How young graduates rate the family business

By Teresa Joyce Colvin

Young people prefer to work for a family company rather than a non-family companyÑso long as it is owned by their family. However, a recent survey indicates that many studentsÑeven those whose families have businessesÑhave reservations about joining family firms. Highly qualified graduates, the survey suggests, often equate family firms with limited career opportunities, lack of objective performance reviews, and competitive weaknesses.

To better understand student perceptions of family firms, I recently surveyed 115 undergraduate and 108 graduate students (plus two unspecified students) enrolled in upper-level business management classes at Kennesaw State College in Marietta, Georgia, which is in the Atlanta metropolitan areaÑan area that led the nation in the number of start-up companies formed between 1988 and 1993. The survey contained 63 items that shed light on the general attitudes of students toward family firms, and whether these perceptions varied among men and women and graduates and undergraduates.

There were 124 male and 101 female respondents. The average age of undergraduates was 22.3 years; for graduates it was 31.3. They had an average of 6.9 years of full-time work experience at an average of three different organizations; 103 had worked for a family owned firm, 33 of these for their own familyÕs business.

Participants were asked two questions to determine general preferences for working in a family firm: 1. If the salary and benefits package and all other things were equal, how would you rank the following in terms of the type of business you would most like to work for: your own familyÕs business (if there was one); someone elseÕs family business; or a business that is not family owned? 2. If you were to start a new business, would you prefer family members or nonfamily members as your employees?

In response to the first question, 147 indicated a preference for working in their own familyÕs business; 72 preferred a nonfamily company. Only two individuals identified working for someone elseÕs family business as their first preference. For question two, 47 students indicated that their first choice would be to employ family members; 125 indicated a first choice of nonfamily members, and 54 indicated no preference.

Overall, individuals had more positive perceptions of family firms when they had worked for one owned either by their own family or someone elseÕs. In the six issue-areas we charted, there were no significant differences in the responses of men and women, but there were notable differences between undergraduates and graduates. These are highlighted below.

Attributes of employees of family firms. Respondents tended to agree with the statement that employees of family firms are more committed to achieving company goals and more likely to make sacrifices for the firm than employees in other types of firms.

Competitive weaknesses. Respondents tended to disagree with the statement that family firms have characteristics that interfere with their ability to compete with other firms, such as being less likely to adapt to changes in their competitive environment or less likely to have formal goals. Undergraduate students, however, were more likely to disagree; graduate students had a tendency to see family firms as less competitive.

Performance policies. Participants tended to agree that family firms are less likely to have formal written policies to guide employee behavior and are less likely to use performance-based, objective criteria in making personnel decisions. Graduate students indicated more agreement.

Favoritism. Participants did feel favoritism is an issue in family firms, indicating their belief that family members would receive preference in such areas as hiring, promotions, and pay. Graduate students felt more strongly than undergrads.

In general, respondents agreed that nonfamily members rarely have a say in decisions, and are unlikely to reach top management positions, in family firms. Graduate students were more likely to perceive limited opportunities.

Attributes of managers. Respondents agreed somewhat that managers in family firms tend to be more concerned about employee happiness and morale, and more understanding of problems at home, than are managers in other types of firms.

These responses provide insight into the concerns students may have when considering employment in family businesses. Perhaps most importantly, students were likely to perceive family businesses to be as competitive as other types of businesses, a strength family firms can and should emphasize when they recruit. Other responses suggest some weaknesses in image; family firms should dispel these perceptions when recruiting. The belief that family firms offer little opportunity for advancement for nonfamily members may be particularly harmful; a 1992 PR Newswire Association survey of undergraduate business students found that more than 80 percent expected to be supervisors or managers within five years.

Teresa Joyce Colvin is associate professor and chair of the Department of Management and Entrepreneurship at Kennesaw State College in Marietta, GA. Article excerpted with permission from the Journal of Small Business Management, July 1994, Morgantown, WV.