Governance People Matters

What Should I Do With My In-Laws?

The succession of a family-owned business is often on the minds of its owners. For most, the transition of a family business from one generation to the next is planned. There is significance and pride in continuing the family legacy, and successfully passing the torch; knowing that your hard work and investment will hopefully bring greater abundance for your offspring.

More often than not, a son or daughter of the owner has been groomed for, or at least involved in, the business operations and is looking forward to this promotion. But one aspect that is often forgotten in the planning of succession is how to navigate the role of in-laws. Of course, the matrimonial decision of a son or daughter who will be taking over the family business will influence the family, but how should it impact the business?

Typically, the “what should I do with my in-laws?” question can go one of two ways. Some families embrace in-laws as their own. The in-laws are given the same privileges and opportunities as all other family members. On the other hand, some family businesses exclude non-blood relatives from involvement in the business. Both options have merit, but when considering which way to go, it’s important to consider the pros and cons of this decision.

Weighing the Pros and Cons

The positive side to embracing the in-laws into the family business is that they can be a great source of support and strong ambassadors for the company. If a child is about to take over the family business, his or her spouse is someone he or she can trust and rely on.

An in-law, like any new employee, also brings new insight and ideas and can provide a refreshing, and perhaps new, much-needed perspective. An in-law might also be a highly qualified asset to the business. For example, if a son or daughter-in-law is a graduate from an MBA program and has strong experience in finance and marketing, a position that allows him or her to focus on these strengths can be a remarkable asset to the family business.

On the other hand, inviting the in-laws into your family business can be detrimental, and many family businesses have established a strict “no in-law” policy. Ultimately, in order for a family business to be successful, there must be a shared, consistent, and lasting set of values, as well as common business goals.

Additionally, the success of a family owned and operated business requires strong communication. The culture of a family business is likely unique to that family, from the way the family communicates with one another to the customs and hierarchy within the family structure. This can make it very challenging to bring on board an in-law, even one who is qualified.

One fictional but true-to-life example that comes to mind is found in the current top-hit TV series, “Empire.” The show gives viewers a glimpse of what looks to be a dysfunctional family-business dynamic with family members involved in each other’s personal business, loud and heated arguments on how to run the company, and no clear delineation of the business role of each family member. The point illustrated here is that each family business has a unique method of operation.

Family-owned businesses operate on the culture or norms of that particular family. To an in-law, or any outsider, a family-owned business operation may look dysfunctional, but for that family it may work just fine.

Implement a Family Work Policy and Clarify Business Goals

This decision shouldn’t be taken lightly, and family business operators should consider creating a written family work policy in reaching this decision. The phrase “make sure it’s in writing” rings true. Documenting a family work policy is an excellent way to ensure transparency and avoid conflict in a family business.
After a family business owner has made the decision to either include the in-laws or not, creating a family work policy that defines who can and cannot work in the business will be beneficial moving forward. When conflict arises, this is the document that can be referenced for clarification. This document should include specific rules on who can work for the family business, under what circumstances these rules can be amended, and perhaps the plan for succession of the business.

For example, say a family business owner’s child gets married. The new son or daughter-in-law is interested in joining the family business. Should he or she be included? Perhaps, the family work policy will allow for his or her involvement, since he or she is the spouse of the business owner’s child, who will likely be taking over the family business.

However, let’s say the son or daughter in-law’s sibling would like to join the family business. Should he or she be included? The decision to include the in-laws can get complicated. Therefore, documenting these types of details in a family work policy is crucial.

Additionally, take the time to clarify the goals of the business and what is needed from the family to achieve these goals. The success of any business requires that all members are working to achieve common objectives. Create trajectories and set time aside for meetings with your family business members that allow for open discussion and dialogue.

As your family expands and more members come on board, it’s important that everyone be on the same page in achieving the business goals. Family businesses that are considered to be the most successful are ones that share values, openly communicate, and are founded on trust and respect for each other.

This article was first published by Davis Wright Tremaine LLP.  It has been reproduced
with their permission.  Find out more by visiting their website here

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