Dear Son, You’re Fired

Dealing with the non-performing family member

Here’s a scenario that has played out in many a small business: For seven years after taking his first-born son into the business, the founder watched for signs that the kid really was a chip off the old block. He wasn’t. Assuming that he would take over no matter what, he put little effort into the job and dismissed all criticism. Finally, the father promoted his No.2 son, who had worked diligently, over the older brother.

That wasn’t the end of the problem, of course. The passed-over son is furious and isn’t speaking to his brother or his father. Other employees are forced to tiptoe around, generally doing everything they can to avoid the older son. So far, the situation hasn’t harmed results at the company, a 50-employee manufacturing firm. But unless some resolution is reached, it will, predicts Jane Zalman, a consultant with Zalman Family Business Solutions in New York, who is working with the family.

Zalman empathizes with the father. “It’s very hard to tell our siblings or children they’re not doing a very good job,” she says. “But it’s even harder to fire them.”

But ultimately, the non-performing son has to shape up or Dad has to get him out of the picture. The younger son is now doing the work of two and other senior employees will grow increasingly resentful as they watch No. 1 collect a fat salary for doing nothing. Those who can do so will may leave. Meantime, productivity will likely suffer, decision-making will be stalled and the company could make strategic mistakes.

In these situations, the business owner is torn, of course. Can he do right by the business and keep his family intact? “You still have to sit down with him on Thanksgiving,” says Zalman. But Zalman and other small-business experts say there are steps you can take to make this difficult situation easier to get through:

Insist on traditional performance measurement systems. Business owners make things worse for themselves and their companies when family members (or any employee) is not given a specific job description and regular performance reviews. This puts the feedback on a professional basis. It also helps to add a 360-degree review system, so input comes from peers, customers and subordinates, too When possible, have the family member report to a non-family employee. (Note: If your company does not have formal job descriptions and regular performance evaluations, goals and measurement systems, etc., a lazy son is the least of your problems!)

Confront the person directly—through someone else. Lots of times, families do everything they can to avoid dealing with the problem. Again, you can get around this by making sure the individual reports to a non-family member. You may have to change the reporting structure before you can deal with the problem. If the problem child/relative must be a direct report, consider hiring a coach who specializes in family businesses to provide impartial input.

But don’t expect a quick fix. Only in movies does that helpful heart-to-heart yield instant results. Chances are, you will have to commit to a series of discussions. Ira Bryck, director of the University of Massachusetts Family Business Center in Hadley, Mass., is working with three owners—two siblings and a cousin—of a 20-employee retail firm. Two told him that the third, the eldest, is “doing work that could be performed by a high school student,” he says. But they were too intimidated to confront him. After working with Bryck, they broached the touchy subject and began discussing what each individual’s role should be. They have a long way to go, says Bryck. But, he adds: “At least they’re now talking about who’s helping and who’s hurting the company.”

Find a better slot. Could be, the person is simply in the wrong job. Thomas Davidow, head of Thomas D. Davidow & Associates, a family business consultancy in Brookline, Mass., recalls a five-employee real estate firm, in which the founder’s son floundered for a year-and-a-half as a salesman. Finally, he had the guts to admit he wasn’t happy. He moved to marketing—where he’s become a whiz.

Send the rookie to a farm team. Before bringing a young relative into the business, let him or her make their mistakes and learn about the world of work in somebody else’s shop. Use your connections to find the kid an entry-level spot in a similar or related business. “The chance of people saying yes is high, especially if they know you’ll do the same thing for them,” says Davidow.

Examine the kind of mentoring you’ve provided. In some cases, the individual may just need a little more training. “Some people feel their kids should have the skills, just because it’s their son or daughter,” says Vince Vecchiarelli, president of Hank’s Auto Body West, a third-generation family-owned business in Wheat Ridge, Col., who also does consulting for family-owned businesses. When he joined the company in 1983, his father almost immediately put him in charge of starting a new office, but with little direction or supervision. The business started to grow—so much so, in fact, that Vecchiarelli, himself, feared he wasn’t up to the job. On his suggestion, they ended up hiring a seasoned CPA to act as his right-hand man and tutor. “We could focus on what my father couldn’t teach me,” he says.

Make sure the person really is screwing up. Before you get ready to confront the problem child, make sure that you’re not the problem. Often, successful business founders have unrealistic expectations. “For some people, no one will be good enough,” says Davidow. Bryck tells the story of a founder and son, who stepped out of day-to-day operations of their family business—and have done nothing but criticize the performance of another son, now the president, ever since. “He’s actually doing fine,” says Bryck. His solution: Bryck is working with all three to come up with specific objectives for the president and ways to measure his performance. This will force the outsiders to be specific and constructive. Until now, he says, they have only been “second guessing him.”