The Money Tree
“Money doesn’t grow on trees!”
How many times did you hear that when you were growing up? It seems like all parents say this to their kids at some point. But when parents become business owners they often treat the business just like a money tree. How?
Jobs for everybody - We see businesses hiring the owners kids, nieces, nephews, brothers, sisters…all regardless of whether or not these people are actually making a meaningful contribution to the business. It seems like this is especially rampant on summer and winter break. Before long the office kitchen starts to look like the student union.
The paycheck allowance - The abuses don’t stop once the kids graduate and start families of their own. We have seen org charts and compensation schedules where everyone at a certain level is making $40k, except the owner’s son. He’s making $75,000 because he just got married and had a baby and needs that much to live.
Follow your passion - Many business owners let their kids come to work and essentially write their own job description. John likes computers? Great! He’s our new full time IT person. Nevermind the fact that no business our size has a full time IT person, and we got along just fine for years without one.
These examples sound overblown and silly, but variations on them exist everywhere in family businesses. More serious than their drag on cash flow is there impediment to culture building and developing other leaders in your company.
Their is a better way. Making kids part of the strategic planning and execution process creates several opportunities.
Planning for future needs - If your son or daughter has an interest in the business you have the opportunity to build a strategic plan that looks out 3, 5 or even 10 years. In that plan you can identify where you anticipate needing specific skills and leadership. Your kids may or may not wind up playing a star role, but you have the basis for a very meaningful and productive conversation about where they can contribute the most and experience the most fulfillment, all without the pressure of needing a paycheck today.
Go to school on someone else’s dime - I am a huge fan of kids going to work for companies in the same industry, but not the same market. Every industry has best practices. You can hire a consultant or buy a report, but it is much more effective to put someone on payroll for 40 hours a week who’s been there and done that. If they want to come work for you encourage your kids to stick around their college town and get a job for a company in your industry. The lessons and experience they eventually bring home will make the memory of those college tuition payments less painful.
Build confidence and humility - Kids need to prove themselves. Most of the interpersonal conflict we deal with in family businesses comes from situations where the kids have never held meaningful professional posts outside the family firm. Knowing they can make it somewhere else goes a long way toward building their confidence. Kids who first work outside the family business also tend to take less for granted. They are more humble and realize the grand scale of the opportunity they are being afforded to work in the family business.
Teach accountability - This one is the most important. Your kids need to watch you build and execute a strategic plan that takes into account the business’s needs, the development of other leaders, good timing and sound financial stewardship. That is how they learn that everyone must be accountable, even the owners. Owners are, in fact, most accountable. If your kids get that lesson you will have taught them something that becomes part of your legacy.
No matter where you are in your business, things can begin to improve today. Have up front, honest conversations with your kids and your key employees about where you’ve missed it and where you need to do better. Then start putting together a plan that you can work diligently on day after day, week after week. If you need help call us.