Who’s In Charge?

This may seem like a simple question, but things can get complicated with a family business.

However, your ownership is structured someone has to be CEO, or potentially Co-CEO’s.

I cannot stress this enough: RULING BY COMMITTEE DOES NOT WORK. Not only will it cause problems, but it’s also incredibly inefficient. Having said that, there are some important things to keep in mind to help things run smoothly.

Keep people informed

Whoever is in charge needs to keep the rest of the family informed and bring them in on big decisions. Being CEO of a family business doesn’t mean you should act unilaterally even if you’re the majority owner. This will undoubtedly cause resentment. People just want to be included, especially if they have an ownership stake, and simply bringing them in on what you want to do will make them happy. You’ll still get to do what you want, but everyone feels like you’re in this together.

Stay in your lane

Everyone has a role to play, and people need to respect each other’s territory. This is true in any business, but in a family business, it can get ugly. If I’m in charge of a department and another family member makes a decision for me or is checking up on my employees and what we’re working on, then we’re going to have words. It makes no difference if they have equal or even more of an ownership stake than I do, I’m taking that as not trusting me. It also looks bad and creates confusion with the employees. If you have a question, ask me. As Vito Corleone said, “Never let anyone outside the family know what you’re thinking again.”

Respect

I’ve mentioned respect, but it’s really what this entire post is about and deserves to be highlighted. Respect is certainly earned not given, but once a family member has proven themselves then trust them to do their job. Don’t hover, don’t micromanage. They may be your son or daughter, niece or nephew, but they aren’t kids anymore and have a vested interest in the business succeeding. Trusting them is showing ultimate respect, and while it may not be intentional, micromanaging says loud and clear that you neither trust nor respect them.

What This Looks Like In The Real World

I was part of the 3rd generation in our business. We had to fight to get respect and trust from our parents and uncles, and there were more than a few heated exchanges. This wasn’t when we were in our twenties and knew we had much to learn. We were well into our 30s or even early 40s. Part of this was the 2nd generation not being willing to let go of certain things and let us handle them, but another big part was we were driving change and they struggled with that. When your kid is telling you that you can’t do some things the way you’ve done them (and very successfully so) for 30 years, that’s tough. These weren’t changes we were making just for the hell of it, they were changes we HAD to make because the world had changed.

I’m referring specifically to children’s product safety regulations. Now we never had a safety issue, but with the new regulations it was a massive undertaking to develop testing protocols, review our sourcing, and last but not least, all of our top customers developed their own protocols we had to go through. This was the fun I was put in charge of. The main result was you could no longer just buy and sell something, and with my Father being in charge of the product that led to some butting of heads. I had to tell a guy who developed a product line over decades that made us the largest arts and crafts wholesaler in the United States that he wasn’t allowed to buy something, or that it needed changes before we could commit. Suddenly his kid was “The Hammer” and the majority of the product had to be cleared by me and my team. I was even nicknamed “Dream Killer” by the purchasing and product development teams. When I would say no he would get mad. Explaining why didn’t help, and he would react as if I had made the laws and it was my fault, and then I would get mad.

This was our battle, but I had cousins and siblings going through their own battles with 2nd generation family members. Some relationships have never been the same.

Time For A Gut Check

So I urge you and the rest of your family, before it gets to that point, to take a step back and figure out what you’re really upset about. Are you afraid of change? Are you scared to let go of even a little bit of control? Do you genuinely not trust this relative? Figure that out before it boils over and you might say something you can never take back.

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