How to manage a family business without destroying each other.

How to manage a family business without destroying each other.

afroconscious

Rumor has it that a popular naija music group (P-square) is combating with their manager (Jude Okoye) who is also their brother.  We do not have the details of the squabble and we will not bother sourcing for it. What is more important for us is to share tips on how to manage family businesses, to discuss the advantages and disadvantages generally reassure that family businesses are not necessarily bad.

Sometime last year, I was in South Africa and met a 4th generation modern farmer. This means the business has been in existence for more than 4 generations: himself, his parents, his grandparents, and his great grand- parents! That is at least 100 years. You should have seen the pride in his eyes when he talked about how his great grand-mother started the business.  This is not uncommon especially outside Nigeria.  I have stayed in guest houses being managed by the 3rd, 4th and even 5th generations. I have met coffee exporters in east Africa that are more than 50 years old in business This shows that family businesses do work when well- managed. I am sure there are some Nigerian examples too and we’ll love to hear from you.

A family business is one where decision making is made by members of the same family. These members can be related by blood or marriage. It can also be across several generations.

There are somethings you must never do if you have a family business.

  1. Employment to family members must never be automatic. Just because someone bears your surname doesn’t mean he is an heir to the throne. Employment must be based on qualification, fit for the job, fit for the organization. Your family members must know that whilst the business belongs to the family, it doesn’t mean everyone in the family can work in it. Some people may just remain beneficiaries not employees. Hiring decisions should be made objectively. Imagine your family owns a hospital, will you appoint someone as the doctor simply because he is your brother? No. This principle should apply to other sectors too. It is equally as life threatening to appoint a non-commercial person to head your business.
  1. Never hire someone you cannot fire. When a relative joins, be clear UPFRONT what his role is, the expectations, how he/she will be appraised and the implications for not delivering on the job. He/she must sign this so that it is clear that he/she can be fired for non-performance.
  1. Have clear policies for financial operations. No family member should be able to pull out money from the business irrationally. . There should be policies. Put policies in place such as the loan policies, expense policies, delegation of authority and more. What applies to the goose should apply to the gander. If the mummy can pull out cash, then the cousin will want to do the same. If the daddy can buy personal cars from company money, that little cousin will do the same. Fair treatment cannot be over emphasized.
  1. Non Family members must feel included. No matter what, you will have some non-family members in your company. You don’t want them to feel like ‘they escorted you to this world’. Be fair; give good employee packages and treatment. Make them fall in love with the vision and business as much as you do to minimize resentment, jealousy and sabotage.

Watch out for the next episode on what you must do for sure, the pros and cons and more.  So, what has been your experience with family businesses?

Picture credit: afroconscious.

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