You have an employee whoÕs not carrying his weight, and, even though youÕve talked to the person about it several times, nothing has changed. Other employees see the problem, too, and are wondering if youÕre going to do anything about it. ItÕs becoming as much of an embarrassment to the owner as it is a major drain on the business. And, to make things worse, the employee in question is your son, who you had hoped would be the next leader of your family business.
Few people understand the anguish and inner turmoil that this problem causes unless theyÕve been through it. It could be a daughter, brother, nephew, sister, or even a parent. Problems with family employee performance and accountability are among the most frequent and troublesome that we, as family business consultants, are asked to help with. Surprisingly, very little has been written on such a common and thorny subject.
Being held accountable for performance by another family member in the business is often interpreted as criticism, punishment, or a personal attack. No wonder family members shy away from it. We recently helped four second- generation siblings develop written job descriptions and achievement targets for their areas of responsibilityÑgoals against which performance is measured. The oldest brother, Kent, the company president, ran into problems with his younger brother, Brad, at their first meeting to evaluate BradÕs performance on his achievement targets (weÕve changed the names).
Kent told us, ÒBradÕs performance was slipping in a couple of areas. When I brought them up, he said he felt I was beating him up. I didnÕt know what to do. As president of the company, my job is to handle this, but as brothers, it felt like we were back in high school when he always felt I put him down.Ó
Among siblings there is a presumption of equality that has roots in childhood. It is difficult for one of those Òequals,Ó as an adult, to evaluate another. Any attempt may quickly become personalized.
The cardinal rule of the business system is that the individual serves the needs of the business. But the cardinal rule of the family system is that the family take care of the emotional needs, health, and well-being of its members. The boundaries between the two systems can blur, and the potential for misunderstandings can begin.
Redefining Accountability
Typically, family businesses operate with lower profit margins than other companies. One reason is that allowances are often made for sub-par performance by family member managers, who may also be the owners themselves. The owners often get caught in a tug of war between their goal to maximize profits and their role of supporting the family, even non–performing family employees. In these situations, the owner seems unable to either fire a family member or hold him or her accountable.
To sort it all out, family members need to reach a clear and common understanding about what accountability does and does not mean, and how it will and will not be used. They must redefine accountability as a positive element. In our view, the best definition is: Accountability is one of the finest forms of recognition in a family business.
This definition casts a totally different light on the concept, and yet is contrary to the norm in most businesses. What many family employees understand by the phrase is that they are Òheld accountableÓ only when they foul up. Our definition also explodes the belief held by many family employees that if they were really loved by the family, they would not be held accountable at all.
Accountability, as we define it, creates a new set of expectations, which emphasize that both the task and the person responsible are important and needed. This more positive view calls for a change in behavior by both the boss and employee. For example, when family leaders ask an employee to do something, they must be sure to follow up and inquire about how that task is being carried out. If they donÕt, they send a negative message about both the person and the task, which says: ÒWhether or not you do what I ask doesnÕt really matter, so itÕs not worth following up on.Ó
Accountability is the opportunity to recognize a personÕs contribution and value to the company. This may be expressed in what has been done or in what has not been done. Either way, it is the personÕs importance, not culpability, that is lifted out.
If you canÕt measure it, you canÕt evaluate it. This principle of TQM applies equally to performance assessment. Accountability requires clear expectations against which performance is measured. Many owners transfer family informality to the business and assume that what is expected of family employees is clear and understoodÑwhen, in fact, it may not be. How many times have we heard, ÒAfter all, sheÕs a member of the family, she should know what we want. Only nonfamily employees have to be told what to do.Ó
Nor does it suffice to exhort family members to Òjust do your best and work hard.Ó To be clear, expectations must go beyond general pronouncements. For example, how does one measure the desired outcome of: ÒSet a good example for other employees.Ó Does this mean getting to work on time? Dressing appropriately? Working overtime? Achieving results?
When unclear, expectations are subject to interpretation. A better way to state the expectation is, ÒYou have to start getting to work by 8 a.m. and not leaving until at least 5 p.m., completing your assigned duties within the deadline agreed upon and keeping personal calls to no more than one per day.Ó ItÕs always a good idea to agree on when the performance goal is to be completed, the results to be achieved, and how accomplishment will be measured.
Accountability for Owners?
It was said of the Boston brahmins that Òthe Lowells talk only to the Cabots, and the Cabots talk only to God.Ó Perhaps the only other outsider that family business owners are required to talk to is the Internal Revenue Service!
To whom, or what, is the boss accountable? For the family business owner, accountability must come from within. For some, it grows out of hallowed family values of honesty, fairness, and honoring the family name and legacy. The commitment of these owners is this: Family business ownership is much more a responsibility of stewardship than it is a privilege of proprietorship.
Steven Covey, an acclaimed authority on leadership and personal development, defines correct principles as being like compasses. In his book, Principle–Centered Leadership (Summit Books, 1991), Covey says, ÒPrinciples are self–evident, self–validating natural laws. They provide Ôtrue northÕ direction to our lives.Ó He offers this advice to the family business leader: ÒThose striving to be principle–centered see life as a mission, not as a career. Their nurturing sources have armed and prepared them for service they Ôyoke upÕ and put on the harness of service, thinking of others. See yourself each morning yoking up, putting on the harness of service in your various stewardships.Ó
The notion of stewardship has been mentioned by John Ward of Loyola-Chicago University and others. From this perspective, the family business owner, as leader, is above all else the recipient and keeper of a great trustÑthe business. The principles of stewardship that we have developed (see box below) may not make a whole lot of sense, however, to the owner who created the business and views it solely as a possession to be exploited to serve the ownerÕs needs. Perhaps the best way to illustrate the spirit of the principles is to cite the statement made to us by one owner who was in the initial stages of continuity planning for his 25-year-old, $40-million company. ÒI look at this business and think about all the people who rely on it and make it successful,Ó he told us. ÒEven though I started it, it has grown beyond me and represents the combined efforts of all of us. I may be the captainÑthe shipÕs safety is my responsibility. But it is the crew that makes her go.Ó
Compare this comment with one made to us by the patriarch of a once-successful but now struggling business, who supported his refusal to do succession planning by saying, ÒI built it, I can take it with me!Ó
The principles of stewardship allow no room for more traditional definitions of ownership that convey domination, control, entitlement, and exploitation. The principles sometimes hit second-generation family business owners especially hard. As heirs-apparent, they sometimes approach employment in the company as if they, unlike other employees, have the right to work according to their own schedule, their own pace, and their own agendaÑregardless of the effect on the business. After all, arenÕt they, as owners, the ones who hold others accountable? Being accountable to no one is one of the privileges of ownership, right? Usually, when this attitude is pervasiveÑand is allowed to continueÑneither first generation nor second generation is paying very much attention to the principles of stewardship.
When owners who are perplexed by these issues come to us, hereÕs what we recommend: Create the necessary structures for employee evaluation, including written job descriptions, clear procedures, performance goals, and regular performance reviews. Develop the attitudes and perspectives contained in the principles of stewardship. Remember that Òaccountability is the finest form of recognition,Ó and that recognition is a gift that family members in a business often forget to bestow on one another. In our consulting with family companies we find that when this perspective exists, or when we can draw it out, the likelihood of overcoming problems and assuring long-term success is dramatically increased.
Edwin A. Hoover and Colette Lombard Hoover run their own family business consulting firm, LSi Resource for Family Business Management, in Oakbrook Terrace, IL. They co-founded the Midwest Association of Family Business Owners.
•My business depends on me looking after its best interest, and that means acknowledging when I am part of a problem.
•Every day is a new opportunity for me to do something good for my business; itÕs up to me whether or not it happens.
•I cannot let discomfort and fear, my own or othersÕ, cause me to avoid facing and resolving difficult family and business problems.
•To keep my business healthy, I must remain healthy, too, through ongoing personal development in mind, body, and spirit.
As both an owner and employee, I will not knowingly abuse the privilege of business ownership, nor jeopardize the well–being of the whole for benefit of any one individual, myself or someone else.
- E.A.H. & C.L.H.