The first month of the year is soon over and yet again I keep facing several & repeated issues with family businesses. I find myself reflecting many times on the common problems I see in different family businesses, even if in different contexts. As a person who just loves joining the dots, I have come up with the following deadly sins I find in many family businesses:-

100% engulfed in Operations: All energy is solely focused on keeping the clock ticking and in growing the business. No one ever takes a step back to see if the business is heading in the right direction or if we have the right type and quantity of resources to efficiently handle the growth we are working so hard to achieve. The business grows and now employs tens or hundreds of people, but the directors and leadership is 100% focused on operative things which in the greater picture are rather small or trivial matters.

Scattered Data: Data is not well organised and scattered all over the place. This makes it difficult to have meaningful insights derived from such data. This only means that decisions are not always (or rarely) based on data and are many times taken on the assumption that what happened in the past will repeat itself in the future. Sometimes this leads to no decision being taken, as the leading decision maker finds it hard to take a decision if this has to be based on conflicting opinions within his or her team, rather than actual and objective data.

Weak governance: Decisions are many times taken by a single person or a very restricted circle of persons, who do not always have the full view of the situation. The necessary system of checks of balance that a solid system of corporate governance brings with it, is many times completely missing, with not even a well functioning board of directors. This means that there is hardly anyone in the business that is dedicating any time on strategic planning and in seeing how things are developing out there and what could impact the family business.

Short Termism: Many times decisions are taken with a very short mindset, meaning that a decision to sort an immediate problem is going to create much more problems down the line. This is experienced all around when it comes to remuneration, performance expectations and much more.

No Performance Measures: Many family businesses have a weak culture in relation to performance. Various leading persons have different ideas and measures of what success looks for them. There are no performance measures or KPIs upon which to hold key managers or leaders to account. Many family business owners grumble that their leading staff are not doing enough but do not know how to actually put their finger on what performance should be improved. This is normally due to the fact that family businesses have not documented their internal processes, which are constantly reviewed to see how to make them more efficient, plus investing in systems & technology to achieve better efficiencies.

Bad Promotions: Many times persons are promoted in leadership or managerial positions based on technical skills, rather than leadership & communication skills which are so important in any managerial position. This leads to a myriad of micromanagers at all levels and very few strategists. Added to this is the complete lack of training to help such persons make the transition to become real managers.

Messed Organisational Structure. Many times the organisational structure has evolved in a continuous patching up exercise over time. Roles have morphed and the actual role and job description of persons becomes murky, with even murkier lines of reporting. This many times gives rise to misunderstandings, false expectations and unhealthy reliance on certain persons.

Weak Culture: There is a weak culture in the business that promotes discipline, attainment of goals and overall loyalty to the family business and its goals. Such a culture needs first of all to rest on many of the points mentioned above (governance, strategic targets, performance measures etc…). Things get worse when family related persons who fall short on many fronts are still promoted to leading positions, thus undermining the building of the needed culture.

Lack of Policies throughout: Lack of Policies both at the top with regards family employment, dividend payments and conflict resolution and also policies in relation to employees and the regulation of their behaviours at the place of work.

I could go on endlessly.

I am interested to know which of the above deadly sins effect your family business. Click HERE to fill this very short survey.

Many family business labour under the idea that some of their best employees decide to leave their family business just because they get a better wage somewhere else. I am tired of seeing valuable persons leaving family businesses because they have many or all of the points mentioned above missing, that they end up feeling tired operating in a messy and chaotic situation.

Obviously as markets get more regulated, competition in every market gets fiercer, banks sharpen their pencils and labour markets get tighter, having issues with many of the above, makes it evermore difficult for family businesses, that do not have all their cards in order, to be successful in the long run.

Many family business owners focus on the cost of getting an outside consultant like myself to help them get their house in order, without giving due weight to the cost (many times hidden cost) and risk of operating with many of the above matters in disorder or completely missing.