Five Things FamBiz Can Learn from Fortune 500’s
People who work in family businesses often relate interesting stories about how things are done in their companies.
These tales can be difficult for some outsiders to understand and believe sometimes.
The most intriguing part is usually the fact that so many of these family companies are very successful, despite some of the non-traditional ways they operate.
Today I want to outline five ways that family businesses can improve the way they do things, by learning from bigger companies, like those found in the Fortune 500.
Succession At ALL Levels
Large corporations usually put a priority on having a great bench of people in every department. They also typically have regular movement via promotions to keep everyone and the company advancing.
Most family businesses don’t put much priority on this, and loyalty and stability are often the focus for employees.
Owners of family businesses could make this more of a priority by starting at the top and insisting that other departments below them follow suit.
“Human resources” is actually a great term that tends to get lost. Seeing “humans” as a “resource” is key.
Formality Is Your Friend
Many family businesses operate very informally, with few “procedures”, and many tasks that remain centralized in the heads of one or two key people.
Family businesses are often limited by how well the leaders can delegate and teach others to do many tasks.
Delegating would enable them to work ON their business, instead of working IN their business.
There are plenty of books on empowering employees, time management, and learning to delegate.
It behooves family business leaders to learn to formalize things so the business can grow beyond their own personal abilities.
Large corporations typically have many leaders, whose operations are guided by leadership groups and teams.
Many family businesses are led by one person, or a very small group of people who call all of the shots.
Understanding that the growth of any company will be limited to its leadership abilities is the first step.
Then they need to learn that growing their leadership team takes lots of time and needs to become a priority.
If you are starting to see a theme in these five things, good for you, it’s not an accident.
Executing On Strategy
Every Fortune 500 company has a corporate strategy, and their focus is to then execute on that strategy.
Many family businesses do not take the time to make and formalize the long-term plans that go into a true company strategy.
When family businesses begin to do the things noted above, the result is the ability to have strategic planning meetings, with strong leaders from every department, who can then work together to outline the best strategy for the company to follow.
Once they have a strategy, they can then focus on executing it. If they haven’t made the effort to come up with and agree on a strategy, their chances of success will be limited.
Even if most of the employees are good at executing their jobs, if those tasks are not part of a coherent strategy, many opportunities will be lost.
Best Person for Each Key Position
Family businesses often have people in positions for which they are really not well suited. These are often family members who are there because they have the right last name.
This is so much easier said than done, but qualified people are necessary for any business to function well.
There are of course several issues at play in these cases. One of them is the salary that the person is being paid for sub-optimal performance.
But the bigger problem is the performance itself if there could be a better, more qualified person in the role.
Sometimes a lateral move is the answer, so the family member can still be paid, but the key role is actually filled by a qualified person.
Take It Or Leave I
I’m sure that some people in family businesses will read this and think that my ideas are not worth the effort to pursue.
I am NOT saying that every family business MUST do these things to be successful. That is certainly NOT my feeling.
For those trying to create a long lasting business that they can pass on to future generations of their family, well, these ideas are merely the first few logical steps.