Managing an Underperformer in a Family Business

In family businesses, leaders sometimes perform hiring and staffing decisions based on relationship and commitment as much as on ability and experience. After all, one goal of these firms is to present employment for family members. But that doesn’t mean all family members perform efficiently.

Start with an open discussion concerning accountability.

It’s fine to show respect for family membership, but it’s still essential to be candid of business needs. In a initial conversation with the family member, examine and listen deeply to understand how they see themselves, and how they think they can add value to the organization. Respond with a kind, unambiguous explanation of the expectations you and the rest of the management have for them, and restate those expectations in a follow-up email acknowledging them for the conversation. After you’ve proceeded on record, it’s a little easier to refer to those expectations in following conversations about performance.

If something about their history or bonds, or your relationship with them, makes it risky or painful to deliver direct feedback to them, consider having a impartial third party convey the message to ensure that the message is on point and that they have understood.

Change their role or responsibilities.

Can they act as an independent contributor or as a subject matter expert? You have to be practical about status and image. They may get to hold their VP title, for instance. But you can move them to be VP of an area that has no employees, or that doesn’t communicate directly with customers if that’s not their strength. For instance, at one of the clients, after evaluating the technical competence of a senior agency executive, it turned out he was more successful with external public and customers than collaborating with teams within, and he was reassigned as a sales leader. At another client company, based on personal enthusiasm and style, a family member was moved to a compliance role where she didn’t really have to adjust with others and could be introduced to as a technical expert.

Re-assign the family member to a non-family chief.

Internal struggles are comfmon between family members and can arise from painful feelings about ownership and hierarchy just as quickly as from performance and accountability concerns. You may be able to assign a family member who had been reporting to another family member to a strong executive who doesn’t have to be concerned about keeping the peace at Thanksgiving dinner. It’s crucial for the non-family leader to be confident that they have the backing of the senior leadership, including family.

Construct off-ramps when needed.

At some point you may need to consider choices that preserve dignity while clearing the way for more productive staffers. A family member may realize that they’re no longer in the running for a top job but aren’t ready to retire, or feel stuck because they know they can’t get a comparable job in the open market. Consider planning a sabbatical process for long-standing employees, or experiment with part-time, flex-time or distant assignments. One of the clients created an “on call” mentor role for a family member who serves as the “keeper of the flame” and historian to tell the stories and describe the company’s background and mission in a way that is inspiring without a day-to-day role.

Opportunities to lead community or industry groups can support sidelined family members preserve status and connection in a figurehead role that also helps the business. They might direct the family council, host community events, or as at one of my clients, head the family foundation, which meant less stress and exposure than in the business but still allowed the pleasures of both decision-making and public leadership. If any of these off-ramps do eventually head to retirement, be sure to celebrate in a way that the family member feels embraced and recognized for their loyalty, years of service, and being in the family. Arrange plaques, mementos, and appropriate speeches so the transition out is steady, satisfying, and minimizes disruption.

Family members who have been turned away can burn with resentment, and may still maintain some control. So if you must exit a family member abruptly or harshly, make sure a human resources specialist or legal adviser checks all the details of your views and language. But by using a combination of these four approaches, you may be able to evade a forced exit and instead encourage the family member be a fruitful participant in the company.