Accountability in a Family Business - American Management Services, Inc

Accountability in a Family Business

People have often said my philosophies and principles can sometimes sound draconian. Everything I teach and implement for our clients is said with the sole intent of implementing quality of life and profitability for ownership. One of the most challenging topics we face is how to deal with multi-owner family businesses – most notably, second or third generation multi-owner family businesses.

One of the tenets I preach is that the best family business has one member. I say this to help eliminate any confusion surrounding roles or responsibilities among family members.

Recently, American Management worked with four brothers who owned a small chain of brake shops in the Southwest. Once their father passed on, the four brothers argued and fought over everything. They implored us to help them get through their business and personal issues and help define each brother’s role in the business. We asked them to do one thing: put their feelings for each other aside for a few months and put the business first. All four said yes. They lied.

On our fifth man-day with them their personal differences with each other, their differences with each other’s spouses, and their individual philosophies and insecurities brought the project to a screeching halt. Sadly, after three generations worth of effort, distrust has resulted in the business being liquidated. What would Dad think if he was alive today?

If you are part of a multi-owner family business ask yourself these 5 questions:

  1. Who is the leader?
  2. How do you define each family member’s role?
  3. How do you hold each family member accountable to that role?
  4. Why should future generations want to work in the family business?
  5. Why should you want future generations to work in the family business?

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