Human Resources for Family Businesses: Do You Have to Choose between Family & Business?

Managing human resources is always a delicate balance between doing what is best for the company and giving people the resources and attention they need to thrive. When family is part of the equation, Human Resources becomes even more challenging because there are so many nuances. Family relationship dynamics, differing expectations between generations, confusion between personal and professional behavior, balancing job requirements with individual competencies, and finding common ground for a shared vision are just a few of the incongruities Human Resources has to wrestle with.

The tricky issues faced by family businesses are often centered on people – both in and out of the family. Family members may not think business norms pertain to them, and non-family members can feel that their needs are not important.

One thing is for sure: how human resources is addressed in the family business will dramatically influence the current culture and business performance, as well as its future success.

HR is a partner with family ownership and governance.

The struggle between business-first or family-first generally starts with the business owning family members and the family executives running the business. By the very nature of their identity as a family member, it’s natural for these individuals to feel the greatest angst when choosing between family and business. It can be very difficult for this group to strike a balance between what is good for the business and what is good for the family.

A highly valued human resources function can create healthier expectations and parameters for both family members, non-family members, and the business.

Human resource strategies, led by the HR leadership, can be put in place that clarify hiring and succession practices and make them based on merit versus family relationship. Job descriptions and performance reviews can set clear policies for meeting job expectations. Well defined compensation and benefit packages resolve pay issues and discrepancies.

When HR is considered a partner with the family owners and leadership of the business, it creates some space between the personal affiliation and business decisions and priorities.

HR plays and important role in cultivating a healthy culture in the family business.

Human Resources’ primary role is to foster a positive workplace culture. This is done by engaging all employees in the business, and creating feedback tools for sharing opinions. When HR is placed in the appropriate role, all employees (family and non-family) can feel they have a voice and are important, but boundaries can be maintained through the HR guidelines set forth by the leadership.

Of course family owners and leadership play key roles in developing, fostering and reinforcing the culture of an organization. However, they can also lean on HR for practices and policies when the waters become muddied. Human Resources becomes the mechanism for supporting all staff and reinforcing the values of the business. This can go a long way to distance family relationships from key strategic decisions.

Family businesses must hire the best talent for the company.

Like all businesses, family businesses must hire, train and develop individuals with the best capabilities. When HR leads the charge, fair and consistent hiring and training practices can be employed, regardless of whether someone is family or not. Retaining employees after the hiring process is also a key area that HR leads. Successful family businesses engage HR and family leadership to develop policies for hiring family members. Steering clear of entitlement and focusing on experience, competencies and potential are better indicators than someone’s last name.

Leaning on HR policies lessens the family versus business struggle.

By taking a more strategic approach to HR issues, family businesses can greatly alleviate the issue of choosing between family and business. You can both manage current issues effectively, and anticipate future changes and needs. Human Resources needs to be seen as a long-term value to the business, and must play a vital role in how family versus business priorities are handled.

How Quad Group Can Help

We actually believe that the family versus business question may be the wrong question to ask. It doesn’t have to be an either-or scenario – it can be a both-and solution. There is no denying the paradox of running a family business. However, a strong HR role can greatly assist in the contradictions that plague family businesses regarding tradition and change, merit-based and entitlement-based hiring and promotion, and exclusive and inclusive cultures.

We believe in finding approaches that are best for the business and the family. Often a thoughtful, holistic approach, that involves human resources, is a critical contributor to long-term family harmony and business success.

Please CONTACT US to learn how we can help you define your Human Resources functions and strategies.