Situation: The CEO of a family-owned business finds it difficult to hold family-member managers accountable. They are responsible for significant portions of the business; however, family dynamics make it hard to supervise them. How do you communicate that their responsibilities affect both the business and the family? How to you manage family in a business?
Advice from the CEOs:
The first issue: Why have they not been asked for accountability to date? If you don’t ask for accountability, then don’t expect them to take this on by themselves.
Assign one family member responsibility for developing the marketing and sales strategy for the company.
Change the compensation from salary to salary plus commission. Over a 6-month period, reduce the base salary to half of what this individual currently earns and tie the rest to success increasing sales.
Assign this person responsibility for analyzing the markets that you serve. Are there areas that the company has not tapped into yet? What can you do to make your web site up more effective at driving sales? How can you use exclusivity on select products to your advantage?
When was the last time that the principals of the business met to figure out what to do?
Set the stage: we have split the business into two divisions and have separated the financials. This gives us more flexibility as we develop the business.
Show them the trends of each business.
Show them that if the current trend continues the business will be unsustainable in X years.
Facilitate a discussion that will start to generate solutions.
If the others do not respond:
Tell them that you appreciate their attendance at today’s meeting.
Tell them that you will meet in another two days as a team. Until then you expect them to think things over and to come ready to share their ideas.
Do not hold the meeting in your office or conference room. Secure an off-site neutral location with a white board.
If you are uncomfortable facilitating this meeting hire an outside facilitator. Ask for the input of the others in selecting a facilitator and follow their recommendation. If you work with a facilitator, start with your own dilemmas to set the tone.
Situation: The CEO of a business that has been in place for several generations is frustrated by the challenges of working with family members. Relatives are involved in top positions, but frequently place personal concerns above the priorities of the business. This leads to tense situations where other family members, not in the business, will intervene to support their close relatives without appreciating the conditions facing the business. Must a family business always be “family”?
Advice from the CEOs:
For the business to thrive, you must match skills and talent to available positions – not just the “best” family member fit for the position.
Understanding that it is difficult for one family member to communicate negative news to another family member, consider hiring a consultant or HR company to evaluate and be the go-between in determining best family fit, or family/non-family choices for open positions.
If the company involved unionized employees, and some family member employees are union members, this may complicate your choices. Seek outside non-union counsel to help you evaluate situations and navigate solutions.
Hire a professional facilitator to assist in running company planning meetings which involve family members. A facilitator can approach the situation from a neutral standpoint, and does not carry the personal history of brother-sister or close relationships within the company. Choose an individual with experience with family-owned companies who can build a company vision that goes beyond personal relationships and concerns. This individual can also help navigate the operational situations facing the company.
Look at both your organization and ownership structure versus applicable regulations and licensing requirements. This may present new alternatives for you to consider.
Situation: A company has many meetings. Organizers calendar meetings on Salesforce.com. Despite this, participants show up late, and sometimes not at all. When the right people aren’t present they must re-schedule the meetings. This ends up wasting valuable time for managers. How do you enforce meeting attendance?
Advice from the CEOs:
The answer depends upon your company culture and priorities.
If you have a production-focused culture, absence and tardiness may not be tolerable. Companies with this type of culture can take the following steps:
Call out late arrivals and absences immediately – the first time take them aside and explain that tardiness or absence is not excusable.
Called out repeat offenders on the spot!
One company has a policy that if you arrive late you stand for the period that you’re late. This has been very effective.
The example that you set reinforces desired behavior for the others.
In client-centered service organizations the rules may be different. Some companies feel that customer calls and meeting customers’ needs comes first, even if it means that the meeting starts without a key participant.
Match your meeting discipline to your culture.
The quality of meeting is dependent on quality of the meeting facilitator. Make sure that you have the right people leading the meetings to keep them on time and on topic. This may improve meeting timeliness.
If this is a challenge for your company, meet with those involved. Clarify the problem and confirm the reality of problem; then agree on the solution and gain their commitment to comply.
Situation: A company goes through an annual strategic planning process followed by an annual business planning process. At mid-year they do a review and correction. The challenge is that if the company is behind plan, the management team does not take ownership of plan revisions – it becomes “the CEO’s Plan.” How do you gain commitment to revisions in the annual plan?
Advice from the CEOs:
Throw out your current process and start over.
The challenge is to gain more buy-in and accountability. This only comes if the targets come from those responsible for delivering them – both for the original plan and if any revisions need to be made.
Look at who you involve within the organization – can you drive involvement deeper to generate additional buy-in across the organization?
Hire an outside facilitator to guide you through the process instead of chairing the meeting yourself. This prevents the resulting plan from becoming “your” plan. It also changes the culture of the meeting as well as the buy-in.
If you use a bottom-up / top-down process, moderate the plan results with an eye to two realities:
Bottom-up input from the sales team is rarely more pessimistic than the CEO’s input. If it is ask what is happening.
Make sure that your top-down numbers are empirical and based on the best market research that you can obtain.
If your plans have consistently fallen short over recent years:
You may be baking the targets too high.
Consider building the revenue plan optimistically, but build the expense plan conservatively. This helps control expenses and attain profitability targets.
So that the two plans are not misaligned, review them more frequently – perhaps quarterly on a formal basis with monthly reviews – so that if your revenue plan is meeting targets you can adjust spending to support production and delivery.
It is common to have one set of numbers for sales and a different, more conservative, number for expenses. As long as you conduct frequent review and adjustment of the expense number to sales performance, this works. Many companies also use different targets for operations than what they present to the Board – with the more conservative numbers for the Board.