Another Look at the HME Modern Family

Posted on in Growth Strategies

For young professionals working in a family-owned and operated HME, knowing what to expect at work may be daunting. The four-part series, “HME Modern Family,” ran in Connect during the Fall of 2016. Key points from the series written by Richard Davis and Sarah Hanna follow.

Part 1 - Succession Planning: Determining Who’s Next in Line

Although every business should have a succession plan, creating one for a family-managed and operated business creates even more complexity.

In a study conducted by the Family Business Alliance, just over 30 percent of all family-owned businesses survive into the second generation. Twelve percent will still be viable into the third generation, with three percent of all family businesses operating at the fourth-generation level and beyond.

Creating a viable succession plan for a family business is crucial for continued growth and long-term sustainability. Family businesses have intimate history, which may make it difficult for someone from the outside to fully understand and appreciate.

The first step in developing an effective succession plan is to create a collective vision, specific goals, and the shared objectives for the business.

This should include all family members who hold key leadership positions in the business. The plan should include a determination of the importance of family member involvement in the leadership and ownership of the business, in the present and the future.

The next crucial step is to instill a corporate governance, a system of rules, practices, and processes by which the company is directed and controlled. It could be a board of directors or a group of trusted advisors who assist with this process. It is recommended that the decisions about any limitations to be imposed on family members be completed at this stage.

Part 2 - Talent Placement: The Right Family Member for the Right Job

How should those involved in family businesses navigate the complexities of talent placement? With thoughtful planning before hiring, when placing family talent, and in leadership.

In family businesses where second- and third-generation family members are coming of age to begin working, leadership must have an honest discussion to evaluate each young family member’s potential.

The most successful family-managed and owned businesses are those with a structured development plan for future generations to assume significant roles in the business. Family members should be exposed to a formal development plan to learn all aspects of the business.

 Younger family members should have mentors, some related and some not, who understand the importance of providing direction and training for these future leaders. Non-family managers and leadership must understand the role they play in developing younger family members.

Part 3 - Nepotism: The Good and the Bad

It is typical practice to bring relatives into the family fold as employees in the HME industry and in small businesses in general. As with anything in life, there are pros and cons associated with hiring a relative.

Motivation is a key factor in the success of a business. Nepotism is one of the biggest motivational challenges found in family-owned companies. Non-family staff who perceive a sense of preference to those relatives are unmotivated to go above and beyond for the business. Similarly, family members who feel entitled to special privileges and positions become complacent and don’t strive to improve performance.

It is recommended that family members gain experience with an unrelated company prior to working for the family business. By doing so, they can bring new ideas and a fresh perspective to the organization.

Treat your family member the same as other employees. It is tempting to be more lenient, but before acting make sure you can honestly say you would do the same thing for any other employee in the same situation.

Part 4 - Family Feuds in the Workplace: How to Minimize Them

Conflict is inevitable in business. In a family business, the conflict can become even more emotional.

Aside from expenditures to run and manage the business, no family members should be able to obligate the company financially, and no business funds should be used for non-business purposes without the consent of all vested family members.

Many family businesses start with a great idea and with the mindset, “Hey, we are family and can always trust and rely on each other.” It sounds good, but a family business should be no different than any other business.

To keep feuds at bay, establish and communicate the roles and responsibilities of each family member, and create a clear mitigation plan, complete with legal documents, in anticipation of undesirable scenarios that could arise.