One of the most challenging aspects in dealing with business families, is getting everyone in the family to understand their role with respect to the family business. Some of the most successful families are the ones who have taken the time to properly explain the areas of overlap between the business and the family.

Members of the family who are employed by the company have most of their roles defined for them, as do all other employees. There are other roles that go beyond those of non-family employees as well, and these are some of the tricky areas.

In addition, there are usually many other members of the family who are not employees, but whose lives are very much interwined with the success of the business. These people often feel like outsiders, and sometimes feel torn by their feelings toward the business, due to certain ambiguities inherent in their situation.

Let me put a couple of generic examples in play here to help illustrate these points. Let’s take a second-generation company where the founder has a number of children, some of whom are employed in the business, and others who are not. Also, some of these G2 members are married and are starting families of their own.

(I will use the more typical male founder in my example, but this typical family is gender-neutral for our purposes).

Founder/Dad/Grandpa did not have to worry about these questions when he started out, and probably does not relish dealing with any questions that “dilute” his total control over the governing of his “baby” by anyone other than himself. With time, he will often come to realize that he must relinquish control of some aspects of the business, often to his children and other trusted employees. This, in and of itself, is already a huge step that many are unable to easily accomplish.

Now let us take it a step further, to where I really want to go with this example. If the family business is to REALLY succeed into future generations, the circle of people who are affected by it will continue to grow outward. Let us think just about 3 generic members of this family for illustrative reasons.

– Alan/Alice (G2 child who is not employed),
– Betty/Ben (G2 in-law), and
– Chris (G3 potential future employee).

All of these people’s lives are very much affected by the business. In the community, these people are viewed as part of the family and are considered by most outsiders are “part of the family” in every way. They are seen to be owners of the wealth of the business (even if they are not, or are only tangentially so).

Their public behavior in the community can also affect the reputation of the family and therefore the business as well, and not always in a positive fashion.

Their expectations of how they can, will, and should benefit from the business, now and in the future, are certainly something that they spend some time wondering about, and for good reason.

It can be very difficult to get founder Dad/Grandpa to ever even think about these issues without stirring up some negative feelings about these questions, feelings about how these people should just be grateful for what they will eventually get.

But the sooner these questions are addressed, the better. Next week, we will look at the analogy of the airplane as the family business. We will look at how the family gets to be involved in what the airplane will be used for, and also in who gets to actually fly the airplane, and under what circumstances.

We will also look at some of the benefits of ownership, which also come along with their own responsibilities.