Managing the interactions between non-employed family owners and the firm’s managers can be one of the most prickly issues in family firms. The issue is heightened in second and third generation firms that need to capture the interest of owners while keeping the business professionally managed.
Consider the following dialogue:
- We should be free to talk with the managers. All we want to do is ask questions and to show our interest.
- What does management fear? We empower and trust them, but we want to feel close to the business. Besides, we think our interest is appreciated by employees.
- We don’t want owners to confuse the organization. We want everyone to go through channels.
- We worry that owners will be running all over the place interfering with managers’ work, confusing employees, and drawing hasty and incomplete conclusions on how things work around here . . .
The “busyness” and defensiveness of management can lead them to block family involvement. That posture raises suspicions and sometimes alienates of non-employed family owners, creating both an escalating spiral of expectations and a self-fulfilling set of fears. To avoid these problems, both groups need to work out a communications and involvement process.
Management can write monthly update letters to non-employed owners. Owners should be sensitive to the effects of their questions on the non-family managers. Non-family managers may wonder:
- Should I answer the questions?
- Should I share my honest views?
- Should I report the interaction to my boss?
- Is the family getting along?
- Are people judging me?
We encourage the family to have a well thought-out policy on owner-to-manager inquiries and that the policy be clearly communicated to executives, employees and all owners. One such policy reads: “Questions concerning the business are welcome from all owners. Any questions, however, should be directed to the Chairman, the CEO, or other members of the Board of Directors. We always seek to respect our business’s chain of command and the discretion and responsibilities of our executives.”
Keeping family away from the business can lead to distrust and loss of interest. Having family freely about the business is disruptive and leads to risks of unfortunate behaviors or misunderstandings.