Help for handing over a family business
Whether a child is groomed to take over the family business or mistakenly pushed into it, problems often arise when family and authority mix.
NEW YORK (CNNMoney.com) -- It's not something that most family-run businesses want to think about, but selecting an heir apparent can be even trickier than launching the company.
Family-owned businesses have a strong foundation in emotion, according to Joel Getzler, vice chairman of Getzler Henrich, a turnaround and restructuring company, and that can make it nearly impossible to make impartial decisions about the future of the firm without allowing deep-seated emotions to creep in.
"Being in an emotional relationship and a business relationship puts a different, more difficult kind of strain on relationships," said Getzler, who inherited his consulting firm from his father.
Difficult-to-solve personality issues are almost inevitable in family companies, and without an exceptionally strong patriarch or matriarch leading the family business, problems can mushroom.
Despite whether a favored daughter was groomed for the business or a son was mistakenly pushed into a position of authority, a parent might not have the ability to select an appropriate heir.
"Once the patriarch or matriarch retires or dies, many businesses become a free-for-all - despite carefully laid plans," Getzler said.
To that end, Getzler offers some tips to help business owners make rational decisions about their successors. These strategies can also help owners make other tough calls when family relationships are at stake.
Set up an advisory board. For starters, Getzler recommends gathering a group of people you trust to help make decisions on matters such as succession, compensation and division of labor once the business has been handed over.
"(An advisory board) sounds like a fancy name for something relatively simple, he said. "Get people you respect to act as a sounding board."
"Family businesses need to follow the lead of a more professional company and hire outside help that can guide them through business decisions and how to deal with personnel issues," he added.
Employ a family business counselor. In addition to an advisory board, many family businesses could benefit from seeing an outsider who can help them put their personal and business lives in perspective, Getzler said.
Even your accountant can serve as an advisor to the business to help mitigate issues as they arise.
Someone you are familiar with, even if they aren't entirely neutral, "is better than nothing," he said.
Manage egos and salary demands. If one sibling in the family business is generating a significant amount of sales and another is performing blue-collar tasks - and they are paid the same - those "worth more" could feel resentful, Getzler said. Or, as is sometimes the case, a spouse could vocalize those feelings on behalf of their loved one.
"In cases like this, you have to ask yourself what the business's goal is," said Getzler. "Is it to keep the business together, or to keep the family and the business together?" The answer to that question often dictates the next step.
The answer might be to split the business in two pieces and give each sibling a piece.
Stop the feeding frenzy. Often when a business is passed on, the number of family members who own a stake in it grows. And in many cases, family members then feel freer to take money out of the business - sometimes to the point where there isn't enough to support everyone involved.
As the family gets bigger, and there are more mouths to feed, this issue can really explode, Getzler warned.
"Everyone gets along generally when there is a lot of money to go around. The fights start when someone feels they are working hard and not making enough," Getzler said.
In the end, he insisted, "there's nothing magical," to navigating through difficult family business issues. "It's about getting people to focus on the end result."
Are you an entrepreneur who started your own company and who now has a parent (or two) working for you? For a future article in Fortune, we'd like to hear from you! Please e-mail and tell us about your situation - what kind of company you have, how your mom or dad came to be your employee, and how we can contact you for more information (phone or e-mail) during business hours.