Working in a Family Business

Understanding the Pros and Cons

Working in a Family Business - Understanding the Pros and Cons

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Family businesses benefit from team members having a similar upbringing.

Working in a family business can be a pleasent and rewarding experience, for both family members and "outsiders" alike. But, there are also many pitfalls.

Perhaps you're an "outsider" and feel like you need to pick up the slack of a family member that's not pulling their weight. In most companies, you could simply complain to your boss. After all, every team member should work equally hard, right?

The problem is that you don't work for a "normal" company. You work for a family business, and your colleague is closely related to the boss. That makes things a bit more complicated.

So, what do you do? How do you handle difficult situations involving family members in a family-run company?

In this article, we review the pros and cons of working in a family business – both for family members and for outsiders – and we discuss some strategies for creating and managing successful working relationships in a family-business environment.

Issues for Family Members

If you work in your family's business, you probably already know that it can be a complex environment.

Here's an example: imagine that your mom owns the company you work for. You're heading the advertising department and have a unique, innovative idea for the next marketing campaign.

When you pitch the idea to your mom, however, she's less than enthusiastic. And instead of bringing up impersonal, practical reasons for not going along with your idea, she brings up mistakes you made years ago, before you even started working for the company.

In a family company, there's often no such thing as a "fresh start."

Like everything in life, working with your family has its pros and cons:

Pros of Working for Your Family

  • You're collaborating with people you trust and care about. This can be a very nurturing environment, and it can give all family members more self-confidence.
  • The work environment may be more relaxed. For example, it may not be an issue if you occasionally arrive late or leave early, which it may be in a traditional corporate culture where flexibility isn't built into your contract.
  • Family members usually understand that they're all in this together, and are working toward a common goal. They may be much more willing to make financial sacrifices for the company, if things get tough.

Cons of Working for Your Family

  • Family members are often promoted even if they're not an ideal fit for a new position. This can lead to business problems, as well as angry and resentful non-family staff, who may have been denied the promotion.
  • Personal issues are easily carried into the work environment, and work issues may be carried back into home life. This may lead to family problems that impact the company and the other workers.
  • Because family members often have the same background and upbringing, the danger for groupthink and resistance to change is very high, especially if an older family member is running the company.
  • Family members may find it hard to take tough business decisions that will have a negative impact on another family member, or give them negative feedback about their performance when appropriate.

Issues for Non-Family Members

If you work for a family business, and you're an "outsider" – not a member of the family circle – then your position can be challenging.

For instance, you've been at a family-run company for almost five years. And yet, you've never had any kind of performance review. You're not sure if the work you're doing could be improved, or even if the owner has an opinion on the changes you've implemented in the company. You'd like more responsibilities, but it doesn't seem like there's any kind of procedure in place for reviews or promotions.

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Should you proactively ask for a review, or will this be considered too meddlesome since you're "outside the family?"

As an outsider looking in, it can be hard to know what to do. Just like for the family members, there are several pros and cons here:

Pros of Working in a Family Business

  • A family-run company may have a more relaxed environment, as we said above, and this can be pleasant for non-family members too. Some companies may treat all of their staff like family, which can create a wonderful personal work environment.
  • It can be easier to make big decisions in a family-run company. Instead of having to wade through multiple layers of bureaucracy, which are common in larger organizations, family-run businesses are often more flexible. If you need approval for a project, you're more likely to get a quick decision.
  • When a family runs a company, the desire to keep things profitable and stable for future generations is usually very strong. This is good news if you're looking for a safe, secure job.

Cons of Working in a Family Business

  • It's easy to feel excluded, especially if family members discuss business or hold meetings at home, or outside of work hours.
  • Earning a promotion may be difficult, especially if the choice is between you and someone from the family. Very often, family loyalty is likely to impact the decision.
  • If you attempt to make changes that in your view will improve the way the company works, you may face resistance by family members. They may see your actions as harmful, and they may do whatever they can to preserve their traditions, and keep everything the same.

Strategies for Success in a Family Business

Whether you're an outsider, or part of the "ruling family," you can use several strategies to succeed in this environment.

Family Members

  • Establish boundaries – Create a "best practices contract," and make sure every family member working in the company has a copy. For instance, it's easy to take work home, and talk about business on nights and weekends. This connection between your work life and home life can cause stress, and you may feel as though you never have any time off from the business. Boundaries are cruicial – make sure work stays at work, and keep home time separate.

    When it comes to making tough decisions or issuing reprimands against another family member, managers need to remind themselves and their relative that they're acting for the long-term good of the business because they're at work, and what they're asking for in no way reflects what they think of the other person as a cousin, sister or daughter.
  • Define roles – Clearly define everyone's roles, and how they fit within the company hierarchy. For example, if you assign your aunt a project, she may push it aside because (a) you're her niece, and (b) you're much younger than she is. This is not only frustrating, but it can be very bad for the company's productivity and success. Identifying lines of authority can help prevent this type of conflict.
  • Reward fairly – Problems often arise when there's an unfair distribution of rewards between family and non-family staff. For instance, family members may receive higher bonuses than non-family workers. Reward all team members based on competence and achievements, not personal relationships.
  • Promote fairly – Ensure that non-family staff have the same chances for advancement as your family members. If the rest of your team believes they can't move up in your company, they're probably going to leave. You don't want to lose that talent and knowledge.

Non-Family Members

  • Don't take sides – If family members are having a disagreement, you might be expected to support one side or the other. Aim to stay neutral. Listen to their problems, but don't get involved, or try to solve anything between them – there's likely more going on than you can see. If things get really difficult, you may consider booking some time out of the office.
  • Understand your position – If you dream of one day becoming the CEO, then you should probably start looking for a job somewhere else. The chances of a non-family member heading the company are probably small, at best. Examine your professional goals and your work environment. If the two are aligned, then you'll likely feel happier, and have less conflict in your career.

Key Points

Working in a family business has its advantages and disadvantages. Whether you're an outsider, or one of the family members, succeeding in a family-run company can be challenging.

If you're part of the family, keep emotional conflicts out of the office. Treat family and non-family staff equally, and make sure rewards are based on performance, not family relationships.

If you're an outsider, don't take sides in family battles. Stay neutral, and take a day off if things really get bad. Recognize your role in the company – and if you're looking for major advancement, and the family doesn't often promote non-family members, it might be time to reconsider your options.

To learn more about working in a family business, our Book Insight on 'Family Wars' is an informative resource.

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Comments (7)
  • Over a month ago Michele wrote
    Hi letsenterprise,

    Thank you for your feedback. We appreciate it.

    Mind Tools Team
  • Over a month ago letsenterprise wrote
    This article is very insightful! As for being caught in a power-struggle with any colleague much worse when it's a family member of the family run business you're working with, the wisest shift to make would be to re-align your responsibility by revising the value you add to, as well as GAIN, from, the company. Open Communication is definitely the key factor at play in any company, family run business or not. Often these days most youth, in fact, have their doubts about joining their family run business due to lack of the same.
  • Over a month ago BillT wrote
    Hello GailMonty,

    This is a really tough situation for you, and one that needs your employer to have a strong working alliance with you. The best thing I can suggest for you here in the comments area is this article: http://www.mindtools.com/community/pages/article/managing-friends-family.php

    If you need further help, I would recommend becoming a member and asking your question in the forums area of our site.
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