Family run businesses. Is nepotism a strength or weakness for a modern business?

Businesses thrive on individuality, determination & dedication.

Whether you are a sole trader, family run generational business, medium trading entity or corporate giant; the one thing they all have in common is people.

Without dedicated & hardworking people at the helm, any sense of individuality can be lost. With ethical consumers seeking more transparency from businesses, consumers & clients have an expectation that they are allowed to get to know the people behind the businesses they support.

Therefore, what happens when you have a couple at the helm? A romantically involved couple? One of the great strengths of working with a partner is the public perception of the relationship. Many couples have thrived due to the nature of their personal relationship & the dedication their clients & customers can see in their business ethic.

One aspect of working alongside a partner or spouse, is that there might inevitably be a need to expand beyond the two of you & take on additional staff.

When the need for taking on additional staff does arise, there are a lot of considerations a partner/spousal couple will need to consider prior to employing another person. Will they bring the same business ethos as you? Do you both feel you can get along with that person? & what value could they add to either of your strengths?

These are serious considerations for any partner/spousal couple to make & are not decisions to be taken lightly or without consideration from both parties.

An additional consideration for couples who run businesses is negative nepotism & how this could affect the working relationships amongst other staff.

In days gone by, the notion of a child, more likely a son, taking over the family business from the patriarch was a large expectation & the notion of a family run business, built confidence in their customers/clients.

There are some exceptional family businesses which are still run by families & with nearly 9 out of 10 privately run businesses being run by families; there is still clearly a need for this business model as it continues to thrive. A couple of examples of successful family run businesses which were started by couples are:

Specsavers

Launched in 1984, Specsavers is a proud family owned business built by husband and wife team, Doug and Mary Perkins. Starting out with just one store on the channel island of Guernsey, Specsavers now has more than 1300 stores across the UK, Europe and as far afield as New Zealand. (1)

Mr & Mrs Smith – curating, reviewing, and isolating the world’s best boutique hotels and seductive getaways.

UK-based co-founders James and Tamara Lohan first came up with their idea for a carefully curated boutique hotel start-up in 2002 after their first international trip as a new couple. Today Mr & Mrs Smith operates from offices in London, New York, Los Angeles, and Singapore and has more than one million members worldwide. (2)

These two successful British businesses are examples of how you can be a successful copreneur & build an empire based on your own endeavours.

What happens if a business incorporates other members of the family? Nepotism can work for many businesses as a family works towards a common goal.

However, how can couples avoid negative nepotism creeping into their success & how could this affect the working relationships of the companies’ staff?

Working for a couple is an interesting concept in itself. Who is the boss? Who does an employee approach for a wage increase or to raise an issue? What can make the dynamic even more complex is when other members of the family are infiltrated throughout the business. There is always the inevitable consideration that they will be treated differently, have better pay & more perks.

Speaking from personal experience & having worked for a family run business some 20 years ago, it was not a positive experience. With the patriarch at the helm, his best friend running the factory & his step-daughter running the office; I felt the affects of negative nepotism every day. The staff turnover in the factory was exceedingly high & the step-daughter would actively flout her excessive spending to all the office members, while also berating her employer, in this case her step-father. It put me in a very uncomfortable position as an employee & after 3 very short months, it was not a place I wished to continue working so I left.

Another example of negative nepotism is the very public appointments of Ivanka Trump (Donald Trump’s Daughter) & his son-in-law Jared Kushner during his Presidential campaign. ‘Trump named them to senior White House posts involving implementation of policy — jobs for which neither is qualified because they have little to no experience in the world of politics or diplomacy.’ (3)

Therefore, successful copreneur’s have many considerations to fathom when running successful businesses & although the temptation to try & run them alone is overwhelming; when you need to expand, you need to employ more staff.

Yet, the choices made by copreneur’s about their staff are crucial for the continued success & therefore nepotism can only truly function if the family member has all of the essential attributes needed to succeed, above & beyond an external candidate. Employing someone out of family loyalty, is not always the best strategy.

Written by Katy-Jane Mason on behalf of Virtually Smart Ltd.