September 2, 2016

Northwest FCS News

michael-stolpMichael Stolp, SVP and Senior Business Advisor-BMC

Families in business together share a lot, which isn’t always easy. It requires communication, understanding and compromise. In many ways, being in business together is like sharing a car. Simple rules addressing refueling, cleaning, maintenance and repairs create guidelines that align expectations, drive accountability and fuel harmony.

Many family businesses assume family members understand their ‘rules of the road.’ After all, sons and daughters grew up watching mom and dad drive. Shouldn’t everyone be on the same page?

We know the answer. Assuming people understand our expectations seldom works. Sooner or later, someone gets left with an empty tank, disappointment and hard feelings. What started as a bump in the road can lead to misunderstanding, hard feelings and even business breakdowns. Examples in family businesses include:

  • Employment:  What are family members’ opportunities and how do they get apply for jobs?
  • Workplace habits:  When does the workday start and end?
  • Upkeep and maintenance:  How clean is “clean?”
  • Vacations:  How much time can people take off and when can they leave?
  • Decision making:  What decisions can people make without talking to each other?
  • Compensation:  How much do the various family members get paid?
  • Financial:  How is capital reinvested or distributed to owners?

Together, the above questions and others like them inform family members about the businesses’ rules of the road. Most rules are simple, but some – like how capital is reinvested –
can be complicated. Whether straightforward or complex, family businesses’ rules of the road should be explored together.

Developing rules of the road is important and doable easy. Share this article with your family business team and ask the following questions:

  • Perceived rules:  What are the written and unwritten rules for business and family?
  • Accountability: How well do we all follow the rules?
  • Gaps:  What questions do we need to answer to align expectations, drive accountability and fuel harmony?

Ask individuals to submit written answers to the above questions separately. Create a table like the one below, enter individual responses anonymously and share your summary in a family business ‘rules of the road’ meeting.

Perceived Rules

Begin your meeting on a positive note, asking each person what they enjoy most about working in the family business. Then, share that family businesses are like cars with multiple owners. A strong running car and happy co-owners and/or users require that people understand the rules of the road. This meeting is all about understanding what the rules of the road are for owing and/or working in your business together.

Interesting questions for your team may include:

  • What rules did we agree on?
  • What rules are written?
  • What rules are unwritten?
  • What rules do we need to better define and agree on?
  • What questions do we need to answer so we’re all on the same page?How do we hold ourselves accountable to the rules?
Develop a written family business ‘rules of the road’ following your meeting. In some cases, it may be brief and simple. In other cases it may initiate or reinforce your values, owner/investor objectives, employee handbook, rules of entry for employment/ownership, code of conduct, etc. In all cases, rules of the road should be shared with all family members affected by the business.

Understanding the rules of the road is important for everyone, assuring drivers and passengers understand their responsibility and each other. Make the most of your business and journey together by defining your business’ rules of the road. Your business will be healthier and the ride will be happier.