Welcome to the Family

Phillip Perry

Do non-family employees feel like "outsiders" in your restaurant? If so, it's a sure bet that their lower morale and simmering resentments are having a negative effect on your operations and sapping your profits. It makes sense, then, to take action that will make outsiders feel right at home.

Workplace psychologists suggest taking two steps. First, foster a business environment that communicates respect for all play-ers. Second, make a point of uncovering festering issues before they escalate into serious morale-busting crises.

Both steps, to a large extent, require a continuing improvement in communications techniques. "Facilitating open communications can be even more important at family-run operations than at other kinds of businesses," says Jerry I. Kleiman, cofounder of Optimal Resolutions, a Manhasset, NY-based firm that helps family businesses resolve relationship problems. "There are so many additional issues involved that you really need to be mindful about identifying and dealing with problems before they become critical."

Here are ways to keep non-family employees happy:

Set the ground rules.
Right from square one, non-family employees need to be told the ground rules in terms of their prospects. "During the hiring process the applicants should be informed as to whether they will be essentially place hold-ers, or whether there will be some potential for promotion," says Susan Lazar, a Minneapolis-based family business consultant. "It is important that expectations be clear." To what level of authority and decision making may they aspire?

Is your family business one of the many in which there is no possibility that a non-family member will be able to gain ownership? That's not necessarily a problem, says Lazar, as long as the non-family employees realize the restriction and are comfortable with it.

Treat people fairly.
"Non-family employees realize they will not be treated in a manner equal to family ones," says Aron Pervin, present of Pervin & Company, a family advisory in Toronto. "But they do expect to be treated fairly." This means family members must not take advantage of their positions in ways that cause irritation or resentment.

Avoid any appearance that family members are benefiting unfairly from the sacrifice of others. Suppose you pull up into your parking space with a new Mercedes, and then tell everyone you cannot absorb more of their health insurance premium increases. That is something that is very hard for people to take.

Confront family issues.
"Family discord directly affects morale and creates a culture that is not attractive to aspiring and ambitious talent," warns Pervin. When family members are arguing with one another, or simply giving one another the cold shoulder, profitability is threatened because business strategy necessarily becomes somewhat ad hoc and subject to the whims of the family member holding the most power. And the insecure nature of such power dynamics can spark paranoia about outsiders: "High performance by a non-family employee may actually be viewed poorly as it undermines owner-manager control," Pervin says.

The solution to this problem, he adds, is for family members to make a commitment to open communications. Disagreements and personality conflicts must be discussed, not swept under the rug.

Work hard.|
Non-family employees will especially resent privileged gold bricks. Any family member who receives a paycheck has to work as hard as non-family employees.

Be especially careful when your children first enter the workplace, either as part-or full-time employees. Don't assume they know what you expect in terms of a work ethic. State explicitly that you expect them to work harder than other employees and to keep longer hours. "Young people should avoid any behavior that would lead people to the conclusion that they are demanding special treatment in terms of assignments or responsibilities," says consultant Lazar.

The second generation should also be encouraged to socialize with others, says Lazar. "Hang out with other employees at lunch time and avoid discussing personal things at work." Rather that referring to parents as "Mom and Dad," children should use the names used by other employees. And learn to avoid discussions with other employees who question management decisions.

Finally, some experience in the outside world can also help. "I recommend that children work elsewhere before they come into the family business," says Lazar. "This will give them something to offer the business beyond a name. And they will have less to prove to employees because they have a track record."

Working's one thing; evaluation's another. And problems often arise when it appears family employees are not being judged by the same standards as non-family ones. In the real world, though, it sometimes occurs that underperforming family members have to be retained in the business. "There are cases when a family member may be just not capable or competent, but the family feels a responsibility to provide the individual with a means of financial support," points out Lazar.

What to do? Lazar suggests creating a position tailored for the skills of the family member. "Your challenge here is to allow the person to feel they are achieving something. In this case they will gain the respect of the other employees even if the person is not performing to the level of the other family members."

Show appreciation.
Family businesses can help non-family employees feel valued in a variety of productive ways. Share the fruits of success in terms of bonuses, benefits packages and retirements plans. And provide less ambitious but still highly prized extra such as:

It's in these little areas that family organizations can really shine. Bigger companies often just don't have the time.

Open the door.
Family-run businesses often have open-door policies that encourage non-family employees to approach members of management to express bottled-up frustrations that might otherwise grow into real morale problems. When combined with clear definitions of company policies, such communications can help management avoid a common source of stress in family businesses.

"Problems arise with non-family employees when there is a weak intersection of expectations and reality," says Paul Karofsky, principal of Transition Consulting Group, Weston, MA. "This can lead to frustration, hostility, terminations and even lawsuits. This stuff can get nasty. Left unchecked it can kill morale and destroy profitability."

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