It seems like the dream situation. You start a business, create a family and then when your sons and daughters reach maturity, you bring them in to run the company and eventually succeed you and carry on the family legacy.
Seems like a fairly simple strategy, right?
If only it were only true. In fact, experts and people in family businesses all agree that there are just as many cons as there are pros to working with family. But it’s important to note as well that all situations are different, and individual companies have to make the best decisions for their unique set of circumstances.
Jason Case, who worked in the business that his grandfather started in 1951 along with four brothers until recently starting his own company, Case Snow Management, Attleboro Falls, Mass., says that one of the pros of working with family is the trust factor.
“You have each family member act as owner of the company, and when they’re around, everyone is working diligently. The more eyes that are on everything, the better off the company is at the end of the day,” says Case. “Hopefully, each family member puts in more effort and time into developing the company. It’s their company at the end of the day. My grandfather passed away and left his company with my father, and some day he will do the same with his son. You want to build up that company because it’s part of your inheritance.”
Scott Neave of Neave Group Snow & Ice Management, Wappingers Falls, N.Y., who worked in his dad’s business until buying him out, agrees that, in theory, working with family means that trust shouldn’t be an issue.
“You all have similar values,” he says. “Like me, you grow up in the business and are in tune with what’s involved. Ideally, the best partnerships or relationships are ones that complement each other.”
Consultant Daren Fristoe, The Fristoe Group, believes having a business influenced by family is a good thing due to the old saying that “blood is thicker than water.” “You have an employee who is loyal to something beyond a paycheck,” he says. But he also sees a negative side.
“I like to use the theory, ‘Don’t hire someone you can’t fire,’” he says. “It’s very hard to fire your kid because you’ll tolerate a lot more. As the boss, you may tolerate a less-than-stellar attitude, attendance or productivity because it’s my kid or my spouse, so I think you just skewed the business model. So when you start adding other people, the problems start because I’m treating Tommy different than Darren.”
Neave agrees this can be a problem, especially with titles. Calling someone “Mom” or “Dad” or “Uncle” or “Aunt” at work he feels can rub non-relatives the wrong way.
“I’m uncomfortable calling my parents ‘Mom’ and ‘Dad’ at work, so I don’t,” he says. “I remember my cousin used to work here and called them ‘Aunt’ and ‘Uncle’ and the other employees resented it, especially because I didn’t do it. It seems like you’re reminding people that you have relatives in the company, so it can come across as tacky.”
Case has seen it both ways in his company. He believes it comes down to a matter of respect.
“You have to find a balance,” he says. “One of my brothers calls my father by his first name and views him as his direct boss. My other brother is the complete opposite in that he feels obligated to voice his opinion or talk back like it’s his actual father and not his boss. You definitely need to have the respect factor for your brother or sister or mother or father if they’re your superior. You have to think of them as your boss, that you don’t have job security, and that your pay correlates to your work ethic and production just like working in a non-family situation.”
A simple solution to the respect issue? Having a tactical approach, Case says, when there is disagreement. “You can say, ‘Dad, I see why you made that decision and I respect that, but have you thought about this? I learned this in school and maybe you should consider it. That works better than saying, ‘That’s the wrong way; we shouldn’t do it like that.’”
Even though this kind of “direct talk” can be abrasive if done improperly, Fristoe believes that it’s another pro to working with family from a human resources standpoint.
“The theory is that I can say anything I want to you as an employee because you’re also family, so you eliminate the areas of, ‘You’re discriminating against me,’ or, ‘You just said something completely hostile to me,’ because this is a familial workplace and you’re the only one here.”
Another pro to making work a family reunion, Fristoe says, is that right off the bat, everyone knows your style, language and way of doing things.
“There’s no honeymoon period,” he says. “You already know me and my expectations if you’re my son, daughter or spouse. But I think that’s also a con. You’re in the business, so maybe there’s an expectation that you’ll be easier on me because you’re my mom or dad. I do know your styles, and I also know sometimes when you bark, there’s no bite. Because of that, there could be a different level of accountability and/or respect for the boss. So familiarity is a double-edged sword.
“It’s extremely hard to manage friends and family, because we’re human beings and we’re either going to be razor sharp and hold you to a higher standard than anyone else, or we’ll look the other way because you’re my kid. For example, it’s very hard to coach my son because I have to be aware of whether I’m being harder or softer on him because he’s my kid.”
Neave and Case both strongly believe in making children work outside of the business before bringing them in to reduce or eliminate the sense of entitlement they might have or the expectation that Mom or Dad will treat them differently.
“I would make sure they work somewhere else for a number of years,” Case says. “Typically, the younger generation knows everything and is looking to implement changes and do things the way they think should be done. That brings in a negative to the company as opposed to if they worked in corporate America for awhile and got the understanding that you have to show up to work on time and learned new and innovative things and brought what they learned to a smaller business.”
Says Neave, “I would want my children to work for someone else first, too. I would want to make sure they want to work in the family business for the right reasons and not because they think it’s the easiest path. I want them to see for themselves if they have the passion, skills and natural ability to do what they want to do. I wouldn’t want to put them in a position where they would be miserable or fail. I would make sure there is some understanding of what the expectations on both sides are. It’s not something I would rush into, and knowing what I know now, I would even be slower to join the family business and make sure it’s the right thing to do.”
One challenge not to be overlooked as well when it comes to involving family in a business is the succession plan: who’s going to take over when Pops retires?
“The pro is, I want to pass this business on to my son or daughter, and they have been here, they know the business and know how to do it, and they know how I did it and the mistakes I made,” says Fristoe. “The negative side is if they aren’t worthy or you don’t want to pass the business to them, then what do you do? Looking for a third party to buy the company out from under the kids gets messy.”
Perhaps Fristoe sums it up best when says: “It’s kind of ‘buyer beware’ if you’re going to open a business and fill it with family members.”
Jason Stahl is a Cleveland-based writer and frequent Snow Magazine contributor.
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