So the negative relationship was continuing, now on a business basis as well. When questioned in any fashion the father threatened to retire again, but the daughter still needed the help, so they’d have a discussion and reach what she thought was agreement. But, of course, the father went back to doing things as he saw fit, rather than letting her take the lead. She found this lack of control very draining on her emotionally and physically. But she still needed someone to function as CFO.

After discussing it with me she realized she really needed to find someone who would be willing to work WITH her and follow her lead. Her plan is to bring on a consultant to function as temporary CFO. If he/she works out the person will become permanent. Over the next 30 days she will actively seek a replacement for her father and tell her father that she is accepting his retirement. She expects to get some flack and more negativity, but she has realized that her father will never change (cannot change) and she needs to take back control of her business.

Too often I see business owners putting up with employees, often parents, who are non-productive or counterproductive. Sometimes a work-around can be made. I have one client whose father handed over the business to her but remained in the business. Because he functions mostly as an ambassador he is not blocking productivity. In this case it’s good for the parent and the business, but think long and hard before agreeing to have a family member in your business, especially a parent. Make sure they are not  holding you hostage in your own business.

Do you have an interesting story to share about child-parent business relationships?

Also historically they said they often disagreed with each other in meetings with their executive staff.  Because this took extra time and was not a good face to be presenting to those who had major responsibilities, they decided that when they found themselves disagreeing they would stop the discussion and say they would work out the disagreement at a later time and come back with a unified position next time. At this past week’s meeting they didn’t disagree in the meeting, but realized they didn’t agree and decided to discuss it afterward. By taking it up specifically after the meeting they were able to reach agreement and are prepared to come back next time with a unified statement. Both felt it wasn’t perfect, but that progress had been made.

The bottom line: in order to move forward on anything, agreement must be reached. When there is disagreement it saps energy and time and keeps things from moving forward.

In addition to finding out where they were together and where they were apart, I learned each of their strengths. I asked if there was a delineation of duties, with each having responsibility for specific areas. While it seems they knew their areas of strength they did not have anything like a table of organization.

So their first assignment was to agree that each would be the final decision-maker for specific areas. The husband took web site development and marketing; the wife took operations and product management. For projects they agreed that the individual responsible for the department bearing the bulk of the work would oversee the project from beginning to end and would assign tasks to the other departments if needed.

They also agreed that before major decisions were made in their areas they would run the details and facts by the other partner. If the other partner had issues or concerns they would take 24 – 48 hours to consider everything before making a final decision.

This change meant they would need to communicate the new structure to their department heads, which is on the agenda for next time.

They have used the new system for 2 weeks and things seem to have gone smoothly so far. We’ll see what comes up as new projects are started and the staff adjust to a clearer delineation of roles and responsibilities.

“For example, both the nonfamily family business and the true family business may rely on informal, unstructured decision making processes. Decisions are made exclusively by the senior person in the business.

Decisions may be made opportunistically or under the pressure of a crisis instead of in a timely, strategic fashion. Sometimes there’s not a shred of evidence on the table to help illuminate the issues. Sometimes there’s no decision. The issue is talked about until everyone loses interest and wanders away to keep on doing business as usual.”

Among other shared characteristics might be:

-  the lack of a true management structure, and as the business grows nothing is put in place. Record keeping and reporting are often handled only in a crunch.

- interaction between staff is also unstructured and can get off track easily

- accountability at all levels is often soft or non-existent, often just to appease personalities and overlook lack of competence

- lack of a clear succession plan

On the positive side these types of businesses exhibit strong loyalty among the group and to the company.

Read the entire article…

In Resolving Disputes in Family Businesses, http://www.smallbusinessadvocate.com/small-business-articles/resolving-disputes-in-family-businesses-2227. David says: “a family business (FB) is really three distinct but intricately related systems. Each system—family, ownership, and business—has certain functions it must fulfill, and where these systems overlap, more opportunities are created for their functions to clash or be confused. Untangling them requires a clear view of how each system works on its own, as well as how they mesh together.”

David offers excellent examples of his systems as well as suggestions for resolving family issues.

What family business stories do you have to share?

Sometimes people try to get the family member to change.  James Lea has a blog article about some of the challenges of working toward change in a family business.

He says,

First is the honest recognition that change is needed now. The classic ostrich posture may be comfortable, but it’s unattractive and unproductive.

The second is courage. Change is often scary. Also, almost no one wants to accept change that cuts across the grain of his preferences and pleasures, so sometimes change must be driven into place.

Third is a willingness to change — to give up familiar, if only marginally effective, ways of running the business and relating to the family — to make room for something new, different and better.

I have a client whose father started the business and is still involved even though he doesn’t take a salary and is starting to fail. According to my client the only thing keeping him going is his involvement in the business. He lost his wife several years ago and this is all he has. She cannot take the job he’s doing away from him. But she can pick up the parts that he’s starting to fall down on. Little by little he will have less and less responsibility, but will still be involved.

In this case change cannot be forced, it must be directed over time, sometimes without necessarily having agreement.

In her article, Laura Petrecca covers the good , the bad and the ugly parts of a business partnership. She quotes Barry Nalebuff, a Yales School of Management professor, who co-founded Honest Tea with former student Seth Goldman. He says “his partnership helped propel Honest Tea from $250,000 in sales in 1998 to $13.5 million by 2006. In 2008, Coca-Cola purchased 40% of the firm.” That’s quite a success story.

Laura’s case for a partnership is the extra skill set a partner provides, if done correctly. “With a company comrade, there is always someone to brainstorm with, to share work duties and, of course, to help carry the financial burden. An agreement covering the ownerships structure, financing and division of duties is a must”. And be sure to address contingencies like what happens if a partner becomes disabled or dies.

Laura includes examples and tips on handling issues between married partners, as well as family and friend partnerships. Reporting on two high school friends who formed a partnership, she quotes “Things have been a little rocky, but we’ve managed to stay afloat, …I think (the troubles) have helped our business get stronger and our friendship get stronger.”

Here’s one client’s history on how family/business challenges were resolved.

Barbara (anon.) took over her father’s janitorial and commercial maintenance business several years ago. Even though Barbara now owned the business, the father kept doing what he had always done: he did the work and got help where needed. Barbara had to be both business manager and field supervisor.

Realizing that she could qualify for minority/women’s contracts she began to bid on city and other large institution jobs. As she got new business, she realized she needed someone who could do specific field supervisory work. She brought in a cousin, Robin, who had no supervisory experience or training, but was confident she could do it. She was also the only person the father would accept in that position.

Needless to say, Robin was no help, but it was only after Barbara sent her for supervisory training that she began to function as a real field supervisor.

But the requested written weekly supervisory report wasn’t happening until Barbara asked her for the report in a weekly meeting with others and she didn’t have it. The reporting did get better, but Barbara is now hiring another field supervisor to train along with Robin as the business grows. When Robin learned Barbara was upgrading a staff member to supervisor her performance improved dramatically. (Just like the eel in the fish tank.)

Then there’s Darla, Barbara’s sister, who handles accounts receivable and payable, as well as functions as HR manager for 18 field staff. Barbara had to institute a regular report from Darla in order to know her financial status. It took scheduling a weekly meeting to encourage the discipline needed to stay current.

Finally, Barbara’s daughter, Jade, who is attending college, is also helping Darla. She’s not only learning the cleaning and maintenance business she’s also learning how to get things done.

That’s five family members in one business. At this point things are working well and the business is continuing to grow. Everyone needed to accept responsibility for carrying out their responsibilities efficiently and effectively and keeping the communication flowing. Now the business is really poised for growth.