For every large, multinational construction corporation, there are thousands of family-run businesses that exist in the industry. In fact, many of those same large corporations began as a small family-owned business.
Note the difference in nomenclature in the two previous sentences: family-run and family-owned. For an enterprise governed by a sole proprietor, there is undoubtedly a feeling of, “Wow, it would be so nice to have a built-in succession plan complete with sisters, brothers, cousins, in-laws, etc., to pass on this business to one day.”
On the other hand, there are also leaders looking over that fence to the greener pastures of their sole proprietor neighbor thinking “Wow, that person is so lucky not to have their sisters, brothers, cousins, etc. in the business.”
There are many successful family operations, so this piece is not about them. They found a way to navigate the complicated waters of family ownership and family dynamics. But, there are also countless firms that put the “fun” in dysfunctional, creating undue levels of internal stress and, in many cases, inhibitors to profitable growth. This piece is about them.
For some reason, as family members enter the workplace, it gets complicated — even when that family is otherwise cohesive and drama-free.
Consider the business whose owner has a son or daughter operating as leader. All too often, one of two scenarios materialize: either the owner micromanages their child or completely avoids interacting with them. Micromanagement happens when, in an effort to appear unbiased, the parent oppressively manages their child.
Conversely, there are also parents that turn a blind eye to their children’s aberrant behavior, almost avoiding controversy at any length. Both situations reek of double standards and create high levels of dysfunction, not only for the child, but also the rest of the organization.
Imagine a nonfamily member leader within the firm. They must attempt to tiptoe the minefield of inter-firm (or inter-family) politics that resemble a soap opera. As if building projects weren’t complicated enough, they now must play the role of family counselor.
As the leader of your firm, are you managing with one approach or standard? Or allowing family dynamics to play a role in your decision-making and, in turn, the strategic plan of the organization? Understand that this could be hamstringing the firm and ultimately creating an anchor to growth.
While it may be depressing to consider, every leader is simply keeping the seat warm for the next generation. Even for that 45-year-old leader, succession should pervade every aspect of the strategic planning of the firm. However, a firm with plenty of family members provides some solace, creating a safety net of succession. Or does it?
The first question a leader must ask themself is, “Is this person the right person to carry on the firm’s legacy?” Sharing the same last name does not mean the business is guaranteed to succeed under their leadership (or lack thereof). There
are plenty of third-generation firms that will tell you they should have dipped their toes into another gene pool when addressing their succession plan. Ask yourself the following questions:
- Should this person (people) lead the business? Why?
- How are they viewed internally?
- How are they viewed externally?
- Would their ascension be viewed as entitlement or the right choice?
Additionally, many firms want only family ownership, retaining the business under the family name. There may be pride in that family name but realize that every decision has a corollary downside. How many talented individuals could potentially lead the business but they will never ascend to the top because they don’t share a name with the current ownership.
Sure, you may have plenty of family options to run/own the business, but is the right individual(s) someone that doesn’t share an allele?
The Organization Crowbar
Everyone has seen that family member that just doesn’t fit. So, rather than address it, they are shuffled around the organization like a hand-me-down set of shoes. All the while, the organization hears that they may be the future of the organization. If that doesn’t scream confidence, nothing does.
Sometimes having the same last name as the one on the door is a curse. You don’t really want to do this, but it is your family legacy. Destiny awaits, right? Ask yourself the following questions:
- If my relative was a free agent on the open market, would they be here?
- Have we talked about their future and what they really want to do long term?
- What message is it sending to have them in the business, shuffling from department to department like a ship without a harbor?
- Are we letting succession cloud our judgment on what’s right for the health of the business?
Crowbarring any individual into a spot, leadership or ownership, creates angst, and resentment while setting a horrible precedent for the company that could have a negative impact for years to come.
Reluctance isn’t exactly a desired trait in any leadership team. It is one thing for a leader to be nervous or pensive, but it is entirely different to insert them into a role that they view as a dead end.
The phrase “it’s just business” was probably crafted before construction organizations decided to leverage family. It may just be business, but you still have to see these people on the holidays.
Having family in the business does not mean it is destined for failure. In fact, there are many upsides to family ownership and management. But just like any other challenge a firm may encounter, there is a need for thoughtful and proactive tactics to navigate them successfully. Plus, the board room would be incomplete without a kids table.