There are advantages to nepotism and there are disadvantages. The good kind of nepotism takes advantage of relationships with respected employees and colleagues to help find and hire employees with similar traits. Good nepotism has worked successfully for many family businesses and can foster an environment where employees feel that the employer really cares about them.
Nepotism is the practice of showing favoritism toward one’s family members or friends in economic or employment terms, for example, granting jobs to friends and relatives, without regard to merit. Such practices can and do have damaging effects on businesses. They can erode the support of other employees, reduce the quality and creativity of management and diminish the importance of competence and high-level performance.
In many smaller family-owned businesses, nepotism is viewed in positive terms, often because it is a cheap source of labor, and is considered a synonym for “succession.” This rationale is a mistake. Competence must be the criteria for employment, followed by years of consistent, high level performance that can lead to succession.
Nepotism is neither good nor bad, in and of itself. It only takes on a positive or negative charge in the context of how one has raised one’s children. I believe that the task of being a parent is simply this, “To raise responsible adults who have high self esteem and can function independently in this world.“
This process involves instilling those values that will lead to competent employees — honesty, integrity, dependability, respect for others, being industrious and doing one’s best in every endeavor.
Failure to teach these principles opens the door to children feeling entitled — believing that they are the privileged and should be given everything. This deficiency becomes a ripe incubator for problems to emerge when the child works in the family business. Children who come to the business with an attitude of entitlement will think they are exempt from the rules that apply to “ordinary people.“ They often don’t understand that they must earn their place in the company through hard work and consistently-demonstrated competence. A seemingly small thing like coming to work on time is an example.
Experience […]
A family business advisory board can make a family business stronger, increase shareholder value and better position the company to capture the opportunities that are available in the marketplace. An advisory board is made up of outsiders who are experienced business leaders who can cause business owners to examine possibilities they might not otherwise consider.
Business advisory boards create a forum in which active family business owners, in concert with advisors, impact the strategic issues facing the company. An advisory board can make the family business stronger, increase shareholder value and better position the company to capture the opportunities that are available in the market place.
During the Family Firm Institute's (FFI)25th Annual Conference in Boston, MA, David Bork was invited by Professor Claudio Muller to speak to his class in Santiago, Chile. With 100 people in attendance, Bork presented on several of the fundamental principles of Family business, including family business education, as well as topics covered in his book The Little Red Book of Family Business.
Anyone serving a role in a family enterprise needs wise elders to provide family business advice, guidance and wisdom. Elders play an important role in family business. Modern-day elders serve the same function as elders in ancient times. An elder's wisdom lives on in the countless people whose lives he or she influenced.
Family business transition is something that all family businesses will endure at some point. When the founder or leader of a family business passes, survivors must have adequate information so they can make wise decisions about the business. Information should be compiled and customized so the family is fully prepared for the unexpected.
Having a family business plan in place is very important. Even though it is a difficult task, families must prepare for the challenge of dealing with the death of a family member who is a key to the family business. The death of a founder or key executive in a family business is a very difficult situation, but a family business must prepare for such a situation.
Family business policies should include periodic and scheduled performance evaluations. A performance evaluation presents an opportunity to discuss quality of contribution, work habits, professional growth, demeanor and attitude within the business and with customers. Family members set the standard for the company and their behavior must be a leading example for all employees.
Family business compensation is something that should be addressed within a family business's employment policies. Family members must understand that they will be paid fairly, at fair market rate, for the position they hold. This avoids a family member from obtaining an inflated view of their contribution to the family business.
