• Home
  • Resources
  • Blog
  • WHY IS FUNCTIONALITY STRUCTURE IMPORTANT IN YOUR BUSINESS?

CLARIFYING ROLES IN THE FAMILY BUSINESS

Like other organisations, family businesses need to be managed well not only to survive, but to thrive and grow. Due to the uniqueness and complexity of a family business, the implementation of a corporate framework can help provide structure and clarity to the business. The owner of a family business has the same challenges as any manager or owner of a small company. The job however is made more complicated by the presence of family members in the firm, where decisions may be influenced by relationships and emotions which would not be an issue in other companies.

As family businesses progress and expand, how do the family members define their roles and overcome the challenges facing the business, to ensure their success as they transition into the next stage of their business?

WHO’S IN CHARGE OF WHAT?

If you are the founder or owner of a family business, how do you define the role of each family member? How do you hold each person accountable to their assigned position? And should you decide to hand over the management of the business to the next generation, how do you see the transition of responsibilities to family members and even your own role in the business in the future?

In any business employees are appointed based on their competencies with regard to the positions available within the organisation. The challenge in a family business is allocating these roles to family members making sure that each person has a role which best suits their capabilities and best serves the business as a whole.

Moreover, an understanding of the lines of authority is also important especially when family members fill several positions. Unless the family is geared to one common goal, the business is bound to fail. Everyone in the family must do their part in the business to ensure its continued success.

IT’S NOTHING PERSONAL. JUST BUSINESS.

A clear understanding of the relationship between the family and the business is needed and must extend not only to the present, but also for future generations. It is important to clarify a business structure which draws the line between the business governance and family affairs.

Take for instance the role of family owners who are also business managers. As they occupy two different positions in most cases, these positions should be appropriately and distinctly separated from one another, especially when making important decisions. Owners on the other hand who are not managers, are often responsible for appointing a board of directors to run the business on their behalf. At times, it is often difficult for the owner to let go of the business and entrust it to someone else, even a family member. When this happens, the people entrusted to run the business may find it difficult to perform their role effectively to bring the business goals to reality.

This is the reason why family members should thoroughly understand the role they play and their accountability to the growth of the business. When families work in the business, they need to adapt the hierarchy of the family to suit the objectives of the business. Decisions need to be made without bias and with subjectivity as in any other business. It can be difficult to separate family relationships from business relationships. Unsurprisingly, emotions may interfere with business deliberations and decisions when families work together. And when family members with different perspectives and ideas meet at the corporate table, there is an obvious potential for conflict.

PUT EVERYTHING IN WRITING.

Agreed roles and responsibilities need to be clarified and well documented to ensure that they are fully understood not only by the people in the business today, but also by future generations.  Documenting job descriptions not only assures accountability and helps measure performance, but it also prevents possible conflict and overlapping of responsibilities. This is usually the cause of feelings of uneasiness and unfairness among family members when there are no documented policies on roles and responsibilities.

There is no quick solution to the problems faced by family businesses, but the answers become clear when we are able to define goals and bring the family together to achieve business success.

Indeed, clarifying one’s role in any family enterprise is a huge step to contributing to its growth and continuity. In your family business, how do you make it work? How do you make every member of the family accountable, in the midst of differences in priorities and personal goals? Share with us your tips and ideas in the comments section below.

Leave a comment


Ready to take your business to the next level?

We get owners out of the day-to-day running of their business. We'd love to work with you to identify your strengths, pinpoint gaps and opportunities, and develop a game plan for your future success.

APPLY FOR A FREE BUSINESS AUDIT NOW