There are always challenges with a group of individuals working together. In family businesses, family relationships add a different dynamic to the mix. Business advisors recommend keeping the lines of communication open between family members.
“You can’t fire your mother — at least not without making Christmas dinner really awkward,” says Tammy Arthur, Ph.D., an assistant business professor at Mississippi College and a family business owner. “Seriously, your business may come and go, but your family is forever. It’s important to keep that in mind when conflict inevitably occurs.”
Her advice is to be as clear as possible when setting up a family business. “Be really careful and spell out in advance what the financial arrangements are,” she said. “What role does each family member play in the new venture? It may feel awkward to write it all down, but it can save a lot of heartache later on.”
Steve Barrilleaux, director of the Gulf Coast Mental Health Center in Biloxi, likens families working together to those he’s seen living together after Hurricane Katrina.
“Things are magnified. It’s a unique set of challenges,” he said. “Clients have told me there can be friction between family members and other employees — maybe parents bring a child into the business and the child feels he doesn’t have to show up on time or be as vigilant as other employees.”
He reminds families who work together that they have a common business goal and should have common rules across the board. “Families should know each other’s limitations and be willing to be on the same page for the good of the business,” he said. “I’ve seen small and large businesses have a lot of tension build between family members and other employees. Business owners have to draw the line and decide what it’s costing them.”
Managing family relationships is a major issue in running a family business, according to Jennifer M. Sequeira, Ph.D., and assistant professor of management at the University of Southern Mississippi.
“The first thing the founder or owner needs to establish is the boundaries of the business,” she said. “Often times, many of the smaller family businesses are not managed like a true business, meaning that the structure found in a non-family business is missing. Delineation of specific tasks, titles, goals and formal expectations are sometimes unclear.”
When this uncertainty exists, it can make it more difficult to manage the relationships among family members who work in the business.
Don Fischer, director of the Small Business Development Center at the University of Mississippi, says relationships in family businesses need to be addressed by family members.
“I have had a family business and it’s difficult,” he said. “I’ve also seen business partnerships come apart and family partnerships are more bitter when that happens. Partnerships are fragile at best.”
His advice is to have a dissolution agreement before going into business, a sort of business pre-nuptial agreement.
Sequeira points out that a number of issues can create conflict among family members in a business.
“Conflict can arise from certain family members being favored over others or the founder having a strong relationship with one family member to the exclusion of others,” she said. “Establishing specific guidelines and expectations — discussed with all members — of how the family should act in the business and how the business should be managed is the first step in creating boundaries.”
Involving all family members in discussions of these guidelines and expectations is of major importance, she adds, helping them buy in to the plan.
“All involved should be treated fairly with the same expectations and requirements being placed on all with no favoritism in compensation, benefits and responsibilities,” Sequeira said. “Discussions about the long-term goals should also help everyone see the big picture and possibly help in the reduction of day-to-day conflicts and difficulties.”
Contact MBJ contributing writer Lynn Lofton at email@example.com.