Are family businesses ‘turning a blind eye’ to poor performance?

If the results of our latest web poll on family business are anything to go by, then family loyalties could be clouding the judgement of a surprising number of business owners.

Our online survey found that almost half of business owners questioned (45 per cent) had turned a blind eye to poor performance in the workplace because the staff member in question was a relative.

This is just one of a number of issues unique to owner-managed family businesses that have been magnified by the economic downturn, though we must not forget that many family firms have been performing well.

Having family members on the payroll can be stressful for some business owners; it can be hard to communicate frustrations which can get in the way of good business judgement. This can also frustrate other staff members who may feel their colleagues are shown favouritism because they’re related to the boss.

However, with over half of respondents also saying this has not been a problem in their business, the figures suggest some owner managers may find it easier to work with family members.

This is also backed up by previous research conducted by Moore and Smalley which found that the loyalty gained by having family members as colleagues gave them an advantage over other firms.

Family businesses offer a number of benefits that are hard to cultivate in other companies, such as greater trust between staff and stronger commitment to the success of the business. In times of hardship family members will rally round and offer support and financial sacrifices.

However, this closeness also means there can be additional emotional stress on family businesses, particularly when it comes to things like having to tell a family member you have to make them redundant. The issues of pay and benefits, disciplinary procedures, managing conflict and inheritance can also create conflict.

If you’re an owner manager and want advice on family business issues, give me a call Ginni Cooper on 01772 888400.