Accountability in the Family Business

Back in June, in Five Things FamBiz Can Learn from Fortune 500’s, I noted a few ways Family Businesses could benefit from emulating large corporations.

After it went out to subscribers, I got an email from an old friend, suggesting a 6^th thing I could’ve added: Accountability.

So I explained to “Gary” that my lists always stop at 5 (much to my wife’s consternation) and maybe I could tackle accountability in a future post.

And here we are…

Noticeable In Its Absence

Gary doesn’t come from a business family himself, but he did marry into one, so he’s familiar with some of the dynamics involved.

His email to me included this sentence:

“After placing individuals in the right “seat” for them to succeed, you must hold them accountable for both the execution of the strategy and corresponding results.”

This made me wonder if some of Gary’s in-laws were perhaps not being held sufficiently accountable for their execution and results.

Accountability is something that’s much easier to notice when it isn’t there, and often especially so by outsiders whose workplaces are much more formal than many family businesses.

General Accountability… with Exceptions (!)

Of course, there are some cases where lack of accountability causes more problems than others.

You may be inclined to think that as long as there is some accountability in a business, then that’s better than none at all.

Well, that would make perfect sense in many cases, but maybe not in some family businesses.

If you’ve ever worked for a company where everyone is held to account, except those who have the same last name as the boss, then you know what I mean.

Formality is your Friend

One of the bad raps that family businesses often get is that they are not run as professionally as they should be, and that’s often true.

I like to think that that it has more to do with the size of the company than whether it’s family-owned and operated.

A strong correlation between firm size and formality makes more sense to me than one centred on the level of family involvement.

Minimal Standards for Success

Gary mentioned strategy and results, so let’s look at those.

In the original post, I mentioned “Executing on Strategy” as my fourth point.

Now IF the business has a clearly understood strategy, AND those charged with its execution have the resources available to do their jobs effectively, then it makes perfect sense to hold the people accountable for the results.

Unfortunately, in too many family business cases, people can easily argue that they’ve been set up for failure because of a lack of clarity and/or resources.

Give Me an Another Chance

Nobody’s perfect and everyone deserves a second chance, right?  And family businesses are supposed to have more of a long-term orientation, so let’s not be too quick to judge, right?

The point where a lack of accountability really rears its ugly head is when it goes on and on, year after year, and nothing changes.

It’s never easy to have to come down hard on relatives, but at some point, it can become a matter of survival for the business.

Direct Reports

One of the simplest ways to minimize this issue is to try to make sure that nobody reports directly to a parent or a sibling.

In smaller companies, this can be almost impossible, but wherever it can be done, this should be a no-brainer.

Problems at the Top

One place that you might not expect there to be a problem with accountability is at the very top of family business, especially when the founder is still running the show.

But the fact that one person feels that they’re accountable only to themselves will probably catch up to just about every person at the top.

Most founders are reluctant to set up a board of directors for their business, because they prefer to run things as they see fit, by the seat of their pants, and never need to answer to anyone else.

Who can blame them?

The A-Ha Solution

At some point, when (if?) they realize that they are in fact mortal, they might wake up to the fact that once they’re gone, a board will be just what the doctor ordered for the company to succeed.

So why not set up the board now, to instill

accountability for the next generation, later?