Family-owned and family-managed businesses, though having a great spirit of entrepreneurship and family togetherness, face several challenges with growth.
The emotional connection and mutual respect between family members, the tight controls, and constant interventions by family members in the day-to-day operations, slow down the pace of the organization and often blur the organization’s vision and goals.
Family members create their own verticals for their comfort and security. The aroma of favoritism and nepotism demotivates other employees affecting their performance. The employees who are non-family members and not the blue-eyed boys of the family, find their jobs challenging. New skills are required for generating speed of thought and speed to market and becoming competitive. But the environment pushes the attrition rates in such organizations significantly high.
“For growth and sustenance for generations, the family-owned organizations need to manage their talent well.”
The family businesses have quite a few employees who have been with the business since its inception. They are loyal, hardworking, and trustworthy. But they lack the skills and capability to learn and adapt to new technology and management systems. Though they have been rewarded suitably and head certain functions, they are not the ideal candidates who can be termed as leaders for tomorrow. Fresh recruitments, mainly at the senior level, do face a challenge in getting along with the old team. The old team members feel equally threatened.
Long-serving employees have gained the trust of the family over the years. The family members also do feel comfortable assigning critical work to the old stable employees. Integrating the old and new employees, and bringing them on the same page, through a cohesive culture is challenging. While the new employees put in their best efforts to prove themselves, the old employees feel ignored.
Family businesses even though having well-defined business processes, and systems for performance measurements, appraisals, and growth, are often intervened and bypassed by the family members at their own will, creating a lot of confusion. Even key decisions taken over hours of discussions are overruled by the family members, demotivating the employees.
Family businesses face the challenge of finding and retaining new talent to pursue growth. This becomes a big hurdle in pursuing their goals. At the same time, there is the internal challenge of managing family members who seek key positions, without merit. Even though the capabilities of these family members are not good enough for senior positions, when they are chosen to lead, they dilute the importance of performance-based growth.
Managing talent during transitions has its complexities. The loyalties of the employees and the trust of the successor may not align. New equations spring up and can lead to dissatisfaction and even attrition.
There should be clearly defined policies and an organizational philosophy for talent management, applicable to family members, non-family members, and the CEO. The philosophy should eliminate the window for personal opinions and focus on performance reviews and growth objectively.
The processes and standards for managing family talent can be separate and independent of the processes applicable to another employee. However, these policies must be of World Class Standards. Family members should be groomed by external mentors or advisors and can also be monitored by the Board of Directors. The CEO and family members must also discuss, agree and set up policies for recruitment, training, developing, managing, and retaining talent for long term
The entire organization, including the CEO, the family members, and other employees should strictly follow the talent management policies and the long-term HR philosophy of the organization. Family members must stop interfering and bypassing the processes set up of talent management.
The family business leader must constantly engage his team in decision-making. He should also understand their needs and expectations which may be skill enhancement training, expectations of key roles, work-life balance, rewards, etc. The business leader should understand the dynamism in the expectations.
Creating an organizational structure, hiring an experienced HR head, and building HR strategy can drive the organization’s growth multifold. It’s the teams that lead the organization to the next level.
ADDVALUE is one of the leading Family Business Advisors assisting members in family businesses to identify, manage and retain the available talent, under the guidance of expert Family Business Consultants.
