This week, I’ll share another extract from our *complimentary booklet,
“The 9 Most Common Mistakes Family (& Non-Family)Businesses Make That Prevent Them From Achieving Their Full Potential… And How YOU Can Avoid Making Them“
Mistake #4: No Clearly Defined Authority for Decision Making
“I have been working with my father since I graduated 15 years ago, Adam thought to himself. After 15 years my father still don’t trust me, I bring in 15 Million sales last year but I cannot even approve a sales training for my team without his authorization.
I have no alternative but to resign. This business I was working with have multiple partners with different titles but all issuing conflicting instructions to the same staff, a lot of my colleagues are resigning soon”
In many family businesses, the organization chart does not necessarily reflect actual authority. For instance, in some Chinese family businesses, decision making remains with the paternal founder, some even long after retirement. No decisions big or small are made without first consulting him. While some do it out of respect, fear or because the patriarch expects it, the rest do it out of wanting to avoid responsibilities, or they are simply more comfortable just doing their jobs without rocking their own rice bowls.
(For non-family businesses, a similar situation sometimes occur when partners in the business contradict each other, or, they contradict the managers they hire, creating confusion and frustration. Staff morale suffer leading to low productivity and resignations.
Both need the same solution – clearly defined roles and authority for decision making.)
Sometimes, members of the family carry important titles while having little actual authority to execute their roles effectively. In others, the titles do not reflect what they actually do, with overlapping and unclear reporting structure. Each family member can and often does issue conflicting instructions to the same employee, accountability is unclear when mistakes are made, resulting in unhappy and unproductive working environment for employees caught in between.
There are also instances where non-title carrying family members are perceived as key influencers. For example, the son of the founder might be a fresh graduate working in an entry level position. However, others perceive him, rightly or wrongly, as having the founder’s ears and attempt to use him as a go-between for information between them and his father. This throws the business structure into chaos.
Clarify your organization structure and follow it. Set clear position agreements and decision making authority for each person involved in the business, starting with the owner(s). Remove all instances of real and perceived ‘invisible authorities’ from your organization. Make sure every task and decision has an owner who will be accountable for the execution and results. Do not allow family members to reprimand an employee reporting to another family member. By removing confusion from the structure and clarifying roles, you create a much more positive atmosphere for growth.
Have a profitable week ahead!
The Familybiz Works Team.
ps: If you own a business in Malaysia, register NOW for our FREE Business Optimization Clinic, valued at RM750. We guarantee you will get at least 1-2 ideas you can implement immediately, even if you do not engage our services.
Only 10 sessions every month for qualified business owners. Claim yours today!
*If you are a family business, request for your copy of complimentary booklet when you register for your Business Optimization Clinic, only successful registrants will receive a copy.