The business hierarchy

One of the problems most often faced in family businesses is deciding who is in charge of what. Certain members of the family may believe that they have the right to make major decisions on the direction and operation of the business because of their status within the family or the amount of capital they have invested in the business. If this belief is combined with a lack of business acumen, it could be detrimental to the success and profitability of the business to allow them to have a high level of control.

To avoid issues that will inevitably be caused by unskilled or inexperienced relatives taking matters into their own hands, a clearly defined hierarchy needs to be put in place, stating each family and non-family staff member’s roles, duties and responsibilities, as well as who within the structure of the business they report to.

As it can often be difficult convincing siblings, in-laws and other family members to defer to one another in any situation, let alone in a business environment, it is generally advisable to hire non-family employees to take on management positions, to maintain order as well as objectivity and professionalism.

Whenever possible, try to assign roles to family members based on their skills and interests; it may seem obvious, but appointing a family member to a position they are not suited to because they feel that they deserve it can not only cause major problems within the business itself, it can also lead to a loss of morale in non-family staff members, who feel that they are not being treated fairly, as well as damaging family relationships.