So, You’re in the Family Business… by Paul Karofsky

Jeffrey: Okay, Dad, so he’s your brother. But does that mean we have to put up with inferior work and an erratic schedule that we would never tolerate from anyone else in the business?

Henry: I know you’re responsible for our Quality Program, but how can I get you to understand?

Jeffrey: Not only doesn’t he carry his weight, but he’s way over paid for what he’s doing. You know we could hire two people, both more productive, for what he’s making.

Henry: Look, Jeffrey, I’ve said it all. Harry is my brother and my partner. There’s really nothing more to discuss.

Jeffrey thinks to himself, “I’m trying to help this organization develop some team responsibility for Quality Management and my uncle, one of the owners, is the biggest obstacle to progress. My dad’s always been ‘the nice guy.’ He accepts anything Uncle Harry does, no matter how poorly he does it. He never confronts him and it’s driving me crazy. I’m working my tail off and don’t earn anywhere near what he gets. He’s becoming a drain on the business. So what do we do? Accept shoddy performance from him and carry him for life just because he’s my father’s brother? And even worse, what if something happens to my dad? Do I become his partner?

Henry reflects, “I know Jeffrey takes Quality Management seriously and I can see how my brother, Harry, can make it difficult, but I thought I raised my son with some values and respect for family. What’s the big deal? So Harry’s getting older and isn’t as sharp as he used to be. He tries hard. And he was there for me when I needed him. That’s what being a brother is all about. How can I get Jeffrey to understand this?

What’s going on…

Jeffrey has a real concern not simply for the present but for the future as well. He is looking at his uncle as a family member, an owner and fellow employee in the company. As such, Jeffrey has a set of standards for behavior and quality that he expects should be met. These are standards he would apply to any other employee in the business and even more stringently to family and owners, especially when building team responsibility for Quality Management. Jeffrey is also concerned about his future, financially and in terms of the business ownership. It might be difficult for Jeffrey to accept his uncle’s performance now, but a partnership with him might well be intolerable. He is frustrated because he expects that his father should see the situation from the same perspective.

Henry has a different idea of family responsibility. It is not dependent upon age, job performance, attendance, or Quality Management. It comes from a value which says “your partner is your partner and when he’s your brother, there is an even greater level of acceptance and tolerance.” In fact, for Henry, “tolerating” Harry isn’t even an issue. Acceptance is automatic, implicit in the relationship. It is that very relationship and not job performance that dictates the terms of the partnership. Henry thinks that if his son shares his family values, he should feel the same way about Harry as he does.

What to do…

Just as family businesses need “rules of entry,” so do they need “rules of exit.” These are ideally planned before anyone is near retirement age so that discussions are not taken personally, but looked upon as guidelines for the company. Is there to be a mandatory retirement age? What about a retirement compensation package? Should there be some consulting arrangement? What about plans for ownership transfer? Can this be done gradually over a period of a few years, rather than all at once?

Family members, even owners, should participate in a performance appraisal process. This allows for early discussion of performance concerns and appropriate corrective action. When discussions like this are delayed, the risk of stirring up high emotion increases dramatically, making a controlled rational discussion more difficult.

Jeffrey also needs to understand in more depth the way his father feels. Henry may well be concerned that if today Jeffrey thinks his uncle is disposable, then maybe he, too, might be some day. A thorough understanding of his father’s value system may not only help the present situation, but may also influence some of Jeffrey’s future thinking.

Henry needs to put himself in Jeffrey’s position for a moment. While he may want Jeffrey to share his respect for “family,” he cannot expect Jeffrey to necessarily have the same sense of commitment to Harry as he does. Harry is not Jeffrey’s brother. Harry also needs to understand Jeffrey’s concerns for the future of the partnership and setting the proper tone for morale with other employees. Jeffrey’s comments about his uncle’s compensation, versus his own, may really be a concern about himself and his own recognition in the company.

Parents and children aren’t going to view all issues the same way. But when children join a family business with parents who have siblings as partners, the parents have an obligation to their partners and their children to address these issues openly and early on.

Paul Karofsky was president of his family’s third generation business.  He completed graduate studies at Harvard University doing research in family communication styles.  Paul is Executive Director Emeritus of Northeastern University’s Center for Family Business and facilitates its Leadership Development Forum.  He is the Founder and CEO of Transition Consulting Group, Ltd and is a frequent speaker and resource to educational institutions worldwide.  Paul consults to family enterprises and can be reached at [email protected] or 561-626-1110.

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