Ninety percent of businesses in the United States are family owned. Some of the biggest brands in America were family founded and are controlled by a family.
Walmart and Berkshire Hathaway are two of the largest examples.
While family-run businesses can be close-knit, friendly, successful and inspiring, they are not without their challenges. One challenge of family leadership is becoming stuck in the same old ways of doing things (because of family pressure) even when the company is growing.
Another challenge is breaking bad news to employees of the company who also happen to be family members. For example, how do you attempt to demote a family member to a lower rung on the company ladder? Or, worse yet, how do you tell Mom and Dad it might be time to retire?
How Do You Fire a Family Member?
In order to shed some light on the unique challenges facing family-run businesses, Small Business Trends spoke with Kathy Kolbe, a global leader in discovering and accessing the power of human instincts, and her daughter Amy Bruske, President of Kolbe Corp. Kathy and Amy have been working in their own family business for more than 20 years. Both are award-winning consultants and advisors to more than 3,000 owners of family businesses and Fortune 500 companies.
As mother and daughter, working together for more than two decades, Kolbe and Bruske have personally experienced every situation discussed in their new book Business is Business: Reality Checks for Family-Owned Companies, which provides research-based insight on the most effective ways to run a business and manage relationships.
Neither Kolbe nor Bruske recall a time when they wished they were working anywhere else.
Here’s some advice they share with Small Business Trends on how to tell a family member they’re no longer needed in the business.
Don’t Become Known as the Family Member Who Fires People
First Kolbe and Bruske insist family members can avoid being criticized for firing another member of the family by praising the individual’s level of effort, if appropriate, and by confirming and discussing what they naturally do well and careers suited to those abilities. Family members should analyze why continued efforts would not be fruitful and examples and references for where and with whom they might succeed should be given. Criticisms of being the one doing the firing could also be avoided by sharing a vision for the future and, as Kolbe and Bruske explain:
“Agreeing on how you will share the information with others, including all company employees and non-employee family members.”
Show Some Tact When You Fire a Family Member
Family members firing co-workers with a family attachment should show tact about the uncomfortable situation at all times. According to Kolbe and Bruske, employers firing family workers should avoid bringing up any other family members’ performances in the company. They should also refrain from discussing the situation with other family members who are uninvolved in the management of the business.
During social situations and at family gatherings, the family business members should avoid referencing the situation to avoid awkwardness and conflict.
Equally, families should not, according to Kolbe and Bruske:
“Incriminate or assign blame if they in fact tried hard and did nothing unethical or against policies.”
They should also avoid itemizing errors or omissions and assigning guilt to anybody.
Forcing the founder out of a family business is an even more complex task than firing family employees.
Attempt to Build Trust
To help assuage this difficult and complex situation, Kolbe and Bruske say family businesses should aim to involve a non-family adviser who is trusted by the founder. They should also openly ask the founder about his or her plans for the future and, if possible, have the founder set a transition date and communicate decisions to others. Company time should also be invested into assisting the founder in moving on to a desired adventure.
“Create a special celebration event or document (e.g. book, painting, photos) that the founder can look forward to and that can be used for closure,” Kolbe and Bruske recommend.
Avoid Bullying or Patronizing
In such situations, it is important that the founder is not bullied or patronized. The true entitlements of the founder should also be honored. The family business members should also not be afraid to ask for the founder’s advice or, as Kolbe and Bruske explain:
“Change everything that the founder did that made the business successful.”
Running and working for a family business can be rewarding and fulfilling but is not without its trials and tribulations. As explained above, tact, patience and diplomacy should be applied when it comes to the difficult situation of firing a family member.
Fired Photo via Shutterstock
It can get complicated. The relationship can be severed as well.
That’s true Aira. Difficult situations can definitely arise.