5 of the Best Principles for Leaders in the Setting of a Family Business

5 of the Best Principles for Leaders in the Setting of a Family Business

Family businesses may look very similar to more traditional ventures. However, leaders must recognize the special context that occurs when the lines between professional and personal becomes blurred.

Many of the skills that create great leaders in traditional settings are applicable in family businesses. That being said, individuals who do not adjust their approach may face some serious issues.

Family businesses come with a number of benefits, including greater trust and commitment among employees. Perhaps because of these benefits, leaders need to work diligently to maintain a supportive work environment and ensure that everyone has a voice.

Some key tips for excellent leadership in the context of a family business include:


  1. Institute a family constitution for the business.

Everyone needs to feel like they are on equal ground in the workplace. Many businesses create codes of conduct. The family equivalent could be a constitution outlining the standard by which family members will be held accountable.

This sort of document may look very different from a typical company policy. It should point directly to the values that the family wishes to uphold and perhaps even create a frame for governance within the company. All members of the family involved with the company should contribute to the document so that everyone buys into the ideas that it represents.

Just like any government constitution, it should be considered a living document that can be changed over time. The constitution should also articulate some of the more traditional policies, such as processes for evaluating employees and welcoming new individuals to the staff.


business plan


  1. Break free of the confines of emulation.

Family businesses are often dynastic, meaning that children take over the leadership roles once held by their parents. When this happens, many people will begin comparing the new leaders to their parents. Sometimes, children can feel like they need to emulate their parents, but this mindset only ends up hindering progress.

The world changes very quickly, and businesses need to adapt to stay relevant and modern. Children should respect the contributions that their parents have made. They should also not be afraid to create their own vision and establish new policies that lead employees down a different path.

Often, a conversation about expectations when leadership transitions occur can help manage tensions that could otherwise arise when new leaders depart from tradition.


  1. Have everyone consent to a transition plan.

One of the issues that can arise in family businesses is succession planning. A contentious issue even in traditional companies, family connections can make the process even more stressful.

The best way to manage this stress is to create a concrete transition plan that everyone in the family agrees to. That way, no surprises arise down the road. Open communication when it comes to who will take the reins next helps manage expectations.

Importantly, the transition plan needs to outline how emergency situations will be handled; sometimes, decisions need to be made very quickly. Having a clear roadmap when it comes to appointing successors helps this process go smoothly.

Whenever a change to the plan occurs, the whole family should be involved in the conversation. This ensures everyone is on the same page.


  1. Make family members earn their places in the staff.

Even in a family business, individuals need to earn the positions that they hold. Placing someone who has too little experience in a position puts the entire enterprise at risk. It can also create a lot of tension among staff members, whether or not they are family members.

Separating familial relationships from business decisions can prove extremely difficult. However, it is critical that leaders never engage in nepotism. On the other hand, leaders should not behave in ways that discourage family members from moving up the ladder.

Because this balance can prove very difficult to manage, many leaders from successful family companies recommend engaging a third-party counsel or bringing a business coach on board. Both of these options provide an objective perspective when it comes to making the right decisions for the future of the company.


family business


  1. Pay special attention to opportunities for bonding.

Because people are related in a family business, leaders may overlook the need to create opportunities for bonding. However, this can lead to resentment and frustration among family members.

Trust is one of the keys to success in a family business. Leaders should not assume that members of a family will always get along or that they spend a lot of time together outside of the workplace.

The best leaders make time for their employees to spend time with each other. These opportunities make it possible for individuals to show their vulnerability and develop true authenticity in the relationship.

In addition, these events can help any employees who are not part of the family bond with their coworkers and start to develop real connections to them. Ultimately, these efforts will result in a staff that works together effectively and efficiently.