Human Resources: Where We Take the “Family” Out of the Family Business

Family-owned or controlled businesses are a cornerstone of the United States economy making up about 90% of all U.S. businesses and generating over 50% of the Gross National Product. However, less than one third of family businesses survive the transition from first to second generation ownership, and another 50% don’t survive the transition from second to third generation.

One way to ensure that a family business will stand the test of time is to buck the trend of placing family members in leadership roles for which they aren’t necessarily qualified, and to bring in experienced professionals to oversee important functions. This is particularly essential when it comes to the Human Resources function. Here’s why:


1: The family needs an honest voice in personnel matters to protect your workforce from destructive family dynamics.

Let’s face it, your big brother has always been a bit of a bully. Or, your little sister just HAS to be the center of attention. Oh, and your uncle is the “ladies’ man” of the family (never mind those three restraining orders). Inevitably there is something that irritates you about your individual family members (and has since childhood), and LUCKY FOR YOU that dynamic will undoubtedly follow you to work every day. Unfortunately, family members in family-owned businesses seem to forget that their family dynamics, although perfectly normal to them, can be extremely uncomfortable for their extra-familial personnel, creating a less-than-ideal culture or even a hostile work environment. I once had a family-member/owner tell me that his sister was the most toxic individual he had ever met just hours before I had to work with her for the first time (but absolutely not get along with her or enjoy her company?!). Awkward! Even still, it isn’t the inside japes and emotional wet-willies that make your employees suffer, it is the fact that, despite it all, you still favor each other over anyone else when it comes to promotions, raises, bonuses, and other perks like company vehicles, tuition reimbursement, etc. Why? Because it’s FAMILY.

Enter a qualified Human Resources partner (ahem, Human Resources Experience) to create a buffer between family dynamics and corporate culture. This HR professional can point out and help remedy (or at least cleverly disguise) nepotism, and might even recommend development opportunities to improve family members’ qualifications or engage an organizational psychologist to unpack some of that baggage. Be forewarned though, the hardest part comes next. The family has to actually be willing to accept the feedback rather than banding together against a common enemy (another toxic situation I recently witnessed). Before you allow your family to transform HR into the new family whipping boy, remember that this non-family advisor is speaking the truth, bitter as it may be, and your acceptance is essential to the ongoing success of your business.


2: Employees need to feel safe reporting employee relations matters, even if they involve a family member.

You had to know that I was setting you up with the “ladies’ man” uncle, right? So, Uncle Creep-O sets his sights on Claire Copy Clerk, making it “their little joke” that he will wear her down and eventually she will sleep with him. Of course, Claire feels like crawling out of her skin when he enters the room. Do you think Claire is going to report the hostile work environment sexual harassment to the President of the company (a.k.a. Uncle Creep-O’s brother)? No. How about to Uncle Creep-O’s wife (oh, didn’t I mention he was married? Charming!), Betty the Bookkeeper/sister-in-law who has been randomly assigned all HR duties? Nope, not a chance. Claire wants to report her complaint to someone who won’t have an emotional breakdown at the news; go figure! A qualified Human Resources partner will provide Claire with a safe environment where she can report harassment in the workplace, and who will follow through with a thorough neutral investigation and final recommendation to the company’s leadership based in fact, not emotion. Again, the family has to be willing to accept the help and recognize that recommendations are made for the wellbeing of the business, which may be inconsistent with family preferences. I assure you, there is no, “BUT HE’S FAMILY” defense to the prohibition against sexual harassment in the workplace.


3: Critical workforce decisions that could trigger liability need to be evaluated by someone who is not weighed down by family obligations.

If we don’t remove Uncle Creep-O from the workplace, we are looking at very real legal liability. Don’t believe me, check out this article, or just Google “million dollar sexual harassment settlement,” and behold the carnage. Now, who’s it going to be? Who is going to be in charge of letting him go? Suddenly everyone’s water-colored memories of Uncle Creep-O seem to heavily outweigh the risks. President Brother can’t fire him because, “He saved me from being hit by a train in ’82!” Vice President Nephew certainly can’t do it after Uncle Creep-O bailed him out of that unfortunate DWI incident that nobody knows about (wink, wink). And Betty isn’t looking to fire her own husband – they have two kids in college for crying out loud. I can tell you that the time that it takes a family to hem and haw over who will sack dear old Uncle Creep-O has an uncanny correlation to the amount of time Claire IS NOT willing to wait to stop being groped. If only a non-relative, third party could objectively evaluate the risk and politely invite Uncle Creep-O not to return, while assisting him in a smooth transition to a new role. Then, what if that same individual could provide the whole family with anti-retaliation training to avoid a very expensive backlash against Miss Claire? Sounds fabulous if you ask me.

It takes a special kind of professional to navigate the complex relationships associated with a family-owned business. Here at Human Resources Experience, we are deeply honored to be trusted by many family-owned businesses. Contact us today to discuss how we can apply our expertise and make a positive impact on yours.