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Market Insights Workforce insights Top 3 common challenges faced by HR professionals in family businesses
Top 3 common challenges faced by HR professionals in family businesses

Top 3 common challenges faced by HR professionals in family businesses

Every organization brings with it an entirely different set of challenges that need to be overcome. In a family run organization, a HR professional can expect the complications to be multiplied two fold as many more factors need to be taken into account.

Every organization brings with it an entirely different set of challenges that need to be overcome. In a family run organization, a HR professional can expect the complications to be multiplied two fold as many more factors need to be taken into account.

Here, we look at the top 3 common family business problems faced by HR experts and tips on how to manage this complicated family relationships in the workplace.


1) Excessive conservatism

A typical characteristic of any family run business would be the presence of  dominant founding member or member(s) who maintain an iron grip on the business. Employees and other family members within the organization tend to look to this person for leadership and guidance due to their seniority within both the family unit and the organization as a whole.

While such figures do bring about much needed business insights and experiences to the table, they also tend to be stubborn and resistant to change. This situation can complicate matters for a HR professional looking to bring about changes within the organization.

For example, senior members of a family run business may be reluctant to embrace any changes brought on by the HR department as they feel that all aspects of the organization should be controlled solely by themselves. As a result, any attempts to make changes within the organization would be met with indifference or even outright hostility thus making it impossible for any changes to be made.

In this situation, both the senior management of the organization along with the HR department need to cooperate in order to ensure that change is enacted. Small steps can be taken by inviting the business owners to sit down to a short, sharp session where suggestions are made and discussed. This has the advantage of allowing the senior to feel relevant while allowing HR to enact changes.


2) Family ties

Arguments and disagreements are all to be expected in any workplace. However, in a family-run organization with many different relatives working together, one can expect the dynamics to be significantly more complicated.

While the HR department can act as a mediator to resolve any workplace related disagreements, arguments among family members in the workplace are an entirely different matter fraught with various pitfalls.

This is because, the line between both professional and personal lives have been blurred resulting in a rather difficult situation for all parties. Family members may feel that their familiarity with each other allow them to act in an otherwise non-acceptable manner in the workplace.

For example, the owner of a family-run trading business has no qualms shouting and using abusive language on his two sons working with him, reasoning that he is merely "guiding" them in the right direction. Any efforts by the HR department to curb such behavior has been rebuffed as this is deemed to be a "family matter" and the HR department should not be involved.

The long-term consequences of such behavior will be the eventual departure of either son from the business or an extremely hostile/toxic work environment which will lead to a higher turnover of staff.

Hence, we can see why HR professionals need to work closely with business owners and other internal stakeholders in order to establish boundaries which will need to be adhered to by all parties. Along with this, the HR department must adopt a zero-tolerance policy for unprofessional behavior among all employees regardless of relationship.


3) Transparency

Nepotism and allegations of its practice are a constant problem for any HR professional working in a family run-business. When left unchecked, nepotism can and will make it very difficult for family-run businesses to recruit talented staff.

While family members can be a great source of reliable, like-minded talent, this can result in accusations of nepotism by other employees within the organization. While nepotism may not actually be practiced within the organization, any perceived nepotistic behavior will lead to non-family related employees becoming disillusioned and even embittered with the organization, eventually leading to higher staff turnover or toxicity within the organization.

Thus, this is where the HR department steps in by implementing various initiatives to ensure transparency within the organization.

Firstly, the entire recruitment, evaluation and remuneration process should be reviewed and overseen by the HR department to ensure transparency. One way of doing this is by implementing anti-fraternization policies which prohibits an employee to be directly/indirectly under the supervision of a relative. This prevents any family-related employees from receiving any form of favourable treatment. Next, only family members with proven track records and the ability to contribute to the organization will be appraised positively so as to prevent any accusations of nepotism.

Secondly, the HR department should have an open door policy which allows for employees to air any grievances that they may have anonymously. This encourages employees to be open about any challenges that they may have and fosters a sense of trust and openness within the organization.

HR management in a family-run business can be a tricky affair, however with the right knowledge and approach, any problem can be overcome. Thus, we have prepared 3 simple tips to help you learn more about how HR professionals can overcome the challenges that they may face when working in a family-run business.


Tips for HR professionals in family businesses

1. Dealing with family politics

Family members may feel threatened by changes or initiatives implemented by the HR department.

Look towards:

  • Taking baby steps – introduce new policies gradually to minimize disruptions.

  • Organizing sit-down sessions where family members and employees are encouraged to provide feedback.


2. Family ties

Working with family can be a tricky affair fraught with complications.

This is why you should:

  • Laydown a code of conduct for all employees irregardless of relationship.

  • Adopt a zero-tolerance policy for unprofessional conduct.

  • Ensure that employees keep clear of family politics.


3. A transparent workplace

Transparency is especially important when in a family-run business to avoid any complications.

A good practice would be to:

  • Take steps to ensure transparency is maintained throughout the recruitment and remuneration process.

  • Introduce “anti-fraternization” policies.

  • Implement an open door policy – encourage feedback and open discourse.


4. Clear communications

Ensuring clear lines of communication between the HR dept and the business owners are crucial for success.

As a HR professional, you should:

  • Be very clear on what your expectations for the business are.

  • Work closely with senior management to ensure that the goals of the HR dept and business owners are aligned.

This article is either written or edited by JobsDB HK. If you would like to publish it on other website or publication, please contact us by email: [email protected]. JobsDB reserves the right to take legal action against any person that infringes the copyright.

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