The Hardest Turnaround Decision for Family-Business Owners—and How to Get it Right
Any company that is facing a turning point—like a rapidly evolving marketplace, new competitors/disrupters, or a market shift—has to reevaluate how it is doing business. And that includes taking a hard look at your team.
For family-owned businesses, this can be anxiety provoking, because it requires you to evaluate whether your current firm leaders can get a turnaround done—and in many cases, these are people who have been with you for years, some since you founded (or another family-member founded) the firm. They have stayed loyal through good times and bad, they have helped build the culture, and you now consider them family. But what if they are not the right people to take your company forward?
There is a way through this challenge that can maintain the relationships you care about while allowing your business to change and grow.
Define Roles: The first step in any successful turnaround—after strategy-setting—is getting the right people into the right roles. Will you require a reorganization to move your company forward? What does the new organizational chart look like? Start with a clean slate and then step back and think about the abilities and aspirations of the people on your team and see where there is a fit.
Define Responsibilities: In some cases, the role stays the same but what you need from the person in that role has changed (e.g., You still need a COO, but you now need a COO who can lead a major technology transformation). Does the current team member have the skills to take on the new challenge? If not, are they prepared to partner with (and are you prepared to invest in) an expert advisor?
Establish Accountability: In family-owned firms where things have been done in the same way for a long time, accountability measures are sometimes lacking. Implementing metrics and performance standards can be jarring and even feel threatening to long-term employees who have always done things their way, but it is essential for getting your company to the next level.
Position the Change as a Legacy-Saving Measure: How you communicate with senior staff about a turnaround effort can make all the difference. Be clear about the challenges the firm is facing, and the necessity of change for the long-term health of the company. Emphasize that these changes will allow future company leaders to carry on the legacy you and your senior team have worked so hard to build.
Give people the opportunity to step up and commit. If you are sensing resistance from a senior team member, position the change in their role and/or responsibilities as an opportunity for them to help the company get to the next level, and acknowledge their concerns. Be clear about what you now expect of them, and let them decide if they are ready to commit to the new direction. They should know that you want them to take part in the turnaround effort, but that you understand if they choose not to. (If they get on board, continue to give candid feedback and support as they learn how to do things in a new way. Hopefully, they will succeed. If not, you will have to take further action.)
For those who decline, give them a graceful exit. By doing everything you can to make it possible for valued employees to stay and grow with the firm, you honor their contributions and loyalty. And by being candid and clear throughout the process and having the hard, honest conversations about what’s possible, you will get to the best outcomes for all involved.
Family firms value loyalty, and this can make them wonderful places to work. When a turnaround is needed, you can still show your commitment to your people while getting your company to the next level. If you are facing such a challenge and need guidance, contact me at jz@zurawgroup.com or 917-604-2790.