Role Confusion in Family Businesses
In most family owned businesses – whether Christian or not – there is usually an enmeshment of roles for family members who work in the business. They confuse the four roles that anyone can play in a corporation:
Shareholder
Board of Directors Member
Corporate Officer
Employee
It's not uncommon for individual family members to hold all four of these roles and combine the distinct authorities of each role into a single jurisdiction while fulfilling their day-to-day activities. For example, a son who is employed as the shop manager and is a part-owner of the family-owned business routinely asks the Controller for financial reports on the business's financial position. This type of thing goes on all the time in family-owned businesses because the individuals who own the business see their ownership as a reason to do pretty much whatever they want to do within the organization and get involved in areas of the company that they like to be involved in – regardless of their actual title or job description. What these family members don't realize is that when they usurp the authority given to their employees, they incrementally emasculate those employees whose decisions are questioned or, even worse, changed by the family member. In addition, they:
Create situations in which the chain of command is questioned and blurred
Create "shadow" leadership roles for themselves, causing the real leaders to "look over their shoulder" when decisions are made
Cause some employees to get two approvals (when only one is needed)—one from their manager and the other from the owner. Should conflicts arise between the owner and the manager as to the approval, the employee may be left to figure out which one will win and where to place their loyalties
Core processes that rely on cross-functional cooperation can grind to a halt when the owner swoops in, asks many questions, and then lets the process continue, causing anger and confusion among employees. Some will "check out" and see how long they can last before needing to find a new employer.
Create conflict within the business's ownership structure, which may be exacerbated by the dysfunctionality of the family system.
During the day, family members who own businesses need to stay in their swim lane, performing the duties assigned to them within the authority of their positions. They should not step outside their role during the day and take on other duties, roles, responsibilities, or decisions. Doing so rarely leads to positive outcomes. In Ecclesiastes 3, Solomon writes this:
1 There is a time for everything,
and a season for every activity under the heavens:
2 a time to be born and a time to die,
a time to plant and a time to uproot,
3 a time to kill and a time to heal,
a time to tear down and a time to build,
4 a time to weep and a time to laugh,
a time to mourn and a time to dance,
5 a time to scatter stones and a time to gather them,
a time to embrace and a time to refrain from embracing,
6 a time to search and a time to give up,
a time to keep and a time to throw away,
7 a time to tear and a time to mend,
a time to be silent and a time to speak,
8 a time to love and a time to hate,
a time for war and a time for peace
When we apply this Scripture to family-owned businesses, I think it's pretty clear that for those who both work in and own the business, there is a time to fulfill different roles, and they need to be clear about these roles. The shareholder role is fulfilled at a Shareholder meeting, where shareholders elect a Board of Directors. There are other actions shareholders can take, but electing the Board of Directors is a core role that they fulfill. Family-owned businesses should have a functioning Board of Directors comprised of both family and non-family members. The Board of Directors' members' roles are fulfilled at Board of Directors meetings. This role focuses on oversight, strategy, risk mitigation, good governance, compliance, culture, and so forth. One of the most critical roles fulfilled at Board meetings is selecting and holding accountable the leader of your business, who is usually the CEO. This individual need not be a family member; if s/he is not, the need for the family members who do work in the business to stay within their roles and decision-making authority is exponentially greater. Owners who work in their businesses but are not the leaders need to respect the leader and not undermine their authority. A corporate officer is vested with specific legal powers and responsibilities on behalf of the corporation. Often, the family members take on these roles as well. Still, if they hire an "outsider" as the CEO or CFO, they will need to respect and support those individuals they have employed as corporate officers. Finally, most family members who own a business also work in the business as employees. During the day, the family members need to throttle themselves ("limit" is a good word too) to stay within their assigned roles and authorities. They should not reserve to themselves the right to be involved in any part of the business they choose. Doing so creates confusion as to reporting structures and lines of authority. Overall, even though one person can fulfill all four roles in a corporation, they should understand that they should not combine these roles while working in the business. Doing so does not add value and does not help them grow and further their own business success.