Familistic is a term that all family business owners need to have burned into their conscious.

Familistic : a social pattern in which the family assumes a position of ascendance over individual interests. Merriam-Webster’s Collegiate Dictionary, Eleventh Edition, 2005.

One of the great challenges of owning a family business is the necessity to care for the business so that the business can care for the family. This is especially true when it comes to extended family. Many times they do not have the immediate connection – the risk, stress, sleepless nights, …the sacrifice – one deals with when owning a family business. There seems to be a subtle disconnect that allows the extended family member(s) to float along in an ignorance induced haze. They do not live it 24 hours a day like the immediate family.

Many times the extended family member will enter your workplace with a prideful attitude. They feel entitled to special treatment and consideration based on DNA. They know how to do almost everything better than it is presently being done. …especially those things that directly benefit their situation. This situation is sure to cause emotional angst for you, the owner.

Most people I know who start family businesses do so, to some extent, to be able to use their position and standing to help those family members with whom they have close relationships. Especially when it comes to family, they fall into the trap of thinking with their hearts rather than their heads.

Samuel Gompers, an early labor leader and president of the American Federation of Labor for almost 40 years, believed that “the number one responsibility of a business is to make a profit.” As an early labor organizer, he understood that until and/or unless a business was profitable it was of no value to the owner, the family, the workers, the customers or to society in general.

I have been watching a good friend endure his challenge of changing employment the past 4 months.

He has been chasing an advertised job as a commissioned sales person at a local family owned furniture retailer. In his initial interview, he discovered that the sales manager of this company was a friend of his with whom he worked twenty years ago while selling furniture at another company. The sales manager would like to hire my friend. Having worked together, he understands he possesses polished and professional people skills and sales skills. He also knows my friend has a tremendous amount of integrity. HOWEVER…

This retailer is now trying to work with the fourth nephew of the family that owns the company! The family, probably out of a sense of obligation to extended family members, is giving an unlimited number of relatives a shot at a position they are ill qualified for or have little interest in, while a qualified, hard working person is getting frustrated chasing this position.

Yesterday afternoon my friend called his friend the sales manager and found out that they may be letting Mr. Number Four go soon. He started just five days ago and has now missed his second day of work. The previous three were all let go – sort of. They just stopped going in to work. They did not even have the courtesy of letting the sales manager or their uncle and cousin (who own the business) know of their intentions or decisions. I suppose they were “let go” as they have been “replaced” with what seems to an outside observer to be a never-ending stream of unqualified, disinterested relatives. All this time my good friend waits suited-up wanting to get into the game!

The problems with allowing this thinking to take root in your family business are many. The most obvious is that it is hurting gross sales – the bottom line.

Allowing family members to exhibit this type of behavior and attitude toward your business also hurts the morale of the loyal and engaged non-family member employees you have. This pattern is causing the sales manager to become frustrated and discouraged. In addition to feeling ineffective, he is becoming discouraged because he is being held accountable for pulling certain numbers while not being allowed to make the key decisions about the personnel he uses to help him in this task.

Other employees and staff are beginning to resent being short-handed and being asked to change their schedules to accommodate the absent relatives. This situation, left unresolved, will eventually cause even the most dependable employees to question their loyalty.

Ultimately, allowing this type of behavior to repeat itself in your family business hurts your credibility.

Giving preferential treatment to family members because they are relatives, not because they are the most qualified or motivated, may cause other employees to assume that a shift in expectations has been made by management. Over time, they may begin to perform in the same half-hearted, disinterested, and disengaged manner of those family members no longer at the company.

If this happens, you will have a different and completely new challenge, one you do not want. It is difficult to explain to non-family members sliding – or “relative” – expectations as applied to “family” without tarnishing your integrity.

Family Business Rule : If extended family is not familistic enough, best to protect your business and stick with those who are not family.

All material COPYRIGHT© 2010, Russell R. Bethers, Offpoint, Inc., USA
You are free to link to this post, however, No part of this material in any form or portion may be used without the prior written permission of the author.