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The ‘untouchables’ – liabilities or assets for the family business

Recently, my 19-year-old daughter came home from university for a visit. Over the weekend we talked about a central concern in her life – 'I need more money'– and a central concern in mine – 'how are you doing in school?' Though she got the predictable answer from me – 'No'– I got a little more than the usual – 'I'm doing OK' – from her.

'My economics lecturer is the worst – it's as if he doesn't care. He's always late, rambles on incoherently and never asks any questions. The exams are the same ones he's been giving for years and you never know when you're going to get your papers back. The whole class is just a waste of time. '

This is bad news. I suggested I call the Dean to see what could be done – she laughed. 'The Dean? He can't do anything, no one can do anything to this guy, he's a tenured professor – he's untouchable'.

Unfortunately, she was right. Universities throughout Europe have long supported a tenured system – a programme that awards lifetime employment to those professors who have met the university's criteria for research,teaching and committee work. And though gaining admission into the 'tenure club'is very difficult,once you're in,you're a member for life.

Certainly most tenured professors do not abuse their untouchable status. In fact, they often work harder and do better work than at any other time in their career. They use their freedom to improve their teaching, expand their research and give back to the community.

Yet, there is a significant minority, like the economics professor, who see being untouchable as a way to retire from the job while still on the job. With the risk of being fired permanently removed, they become permanent dead weight – a drag on the students,the university and the community.

A lifetime guarantee
The formalised process of tenure is unique to university systems, but the outcome of the process – a class of untouchables – is not. In fact, the largest group of people with guaranteed lifetime employment is found not on campuses throughout Europe (and beyond) but in the offices and factories of the world's family businesses.

They are the son of the president and the second cousin of the founder.

They are the brother who's been in the business for 10 months and the best friend who has been there for 35 years.

They are the executive assistant who became the owner's mistress and the accountant who keeps one set of books for the shareholders and another set for the taxman.

They are the ones who bring millions of dollars to the bottom line and the ones who mismanage the same amount.

But no matter who they are or what role they play,all family business untouchables are aware of the same thing – 'I'm safe. And no matter how hard I work, I'm here for as long as I want to be. '

Not a bad position to be in. In fact,how does someone achieve untouchable status? How is someone awarded lifetime employment in a family business? It is certainly not obtained through the competitive,rigorous and logical process used at universities. In family businesses,there tends to be no process – other than an emotional one. Here are the most common emotional reasons for granting lifelong immunity:

- An award for services already rendered. 'She was with me from the very beginning and believed in me when no one else did. I'm not going to get rid of her now just because she isn't keeping up'.
- To take care of or protect someone. 'He just hasn't been able to put all the pieces together. I can't stand to see him suffer anymore. He's my son, we'll take care of him here.'
- To avoid grief. 'Listen, you're right, but I can't fire him – my father would kill me. '
- To keep key relationships running smoothly. 'I know he comes in late and leaves early. And I know he doesn't come close to making his numbers, but James is the only one who can keep Sam away from me. And since I can't get rid of Sam, I'm not getting rid of James. '

The 'good' and the 'not so good'
Just because someone was granted untouchable status it does not necessarily mean that they are not adding value to the family enterprise – they may be invaluable. Like the 'good'untouchables at universities, the 'good'ones in family businesses respect their privilege,treating their status as a gift,not a right. They use their position to enhance the business and improve the lives of the people they work with.

But we are not concerned about the 'good'guys, we are concerned about the group that is not contributing,not pulling their weight or 'working'for only a few select and powerful people and not for the overall enterprise. We are concerned about the people whose permanent presence is an obstacle to the success and harmony of the family business.

We are concerned about people like Richard, Anthony's uncle, and Sarah, the 28-year-old receptionist at Jene's export business.

Anthony, the 45 year-old third generation chief executive of his family's €100 million furniture manufacturing business, explains:

"My Uncle Richard is costing us a fortune. He's been the director of marketing for more than 30 years and for a long period of time he did a fantastic job. He produced cutting edge campaigns, created an excellent brand,and achieved good market penetration throughout Europe. But for the last several years it's been nothing but the same old thing: the same old adverts, the same old look and the same old ideas. "

"Our competitors have a splashy new campaign,advertise extensively on the web and are creating strategic alliances with our best customers. But none of this fazes my Uncle. In fact, the more moves they make, the fewer moves he makes. It's as if he's paralysed. But every time I bring up Uncle Richard to my dad, the conversation is short: 'Listen, Richard is my brother and without him I could never have built this business. If he thinks the best thing to do is to do sit tight then that's what we'll do. He's always backed me and I'll always back him. And who are you and I to say anything about marketing? That's not our area!'"

Jene, the managing director of a €35 million food exporter in Belgium,presents another example, Sarah, the company's receptionist.

"I want to fire Sarah and replace her with someone who at least treats people with common courtesy – let alone someone who would arrive at work on time. Sarah is just plain rude. She behaves as if our clients are a nuisance, an inconvenience,to her daily routine. But my hands are tied. My cousin Alfredo has been dating her ever since his wife left him and he's like a teenager in love. If I rebuke her in even the slightest way,he flies off the handle – 'you don't understand her,you're the one with the problem, not her'. And the closer they become the more hostile and arrogant she becomes towards me. She knows Alfredo is the majority shareholder and at the end of the day what he says, goes. My only hope is that they will marry soon and have a family. "

Being free of the burden of untouchables such as Richard and Sarah would reduce a family's anxiety and that of many others in the business. If there was a way for the family to do it, it would already have been done – or they may have already tried and paid a high price.

The reality is that there will always be certain people who cannot be removed until those who protect them decide they are no longer untouchable. Because there is an emotional link with family there will always be:

- The father who grossly overpays his son for his work in the business.
- The owner who retains his best friend as director of sales,despite his lack of success for the company.
- The brother who keeps paying the salary and benefits of his sister,even though her drinking causes her to miss ten days of work each month.

Although these untouchables are common in family businesses,it does not mean that families should be permanently burdened by their presence -- forever penalised by bad attitudes, poor performance and indifference. A situation can be created where you do not have untouchables just taking up space, a situation can be created that will limit the number of untouchables in the business.

How? By using some of the best ideas of university tenure programmes and creating a tenure programme for your family business.

The business tenure programme
The ideas for a family business tenure programme mimic those in universities with one key exception – at the end of the tenure process a university will grant lifetime employment to those who qualify. This should not be part of a family's programme.

There will always be a handful of untouchables whatever course of action is taken. There certainly should not be any legitimacy given to the process,by formalising it. The other reason for not actually declaring and rewarding lifetime employment is simple. As a a business the purpose is to satisfy customers, produce financial returns and develop dedicated employees. Family businesses are not a retirement home – or a counseling centre. People should be rewarded for doing their job the old fashioned way, ie by salary, stock options and a pension. Period.

Universities generally only have a handful of people like the economics professor referred to earlier because they do not give tenure on the basis of potential. To earn tenure, professors are required to show proven achievement. By the time they reach the final stage in the process most of the bad apples have already been weeded out. From day one the university delivers the message: 'If you want the privilege to work here and the opportunity to keep working here you have to prove that you can meet our expectations. If you meet our expectations you'll be able to stay. If you don't meet our expectations not only will we ask you to leave,but you will want to leave'.

This is the tone that should be taken with both family and non-family entering the business. This is the type of attitude that should be taken with people in the business day in and day out – and the type of position weaved into the culture of the business. If done properly, the only untouchables in the family business will be those that are indisposable. Here are three suggestions on how to proceed.

Hire family members with resumes
Universities demand credentials,eg graduate degrees, post-graduate degrees, fellowships and published articles. Universities do not like to place their reputation, students and capital at risk – if a candidate does not meet the necessary criteria,the university is not going to take a chance.

In the same way, family members should have outside work experience before they join the family firm. Their resume must include an employer who was unconcerned about their last name, a paycheck that reflects their contributions, and intellectual challenges that have pushed them beyond their comfort zone. And for non-family hires? Demand all of this,and more.

Assume nothing and discuss everything
A university lecturer knows the ins and outs of the tenure programme from the start. They know what is expected,when it is expected and who will determine its acceptability.

Before anyone begins working in the family firm, the goals and values of both the family and the business must be identified. These should be discussed prior to the individual's entry into the firm. Here are some important questions to consider.

- What business are we in?
- What do we want this company to look like in five years?
- What values do we prize?
- What are we missing that prevents us from moving to the next level?
- How do our clients perceive us?
- What do we do that attracts and keeps good people?
- What are the roles and responsibilities of the person I'm hiring?
- Who will show him or her the ropes?
- Who will be responsible for acclimatising this person to our culture and emotional climate?
- How will I measure their performance? How often will I give them feedback?
- Who can they turn to if they have a question or problem?

Insist on committee work
Universities pay lecturers to lecture and researchers to research. Those are their jobs and those are their titles,but when universities grant tenure,they look beyond the titles on the doors. They also look for people who contribute to the university's community. But in addition to time spent in teaching and researching, tenure candidates must also spend considerable time on various university committees, such as curriculum, hiring, admissions and outreach. In other words,they have to contribute and sacrifice for the benefit of the whole system.

Most family businesses do not have committees but those potential members of the family business could achieve more than just their jobs – in addition to their roles as salesman, accountant or manager they could also take on the roles of mentor, champion and citizen.

As mentors they can show new people the ropes and collect and preserve the intellectual wisdom of the enterprise.

As champions of the business they can be expected to not only promote the business'products and services but also the values,culture and heritage.

And as citizens of the community where they work,should be encouraged to participate and support activities serving that community – anything from area clean-up days to tutoring under-privileged children. 

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