July 14, 2011

Like most small business owners, you’d probably like your adult children to play a part in your firm. Trouble is, just because you’ve thrived as an entrepreneur doesn’t mean your kids are cut out for the life, as well. In fact, it’s common for small company owners to bring their grown-up children on board without preparing them adequately or even stopping to think whether it’s the best life for their progeny—with sometimes disastrous results. “You’ll see anything from resentment by other employees to lost business,” says Wayne Rivers, co-founder of the Family Business Institute in Raleigh, North Carolina.

He points to the son of a small-company founder who assumed a managerial role in the business not long after graduating from college. But, as it turned out, he had little affinity for the work, often coming in late and falling asleep on the job. “Employees figured, if this guy doesn’t have to work hard, why should we?” says Rivers. The result: productivity and morale declined. Eventually, the parents told their son he had to leave, helping him to find a more suitable job elsewhere.

What to do if your adult child doesn’t seem to be working out? Consider taking these steps.

Don’t ignore it

If you see there’s a problem, don’t just hope it will go away. “You can’t ignore failure to perform,” says Rivers. “It means the death of employee morale.” While the experience won’t be easy, you need to have a candid conversation with your child about his or her performance, the problems that have occurred and your expectations. The first time around, give the individual time to improve. If possible, assign a mentor to help. But, if there’s no change, you’ll have to take action.

Suggest a transfer to another job in the business

If yours is a company of, say, fewer than 10 employees, you might not be able to find any alternatives. But, in a larger business, there might be a different role the person can play. It doesn’t necessarily have to mean a demotion, either. “There may be a happier place in the company and a way to get there that involves a lateral move,” says Ira Bryck, director of the UMass Family Business Center.

Help them find work that really interests them

You remember that scion who tended to sleep while on the job? His parents ended up asking him to take a paid leave of absence, during which he sought help from an occupational counseling expert to pinpoint the type of work he was better suited for. Then, they agreed to pay the difference between the salary of the new and old job for one year. Turned out, the young man was particularly interested in car racing—in fact, the reason he was tired at work was because he worked as a volunteer for a racing team—and he ended up finding a job in that industry.

Prepare for an honest discussion about finances

For example, dividends from ownership will be paid separately from salary and, if your policy is that only family members in management positions can own stock, you may have to purchase your child’s shares.

Next time, do it differently

To prevent such problems from happening again, step back and treat the family member the same way you would any other employee. That means thinking through the duties of the position your kid will take, writing a job description and making sure your child has the right skills and abilities. Your write-up should include not just responsibilities, but also how performance will be measured and the criterion for raises. “You need to set standards from the beginning,” says Rivers.

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Anne Field, Article, firing, family-owned business, Business Insider

Join the conversation ( 1 )

• Management Direct 10 months ago

  

  I can't help noticing that this is written completely from the perspective of the business owner and the expectation that a child will have any interest in the family business. Much heartache could be saved by asking the child in the first place what they expect. You will hear it over and over again: 'It turned out he/she never wanted the job'!!