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Set healthy rules and boundaries in your family business

Family businesses have a unique set of challenges. Of course, they face many of the same issues as other businesses—lack of systems, management and team performance issues, no shared vision—but add in the social dynamics of family, and those issues can inflate until they burst. That’s why we see so many family owners come to us for business coaching—to guide them in the process of working together to build a successful business when “working together” is a major obstacle. Creating healthy workplace relationships in a family business is entirely possible. All it takes is healthy boundaries and structure.

Guiding principles for healthy family-business boundaries

It goes without saying that certain behaviors are inappropriate for the workplace. I’m not referring to the obvious scope of bad behavior, such as harassment or discrimination. I’m talking about subtler versions of inappropriate behavior: For example, if one of your sales people criticized your approach to leading an all-team meeting. Implicitly, it’s obvious (to most of us) why this type of behavior crosses boundaries. But when dealing with family, the boundaries are much blurrier. Overstepping leads to confusion, hurt feelings, unrealistic expectations, friction, lack of accountability and inconsistent authority dynamics. Here are the seven principles for establishing healthier boundaries within your family business.

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1. Understand that business is an agreement

Business is fundamentally a series of agreements. Of course, there’s the agreement between you and your customers on the exchange of money for goods or services. However, there are also many small internal agreements that ensure the smooth running of your business, such as meeting deadlines and producing the results they're responsible for. Every member of your team—family and friends included—must recognize and commit to their own personal agreements.

2. Put workplace competence before personal connection

Competence is the guiding principle for ensuring that your business agreements are successful, again and again. Of course, business is also about relationships, but relationships aren’t as important as competence. Imagine you own a restaurant and your bartender shows up an hour late because he had an argument with his wife. Does his reason matter to you? Probably not. You may feel compassion for him, but your bartender agreed to show up on time, and you expect him to honor that. Now, suppose that the bartender is your brother. Does that change the situation for you? Professional standards can be difficult to uphold because in personal relationships, competence is not the guiding principle—connection is. To get past this, you must all come together and commit to putting competence first in all business agreements.

3. Hire the most qualified person for the job

In any family business, the fear of nepotism can lurk under the surface. The best way to avoid that is to hire your family member because they're actually qualified for the position. Don't hire them simply because they're your child, niece or nephew. For the good of the company, its employees, yourself and everyone else involved, treat this hire like you would any other. Ask yourself: If he weren't my son, would I still hire him for this job?

4. Own your role on the organization chart

Your organization chart provides every team member with a clearly defined role to play in your business, and defines the precise results that everyone needs to achieve—and this absolutely extends to family members. Make sure they (and everybody else) understand where they belong in the organizational structure and what they're accountable for.

Whether you’re in business with your children, spouse, or other family members, you should each have a specific role (or roles) in the business. Perhaps you’re the CEO or the president. Whatever it is, once you have your role, stick to it and stay within its scope. If you don’t know the scope of your job, make sure you draft Position Agreements for every role. And then, do your job—not that of your spouse or child.

Sometimes this is easier said than done. But for each of you to be effective in your role, you have to be committed to it. Sometimes that means creating rules for how you’ll work with your family members both at the office as well as outside of it. Be open and honest with each other about how hard it is to not interfere with each other’s positions. Create guidelines for how you can give each other feedback, and when and how you’ll check in on crucial decisions. If you can’t be open about the struggle with each other, you’re alone on an island. And that’s not conducive to growing your work together—or your business.

5. Don't cross organizational lines

Line-crossing is when someone other than a direct manager assigns work, disciplines, redirects or manages an employee. Sometimes there are even businesses in which employees have more than one manager. For example, imagine that your son works as a grocery clerk in your organic market and reports to the general manager, who assigns his tasks and schedule. Because you plan to hand the business to your son one day, you want him to have more experience ordering stock. So, you have him shadow your product supplier during some of his assigned hours, taking his attention from his main responsibilities. 

This not only undermines the general manager, but also creates confusion and may mean other important work won’t get done. Each position must be accountable to only one manager. If you’re interested in building a mature business, you must accept that it’s essential to create an organizational chart and follow it—without crossing lines.

6. Set clear work versus life boundaries

Don't discuss business after 6pm. Yes, it's that simple. This may be a serious challenge for you, but it's really important as you separate your family life from your business life to set some strict guidelines. And while you’re at it, speak openly as a family about any other ground rules you feel are needed so everyone can agree about them. Once you’ve worked together to set and commit to those rules, it’ll be much easier to practice good work boundaries, and to move back and forth between work and personal space.

7. Name your role in conversation

If you’re in multiple-role relationships (such as daughter and director of sales), one way to improve healthy work boundaries is to periodically name the role you’re in when you’re speaking to someone to add clarity. For example:

As the CEO, I need to say I’m concerned about what your idea might cost the company, but as your husband, I think it’s just wonderful.

Can I talk with you for a few minutes, co-owner to co-owner?

I know we have equal equity in this business, but right now I need to talk with you as your manager.

I need support from you right now as my manager more than as my mom. I’m overwhelmed. Can you help me get out of it?

Naming your role can be awkward at first, but you quickly get used to it—and it can really help to establish the right framework and context for certain conversations. It’s particularly useful if you foresee how your personal relationship and dynamic might influence the conversation. 

Above all, open and honest communication is key to overcoming struggles in a family business. If you need support to work through some of the common issues of multi-owner businesses, we’d love to work with you. 

Adam Traub

Written by Adam Traub

Adam is our Coaching Delivery Manager. He was a client of EMyth as a General Manager of a manufacturing company and was so blown away by the transformation that happened, he decided to become an EMyth Coach in 2002. He loves helping coaches and clients have more life.

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