How to Keep Your Family Business Together
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By Chris Petersen   
Saturday, 30 June 2007
smc How does the family relationship affect the working relationship?
How does the family relationship affect the working relationship?
The phrase “mom-and-pop” is a strange one in the world of business. Usually used to refer to a small, family run company, the reality is that plenty of the world’s largest and most successful companies could be considered “mom-and-pop” operations.

Family businesses make up 89 percent of the enterprises in the United States, according to the Family Business Institute in Raleigh, N.C. Of those, nearly a third will survive into the second generation. Even fewer make it to the third-generation – less than 5 percent.

Profiled in U.S. Business Review’s June 2007 issue, Erye Bus, Tour & Travel of Glenelg, Md., is one of those select few. The company was founded by Harry and Mary Kay Eyre 60 years ago, and their son Ronald currently serves as president with his sons Matt and Kevin working for him.

Even though co-workers often seem like family, those who actually work with family members have some additional challenges. How does the family relationship affect the working relationship? How can parents prepare their children to be the next generation of leadership within the family business?

Experts say that family businesses survive when they understand the boundaries between family and business, but also the ways in which the two can mean the same thing. More often than not, the things that make up a strong family translate into a strong family business, so long as families remember that and work to use their strengths for the business.

Common Goals
For a family business to survive throughout multiple generations, it has to believe it will. Wayne Rivers, executive coach and owner of the Family Business Institute, says making sure the family understands the company’s goals is the first step toward success. “The first thing is that there’s a crystal-clear vision for where the business and the family are going in the future,” he says.

Most often, that vision is of the strength and vitality of the company, not the profits it can make for the family. Having a common goal is essential, but a common goal of personal prosperity can be poisonous to a family business. Ira Bryck, director of the UMass Amherst Family Business Center, says a family’s vision must be far-reaching.

“The best case is when a family’s long-term vision is a rudder for the business, where they can value giving back to the community, excel at customer service, be a great workplace,” Bryck says. “Also, to invest for the long-term, not eat at the value of the company by demanding quick profits.”

Bryck goes on to say that successful and long-lasting family businesses are ones that don’t exist to be a family’s private piggy bank. Most dangerous for any family operation is “thinking that benefiting the family is the priority of the company, rather than striving to improve quality and service for all stakeholders, including employees, customers and the community,” he says.

Stay on Your Side!
The biggest threat to family businesses, according to Rivers, is a lack of clearly defined roles and boundaries. Those can be difficult for many to establish because family businesses are often built on family members giving all their time to the company. “Most family businesses have this job description: Do whatever it takes,” Rivers says.

“Being as it’s a family business, you sort of grow up involved in the company in some way,” says Matt Eyre, whose earliest involvement with his family’s business included childhood chores like mowing the lawn.

Although it might be necessary for family members to all shoulder the burden of keeping the business afloat, it can also cause roles to become murky, and that can create conflict. Rivers says the sense of ownership family members can have in a family enterprise might very easily lead to turf wars. He says family business owners need to consider their involvement in the business the same way they would view owning stock in a public company. “You would never walk into a GE plant and start telling people what to do just because you’re an owner,” Rivers says.

Anyone who’s ever seen siblings fight in the back seat of a car knows how territorial family members can be. Rivers says he’s seen a brother sabotage his company’s own equipment just to settle a grudge against another brother.

“We’re biological creatures, so you’re going to bring your work home with you,” he says. “The question is when those issues do come home, how do you deal with them?”

Eyre says keeping a cool head is essential when working with your family. “You have to have a certain type of personality, you can’t take anything too personal and you have to take every criticism as constructive criticism,” he says. “When we’re here at work, work is work, so I would treat my brother, or my father would treat me, just like any other employee.”

It’s No Picnic
Family feuds that hurt family businesses can also be the result of family members not taking their responsibility to the company seriously. If family members view the company as just another family project, akin to cleaning out the garage, the entire operation suffers. “Successful and long-lasting family businesses have a strong policy that the business is an opportunity for family members who are passionate about the mission and activities of the company, and have talents to match the needs of the business,” Bryck says. “[It should not be] a place where relatives come to hide out, collect welfare, feel entitled to misbehave, or need to be involved to feel more like family.

“The drawbacks are if they [discourage] talented non-family by sending a message that talented non-relatives need not apply. There is no reason to think that all the right people will come from the owner’s gene pool.”

Passing the Baton
Passing control of the company down to the next generation of leadership is inevitable for a successful family enterprise. Preparing those future leaders for their time in the “big chair” requires a lot of the same attention as good parenting. However, that’s not all it takes.

Rivers likens the transition between family leadership to a relay race, saying that each runner needs to be at the same pace when the baton is passed. Unfortunately, he says, many family businesses don’t consider the whole spectrum of preparedness, focusing mainly on making sure their heirs have all the nuts-and-bolts knowledge. Administrative skills are often neglected.

“What family businesses have is on-the-job training, and they’re not very good at getting [young talent] the sort of training to make them [more than] just worker bees,” Rivers says. Bryck says to make sure the next generation receives “a good business education, and provide the opportunity for them to decide between the family business and some other good match; they should only come in if they fit and they want to make a difference. “Insist family members do a bit of exploration on their own, get their feet wet and get knocked around somewhere else, as well,” Bryck advises.

Erye says his family actually has a policy that no family member can join the company full-time until they work somewhere else. “After I went to college, it was required that we work somewhere else for at least two years for us to see what that’s like, working for another company,” he says. His brother, Kevin Eyre, worked in agriculture, carpentry and sales before joining the family business earlier this year.

It’s important for family businesses to provide options for family members and not make them feel as if they have to work there to be part of the family. Eyre says his middle brother, Brad, spent a few years at Eyre Bus, Tour & Travel but eventually moved on to real estate. It was more important for the family and the business for him to be satisfied with his career, he says. “If you’re not happy in your job, it also affects the family relationship,” Eyre says.
 
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