By Richard M. Segal
July 12, 2012
No two people are the same. No sibling team or cousin consortium members produce the same. Somehow family businesses tend toward equal pay, no matter how unequal the jobs or the performance. It is a prescription for implosion. The compensation issue can be addressed with a reasonable compensation policy, which means something other than equal, and more like fair market value. But what do you do about the family-member employee who just doesn’t perform?
During my years of working with business owning families, I have yet to come across a case where this isn’t an issue for someone. That is not to say that the issue is always at the same level of conflict, but that since no two people are the same, it stands to reason that performance levels won’t be the same either. Most families can adjust to an underperforming family-member employee as long as the effort and attitude are “acceptable” or better. However, when that underperformer really doesn’t carry their weight, doesn’t try and/or doesn’t care-¦well then, things get very dicey.
More than a few cases I have been involved in have had a family member on the payroll, but no work was performed - and this isn’t salary continuation for a disabled family employ. Rather, the company management felt that paying someone to stay home was a good business decision. Can you imagine?
If that family-member employee was so disruptive why not just part company and fire them as you would a non-family member? The answer usually lies in the family dynamics. The family business management either feels the need to take care of this member financially, or they have allowed it to go on so long they don’t know how to break the tie. I’ve seen it with divorced daughters who couldn’t make it without the company check, but would have trouble otherwise finding a job as a single mother and they bring a sour attitude to the office. I’ve seen it with free loaders. I’ve seen it with incompetency. And, I’ve seen it be management induced.
On the Bus in the Right Seat
There is no doubt that part of management’s directive is to find the right person for the right job. In a family business if you limit your prospect pool to the family, accomplishing that goal is difficult if not impossible. It is highly improbable that your family has all the right human assets to plug into the necessary holes. But, most families do it anyway. If you put folks into jobs for which they are ill equipped and are unable to gain the necessary skills, you are creating conflict. You will either create an underperforming employee, or and very unhappy one at best. If you allow the situation to linger, you will have created that underperforming, unhappy employee who develops a sour attitude.
I am reminded of the MBA with a marketing specialty who was asked to take the CFO position on a temporary basis until the position could be filled. Ten years later, she was still there and looking for another job. She hated going to work and she was starting to really hate her big brother. He was so disgusted with her poor attitude and ingratitude, that he was ready to get rid of her any way possible. But Mom and Dad wouldn’t allow it!
Back when everyone was getting their ISO certifications, I recall one family being appalled that they would have to be subjected to performance evaluations. It was true that it was part of the ISO process, but this family could not fathom how they could possibly evaluate each other without creating a war. Therein lies the point. If we can’t have some frank conversation about how we see each other, and give some honest feedback, then we are likely to put up with poor performance. Sometimes, the under performer doesn’t even know they are seen that way for years and when they finally get the message it is too late! Their attitude goes south, sometimes literally - as in send me my checks to the retirement home.
Regular and honest feedback is a necessary part of good management. You can’t avoid it because you are family. You do need find a way to deliver the message - good or bad - with respect and courtesy. I have never seen a family who did regular evaluations have an underperforming employee (family or not) last in that position. They either part company or find a more appropriate position in the company where that employ can make a positive contribution.
What if the hole has been dug?
It’s too late. Joe has already become the black sheep of the family. He rarely shows up at work (or family events for that matter), and if he does he is very unpleasant. You try to keep him away from other customers and employees. No one has a good thing to say about him. But he is your son or brother and you just can’t bring yourself to fire him. Furthermore, this has been going on for years.
Understand that this probably isn’t going to have a good ending no matter how long you put it off. There are three things to try. First, put Joe in a position where he can do as little harm as possible and call it a lateral move. If you can isolate him from others by giving him special assignments in Siberia - great. Better yet, if you can work with him and find something he wants to do in Siberia. Who knows, it might breathe new life into him. Second, cut Joe a rich severance package and call it a day. He will be very angry and blame you (as will some of the rest of the family), but you will be rid of the problem and in time things may heal. Third, and I say this very reluctantly, pay Joe to stay home. If he is doing more harm than good, and you can’t find any position for him where he isn’t “the problem,” then make the business decision.
The best way to handle the non-productive family-member employee is to not let it get that far. Be collaborative in positioning your family in your company and never put the round peg in the square hole.
Be sure to have regular performance evaluations. This is the best way to be sure things don’t go too far and reach the point of no return. It’s difficult to evaluate your family, but a good compensation professional can help you set up a process that will be respectful and courteous.
Finally, if it has gone too far already, then either isolate the problem, or cut your business ties and learn the hard lesson of one of the difficulties of being a family business - the potential of broken relationships.
Rick Segal is the principal at Segal Consulting. He holds a Certificate in Family Business Advising with a Fellows status from the Family Firm Institute. He is the founder of the Family Business Council and its affiliated Study Group. He can be reached at [email protected] or by visiting www.segalconsulting.biz.