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Dealing with Family Business Openly

Back in my college days, I remember arguing with my parents that grades represent a reflection not only of a student's ability to learn but also of a professor's ability to teach. Although, at the time, this was partly an attempt to rationalize my own less-than-stellar achievement, I think my theory has some validity -- and it can apply to performance evaluations in business, especially in family-owned companies.

When speaking to families who work together in their own businesses, I often address the topic of performance appraisals. When I ask how many of them have such a review process for nonfamily members, nearly everyone in the audience says yes. But when asked how many have the same process in place for family members, hardly any give a positive reply.

NO MORE FINKS. Why are family members so reluctant to provide feedback on one another's performance? Maybe the root of the problem goes back a few years. Young children are seldom reluctant to tell Mom or Dad about their siblings' misdeeds. Is this because they earnestly believe they're helping their parents to teach better behavior, or because it's just plain fun to see their brothers and sisters get into trouble for a change?

As the years pass, however, we're taught that tattling is inappropriate behavior. So we cease telling Mom and Dad about our siblings' misbehavior. Why? For any one of many reasons: We shouldn't tattle, sibling might retaliate, we don't want their behavior to reflect negatively on us, or they might just get into even more trouble later if we let the behavior go unchecked.

Take the example of Marie and Stephan, a brother-sister team working in a retail business with their parents. Soon after being engaged to consult with the family, a colleague and I performed a series of confidential individual interviews. These revealed significant conflict between the siblings, most of which derived from differing value systems.

UNNECESSARY? Marie exhibited a passion for the business, sense of stewardship, and desire to ensure the company's transition to yet another generation. Stephan, on the other hand, was perceived as behaving more like an "employee." He had significant outside interests, including golf, fishing, and investing in two-family houses on the side.

Their company had an effective performance review process for nonrelatives but not for the family. When challenged openly about this, all family members said such evaluations weren't necessary because they knew one another well enough.

I wondered whether the siblings felt hesitant about "tattling" and whether the parents felt concerned that any negative feedback about their children would actually reflect Mom and Dad's shortcomings. It could have put into question their skills as teachers and coaches of their son and daughter.

VICIOUS CYCLE. Years ago, I worked with another set of siblings: Roland, Vinny, and Ellen, all of whom technically reported to their father. While Vinny and Ellen also reported to Roland informally, there was no performance-appraisal process.

Instead, each sibling complained to Dad about the other two. And Dad complained to Roland about the other family members. Confusing? Imagine living it on a daily basis, as this family did.

The issues in dispute regarding these four relatives rank among the most common in business families: Perceived differences in values, commitment, hours worked, attention to detail, and follow-through, plus, of course, the biggie -- compensation.

ON THEIR OWN. As long as Mom and Dad are around, younger-generation family members and parents who all work together believe they have no need for a performance-review process. But what will happen when the siblings are on their own -- once there's no parent to whom they can tattle?

Running the business without parental supervision will suddenly put a powerful responsibility on their own backs. It will require accountability and maybe even consequences, the former too often deemed implicit or ignored, and the latter typically feared. Ignoring ineffective behavior won't make it go away. And the absence of well-deserved praise means missed opportunities to reinforce the positive.

A Web search on "performance appraisal" yields more than 3.5 million links, including the 360-degree process that I've found to be of enormous value to effective business management and planning. When safely applied via a compilation of anonymous responses, the process is a positive one, stressing opportunities for improvement and not simply criticism.

EVERYBODY WINS. It's time for family enterprise to take the step. Tattling has nothing to do with it -- the performance appraisals are about professional development and growth. And in the process, a less-than-outstanding review of a family member can also serve in part as a critical commentary and guide for the assessed person's coach, mentor, supervisor, or boss.

What a great opportunity for the benefit of all.

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