Mama loved you best
Dysfunctional Family - Functional Business
June 2005

Most people would love to own a family-run restaurant. The thought of being your own boss and working with loved ones is very appealing ...in the beginning. Every family has a patterned way of interacting; patterns that are often inappropriate for work. Over time, these inappropriate patterns turn into conflict which in turn, because they can involve deeper family issues, can spiral out of control. Despite all the baggage, a functional family business can happen with a little foresight, honesty and, as always, a plan. Here are a few issues family restaurants typically face:

ROLE CONFUSION
Authority can be a common problem for a family business. The answer to the questions " Who is in charge?" needs to be clear and can be a serious issue if one family member has final authority over another. Additionally, if family members do not have an opportunity to learn and develop as employees, their morale and job satisfaction can suffer. Without a clear definition of responsibilities and career paths, tension arises, boundaries ore overstepped, and leadership is compromised.

Solution - A clear cut division of roles - and a corresponding set of rules - means fewer organizational problems and a better understanding of who does what. It will also help eliminate double standards and create consistent management practices within your restaurant. Similarly, family members can feel required to join the business and are unhappy with their roles. This can cause internal problems within the family and business. All family members should be given the opportunity to exit the business without looking like a failure or disappointing other family members.

STRATEGY
Because many family-run restaurants are often handed down, there is sometimes a status quo attitude regarding direction. Lack of foresight and planning is particularly dangerous within the highly competitive and trend-driven restaurant industry. One part of the overall strategy is planning for succession. Often, the decision is put off because of a lack of confidence in certain family members. The fall-out, however, from waffling or denial is frustrated co-workers, depleted moral and, therefore, increased turnover.

Solution - Develop a strategic plan that highlights your concept and how you are going to manage and grow the business. Make sure all family members have an opportunity to provide input and are "on-board" with your branding strategy. Tensions over a transition strategy can be avoided when it includes input from family members who have a vested interest in the decision. Restaurants can be a valuable source of income, pride and wealth creation and the wrong successor can jeopardize their future. Acknowledging the validity of those fears also helps to allay them.

COMPENSATION
Money is always an emotionally-charged issue but in family businesses that charge can launch a space shuttle. In our society, a person's worth is often perceived on balance with his or her wallet. In families - where love and respect is supposedly the common denominator - weighting someone's value to the operation via salary differentials can, and often does, cause jealousies to flare. Fairness is not the issue within family companies; it's the perception of fairness, or lack of, that becomes paramount.

Solution - Create a clear, fair compensation plan that is understood by all family members as well as career and development paths with corresponding compensation adjustments. Compensation that is based on objective, goal-driven, criteria is a direct reflection of personal ambition and competencies instead of imagined, hidden agendas.

Business is business, even when it involves family. Laying down terms, strategy and expectations for family members, helps diffuse any festering or future emotional issues. Once things are clarified, everyone can get back to work and have fun creating a family restaurant where everyone shares and enjoys its success.

Jeffrey S. Davis is chairman and founder of Mage - a management consulting company for entrepreneurs, family companies and emerging businesses. Davis can be reached at jdavis@mageusa.com.