Lack of clarity is a common cause of conflict for families in business, especially when it relates to the interface between: Owners, Leaders, Managers and Employees.
Every complex system (living and inanimate) requires the clear allocation of critical and ordinary functions (ie: roles and responsibilities) to specific parts of the organism.
Business best practice requires everybody working in a business to have clearly defined roles and responsibilities to: (a) give them purpose and direction; (b) help ensure good and appropriate performance; (c) enforce accountability and (d) identify and reward success. Clarity enables this to be achieved effectively, and with integrity.
Just about every smoothly functioning business will have some version of the following operating structure, in use. Contrast this with dysfunctional businesses – they usually struggle to describe, explain and justify their structure, or lack of same.
For the sake of this discussion, the most important part of this chart is the ‘dotted line.’
Note that in all well-structured business, people and operating systems are protected from interference by a group of individuals called ‘Owners’ by a red dotted line, no less.
Owners, and family members in general, do not have any operational roles within businesses, in their capacity as Owners, even if they have major, and entirely legitimate interests in, the fortunes of the business.
For the avoidance of any doubt (as lawyers like to say): there is no operational job description contained in any credible business Organisation Chart ever drawn, that has a box for ‘Owners.’
However, it is common for Owners, and other family members, to have executive, non-executive, and lesser roles in their family business. There is no essential problem with that. BUT, there is a problem when an Owner who does not have a specific role in a business attempts to interfere with the operations of that business – utilising the ‘authority’ they perceive they have, solely as a consequence of their family name and/or their ownership status.
Uninvited, uninformed, unqualified, and unwelcome interference in business operations can create great confusion amongst non-family employees – especially managers, whose authority is instantly challenged and undermined. It also creates serious conflicts amongst other family members, especially those working in the business, who often perceive any such interventions as being invasive interference, and ego-driven, power-plays.
To provide role clarity, and to avoid tensions and conflicts developing in any family business, all employed personnel, from the Directors down, should have and use clearly defined job descriptions, including key responsibilities, clear reporting lines, measurable performance expectations, KPIs, and all the rest of the fruit.
Skilfully and objectively applied HR policies and procedures help ensure that individual roles and responsibilities, and functional task integration, support smooth running divisional operations.
Many family businesses are a lot better at loving and protecting their people than they are at managing them in appropriate, commercially disciplined, ways. As a result, their HR functions are often rather unsophisticated – to the extent they’re profoundly inadequate for the scale and nature of the current business – notwithstanding they worked wonderfully for the business as it was – over twenty years ago.
If an Owner / family member is working in a business, whatever role(s) they have should be clearly defined so everybody, including they themselves: (a) know what they should be doing and, often more importantly, (b) know what they should not be doing.
When an interfering Owner, or non-working family member, disrupts business operations, or seeks to influence any employees, relevant managers need full authority to intervene. It is usually best for a mature and experienced non-family executive (preferably a non-executive director) to take this on, as they’ll be better placed to discharge their responsibilities independently and objectively, according to good governance principles.
Alternatively, the business can use a trusted adviser to help. They’re generally more expendable than family members and valued employees.
Whoever gets the job, their task is to get the renegade Owner back under control, and out of the business, without fomenting a family conflict in the process.
Family members outside the business (Family Council + other individuals) and family members working in the business in an executive capacity, should be seen to be 100% supportive of the responsible actions of whoever performs the intervention, as they seek to re-establish due process, law and order, within the business.