Advivo Partner, Chris Morris, outlines what goes into creating a successful family business.
First Published: August, 2019
Updated: September, 2023
I worked in the family business for nearly 13 years, and during that time I worked with my father, my mother, my brother, my grandfather, my stepsister, my stepmother and my cousin, whom no one knew existed until a couple of years prior to working in the business. I like to think this experience has provided me with a good understanding of some of the complexities that can surface whilst running, or indeed just working, in a family business.
Considering almost 70% of all Australian businesses are family-owned, creating this type of business definitely has its unique opportunities. Their benefits include…
1. Embedded Values Make a Stronger Culture
A successful business requires a core set of values – a mission to rally behind and strive for. In a traditional structure, it can be difficult to identify the business’s core values as the founders are dealing with a number of partners, stakeholders, investors and employees.
2. Commitment
Family members who are involved in running a business together often are more committed to its success because they all have a stake in seeing the business prosper. This personal investment often makes family businesses more resilient.
3. Employee Relations
Families generally take better care of their employees as workers are seen as extended family members. As such, they are more like to place importance on each member’s personal needs despite their business commitments.
4. A Lasting Legacy
In a corporate business, the same mistakes are made twice because the people in charge leave and knowledge isn’t passed down. The clear advantage of a family business with multiple generations is that this knowledge ‘stays in the family’.
Although there is an abundance of positive aspects to family businesses, families typically have hierarchies, often formed from cultural norms and history. This is not unlike hierarchies in businesses, although the business hierarchy should be based on achieving role clarity and providing a platform for good management.
Thus, from my personal experience, I have outlined the most effective ways to improve the productivity and success of your family business…
Leave home at home and work at work.
This can be difficult for anyone, but it can be so much worse for family business. I clearly remember work issues flowing over into the home and home issues flowing over into the workplace. I’m sure I don’t need to elaborate on the devastating effect this can have on both environments and the relationships within.
Develop role clarity within the workplace.
It just sounds like good governance really – that’s because it is. I believe one of the fundamental issues of importance within any family business is role clarity because it forms the basis of expectations for all. Arguably this is true for any business, but the additional challenge for families is that people are coming to work with a preconceived idea of both where they and others fit within the organisation, as well as outside of it. Even if people completely understand their role within the business, they will inevitably find themselves reverting to their ‘family role’ from time to time.
This is not always a bad thing, but understanding that there are often two roles to play is crucial for the family members working together; it’s important to be able to identify which hat you’re wearing at any one time and why. Often individuals will have many ‘hats’ within the business; these are in addition to the many hats they wear outside of the business.
Without getting too philosophical, I believe it’s as important to understand yourself and have clarity on your own roles and expectations, as it is to know the same of others. Having this clear between everyone, will help cut to the key issues in the various situations which inevitably arise.
For this reason, as a family business advisor in Brisbane, I often clarify exactly which hat people are wearing in certain situations and why. I find this brings them back to ensure they’re understanding their role within the business at that time and why it’s important for them to do so.
Defining Role Expectations and Responsibilities
With role clarity, comes role expectations and role responsibilities. Defining these and articulating them is as simple as answering the following questions, which by no coincidence is also what I believe every employee (family or not), wants to know when coming to work:
1. “What are your expectations of me?”;
2. “How am I going to be measured against those expectations?”; and
3. ‘What does my future within the organisation look like?”
To get the best results from employees, including family, I believe clearly articulating and documenting the answers to these three questions is key. Importantly, for family businesses to thrive, family members should be held to the same account as would be normal for anyone in that role. For work culture and family dynamics, there can be no favouritism displayed for family members.
If these aspects can be executed well within your family business, you will be setting yourself up for success, by having the foundations in place, which will help avoid some of the most common issues we see when working with family businesses, and when an issue does creep up from time to time, it becomes very easy to refer back to the respective roles and clarify exactly which hat people are wearing.
Remember – for Millennials, the average time in a job is about 3 years, but working in a family business could be a life sentence.
– By Chris Morris
At Advivo, our highly skilled team of accountants and business advisors in Brisbane will listen to you and take a hands-on approach to managing your business and individual financial needs. Call us on 07 3226 1800 or message us on our Contact page.
