Employees and the Family Firm

  Employees and family firm

First there are the older employees, who in many cases have been with the company since its founding. The founder typically treats them like family. Their relationship with the founder is very close, and they are deeply loyal to him. They expect their loyalty to be rewarded with job security, profit sharing or an ownership stake. Moreover, such employees will not necessarily show the same loyalty to the founder’s successor. They will compare the two owners’ management style, respect for tradition, values, etc. They could be invaluable to the successor, but the founder has not given them much independence.
Younger employees tend to be motivated by professionalism, growth and success, and we usually note significant turnover in this group. The size of the company, along with the presence of the family and the resulting sense of insecurity, limit their prospects, which ultimately drives them to leave. The result is a significant loss of competitive skills. In the second generation, it is common for these younger employees to question the abilities of family members. They consider the family members to have low credibility due to the way in which they rose to their senior positions. As a result, employees lose motivation, which can be damaging to the company. 
Succession is a complex matter for any company, and an especially perilous process for a family company. The company’s characteristics, and those of the people who make it up, mean that succession planning is often delayed or even avoided entirely. In such circumstances, clear, well-planned and properly implemented process helps ensure the company’s prosperity after the founder is gone.

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