You already know how to resolve a family business conflict.
Even if you don’t work in a family business, if you have a family, you know what it’s like to delegate and be dumped on. To be overworked and underpaid. That’s why I’m sure you have the chops to help this family.
The Core Small Family Business Conflict
Ron runs a family-owned shoe factory. The company has been in business for over 80 years, and what started out as a great small business idea is now a large corporation. It was started by Ron’s grandfather Jacob. Jacob passed the business down to his three sons, and now that the sons are getting on in age, they are getting ready to pass the baton to their own kids.
As it happens, more than 10 family members work in the company now. As you can guess, some of them work much harder than others. As the company was growing and making more cash than they knew what to do with, nobody seemed to mind.
But now, the business is suffering because of the recession. It’s tough for everyone. Ron is the CEO of the factory but makes the same amount as his cousin Charlie. Charlie rarely comes to work, and to be frank, everyone is better off when Charlie stays home.
To make matters worse, Ron told me that he’s got three more cousins who behave just like Charlie, and the company just can’t support that kind of dead weight anymore.
Ron feels trapped. Even though he’s the CEO, he doesn’t have the authority to fire any family member – only the owners can do that and they must do so by unanimous vote. Ron understands that none of his uncles would agree to fire their own children, so he’s frustrated.
He’s also frightened.
He understands that unless the company gets back on track, cuts waste and aggressively moves in the right direction, their days are numbered. This is a real shame because the company employs over 200 people and without the factory, they’d have nowhere else to work.
What should Ron do to resolve this family business conflict?
Have you ever faced a family business conflict like this? Can you see a small business strategy that might save this factory?
Neal@Wealth Pilgrim says
These are all excellent comments.
Andy, I think this is probably the smartest move because I don’t have faith the owners will “own up” to their kids being slobs.
Sammy, you are right too…I think Ron needs to do this and maybe is a bit afraid to do so.
Financial Samurai says
I think Ron should have an open conversation with the slackers and use the current economic environment as an excuse for everybody to shape up or ship out.
Downturns are a blessing for many people in mgmt b/c it allows them to place blame for downsizing on exogenous factors, rather than b/c of their own opinions.
Back in the UK I have saw this happen several times and in reality there is probably only one option that will work. The owners need to sell the company and split the proceeds between the family.
Because of the emotional investment all the individuals have in the firm rational discussion is not going to work.
Sell now or get swallowed up in legal fees and bitter arguments.