In a family business, how do you handle issues of family in the business?

The well advised family-owned business has two areas of governance, one for the business and one for the family.

For example, the family might have a family council and the business might have a holding company. The boundaries for these areas of governance need to be established and respected. If this is not the case, then the establishment of these governance structures and boundaries is the first step.

The governance of the business must involve appropriate selection of personnel based on merit (not relationship to the family) and the culture of the company. The strategic and operating plans for the business must deal with the culture of the business and the process of authority and delegation. As appropriately selected managers come into the business, the planning cycle (analysis, written plan including actions, implementation, and analysis) should continue and involve these new managers.

Frequently the issues of control, delegation, and trust are at the forefront in any owner-managed business. The creation of a written plan containing wise decisions evolved from polling a group of diversely informed individuals (including those new managers) is the best way to deal with these issues.