helps to create a balance between your professional and personal relationships.
Hiring or going into business with family can be deeply rewarding and create value for generations to come. But it also needs to be carefully managed. The best way to achieve this is to treat the relationship as though they weren’t family and maintain a separation between your working life and your personal lives.
Many of our members run family businesses and regularly share advice with their peers on how to make a success of it. If you’re looking for more advice, find your nearest Vistage group.