How do you bring a family member into the family business?

Business Leader Post, February 6, 2014

Thomas D. Davidow, Ed.D.

The most important criterion is that the family member wants to be a part of the business versus feeling a sense of obligation to be part of it. The second criterion is that the family member is not being “rescued” from a failed situation, or being brought into the business because the family feels an obligation to do so, or because the family does not believe that s/he can succeed outside of the family business.
Without those two criteria being met, the family member’s entry into the business will slowly result in significant problems for the family member, the family and ultimately the business.

The third criterion is that the family member has a minimum of three to five years of work experience outside of the family business. It has been my experience that only 25 % of family members in the next generation have had outside work experience.

Consequently, their experience of accountability has been compromised—they have never lived consciously or unconsciously with the idea that their performance or the performance of the business could result in their being fired.  In addition, any sense of success (or self-esteem) that they might achieve in the family business might be undermined because they may wonder if that success might be due to their last name.

And if they have only worked in the family business, they will have been exposed only to one way of doing business. As a result, their perspective about how to do business will be narrow.

If you pay attention to the above three suggestions, you will increase the odds for success. However, you will not have eliminated another potential hazard. The flip side of the advantages of family relationships, the positive benefits of mutual trust and a shared value system, is the danger of having unspoken family rules and unexpressed expectations. You cannot let the allure of the advantages of family members entering the family business distract you from discussing the possible down side and from articulating your hopes and wishes.  Worrying and discussing the potential downside is the best way to avoid it.