THE tenth and most important rule is that “there can only be one boss.” Lance explained that this rule is related to succession. The role of the family and owners is to prepare a board to appoint a successor.
“You must establish a process to appoint the leaders. My dad and his brothers established a clear process on who can decide who the next leaders will be. They created an outside board whose role is to appoint and fire the CEO. This is critical so that a business can smoothly pass on from generation to generation, and achieve longevity.” The deep-rooted bias in favour of CO-to-CO successions conforms to the hierarchical patterns of authority that the public has come to accept as the norm in business. Every business is supposed to have one, and only one, boss who is the ultimate decision maker.
Having a single leader does tend to be less complicated from the point of view of corporate decision making. When power is concentrated in one individual, major decisions can be made quickly and informally.
When there are several owner-managers looking after the business, leadership responsibilities may become diffused leading to sometimes slow, ineffective action. In a column in “Family Business Magazine”, Leon Danco, one of the pioneers in family business consulting writes: “Solutions that call for sharing of power – equal multiple partnerships, co-presidencies, rotating the presidency, are usually naïve fantasies … In my experience, a family business can only have one leader. “
All employees, including family members, must have written job descriptions so that there can be no misunderstanding about what’s needed to be done. Business owners, particularly, should define their roles in the business prior to starting up. It is essential in a family owned business that each family member knows in advance what their duties and obligations will be. If you do not know who is doing what, who is in charge of what, then there will be total chaos. How many times have you called a major corporation to try to resolve a situation and all you can get is “I don’t know, it’s not my decision”.
Any business needs to be able to make a quick decision at times and usually it is hard to get multiple owners together to make it. If there are multiple owners you have to make a decision on who will make the final decision if one has to be made. This is hard since no one ever wants to give up any authority nor own up to full responsibility. Have you ever been to a board meeting and wondered why it’s taking the officers so long to arrive at a very simple decision? Choose who will do best in certain jobs and in different leadership roles. DO NOT be afraid to change roles, if necessary. After running the business a while, there might be a need for role reversals.
The benefit of the business should be uppermost when making decisions. Family relationships do not come into play. Employees may be included in discussions, but the one in charge makes the final decision. All employees must agree and respect the final decision of the boss.
This can be a tough call at times. Family members in small family businesses often think their opinions should carry more weight than just another employee. However, these issues will soon pass if no one makes a big deal of it.
Additional tips:
Build a strong relationship. In order to build a strong family relationship, open communication plays a big role. Are you in agreement about issues involved in the business? If not, have you taken the time to talk about those disagreements and come to a solution? What would be the exact responsibility of each family member in the business? These are important questions to consider before going into a business partnership.
Anticipate possible issues. In relation to have an open communication, anticipate possible conflicts that may be encountered along the way and talk about them. Ask each person what they think is the best solution for the situation you are in. Discuss issues especially when it comes to money matters.
Who will be in charge of the business money? How will it be spent? How will it be divided? Understanding your family’s perspective on certain issues will prevent possible misunderstandings in the future.
Nurture your personal bond. The importance of being a family should be given priority despite the demands of running the business. Managing a home based business may require a lot of your time and spending quality hours with your family can easily be taken for granted.
Treat your spouse or your children as a family member, a loved one, not as a business partner or a co-worker. After business hours, do your duty as a wife or as a husband. Remember that family always comes first. A wise tip from Family Business Experts is, “Never abuse the business for the family, and never abuse the family for the business.”
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Prof. Soriano is the chairperson of the Marketing Cluster of the Ateneo Graduate School of Business. He is also a Senior Consultant of Wong+Bernstein Business Advisory Group. For comments, send email at [email protected]
