Nobody likes jargon. Difficult to understand language which confuses more than clarifies. But for some words, there’s no better alternative than a long word to describe the situation. It’s like the German word ‘schadenfreude’. Long word? Yes. Can a shorter word substitute it? No. (Schadenfreude describes the pleasure derived by someone from another person’s misfortune.)
So, what’s the equal to schadenfreude in a Family Business? A word for which there isn’t any appropriate shorter alternative? The word is Professionalisation. It has a whopping 19 letters! And it’s a word which is super-relevant to Family Businesses. So, what’s this long word all about? This article won’t get into a detailed explanation to define the word. Instead, we’ll look at some signs that a family business isn’t professionalised.
Sign 1: Only the leader knows the strategy
A successful strategy doesn’t just stay in the leader’s head. To realise a strategy, it needs to propagate across an organisation. Employees need to understand the ‘why’ of their work. They need to understand how their work fits with the big picture of the company vision and strategy. Low clarity on company strategy amongst employees leads to frustration across levels. The leader is frustrated since they expect more and the employees don’t deliver. The employees are frustrated since they don’t know what they are ‘expected to deliver’. They don’t know what a ‘better job’ means. And what aspirational state the ‘better job’ is expected to deliver.
Sign 2: The leader is indispensable
All founders have a significant emotional investment in their business. Being too attached means that every activity requires leader involvement. And nobody, in the leader’s view, can do as good a job as them. They are indispensable. Yet, indispensability limits growth. Significantly!
Sure, moving on the path to dispensability can be disconcerting for any leader. Giving up control is difficult. Yet, being dispensable has a lot of advantages. The obvious one is the ability to scale a business at a rapid clip. The not so obvious one is that it lifts a load off the leaders’ shoulders. Rather than being a lone warrior for many decisions, there is a team which works together with the leader. The leader doesn’t have to be around for every single decision. That gives the leader less tension and more time to enjoy life!
Sign 3: Employees are irreplaceable
Long serving employees are common in family businesses. Especially in 1st generation businesses. These are employees who often have been around since company start. They know exactly how the business runs and how to deal with difficult situations. Such employees are invaluable. Yet, just as it is for the leader, no employee should be indispensable. That could lead to sudden business shocks. Say, for instance, you have an employee performing his role to expectations. His job consists of routine tasks which seem simple. He resigns after 10 years of service. You replace him. The new employee is unable to perform the same ‘simple’. The business is person-driven rather than process-driven.
Sign 4: Employees have manyand/or hazy roles
Some employees are the go-to people in an organisation. Problem in sales? That person will solve it. Problem in IT? That person will solve it. These are typically long-serving employees who have earned their trust. While it’s great to have them, it’s impacts business. Everything has to wait till this employee is available to solve the issue. This works when a business is small. But larger businesses have more complex challenges.
Equally, employees shouldn’t have hazy roles. Employees can’t perform with unclear roles. Often, a leader feels that roles are clear. Sadly, in most cases, employees disagree. For a leader one key concern in clear job roles is that employee count will increase. With a clear job role, employees would push back on doing those extra pieces of work. That’s partly true. Yet, its more efficient having 1 employee handling 1 discrete task. Instead of multiple employee handling multiple overlapping tasks.
At what scale should you start professionalising?
Dunbar’s number suggests that 150 is the connection limit we can make before communication breakdown. Normally associated with groups in society, the same principles apply in business. Till 150 employees, leaders and employees might effectively cooperate. Even without a strong professional environment. More than that, weird stuff starts happening. There need to be more restrictive rules, policies and processes beyond this to maintain a cohesive group.
That doesn’t mean family businesses should start worrying about professionalisation at Employee No. 149. To be professionalised when that magic number is reached, you need to start earlier. If you are a high growth company or are expecting high growth in the near term, a good number is the 30-50 employee mark. Do it in a phased manner, so that when you hit 150, you are substantially professionalised.
How do you professionalise?
So, if the signs that professionalisation is required are there, how do you go about it? There are three elements critical to professionalisation.
A strategic plan
A Strategic Plan is the basic building block for professionalisation. It makes it clearer as to which systems and processes need to be tweaked. A clear strategic plan is key to attracting the right professionals. And specialist professionals are key to professionalising your organisation
Streamlined processes
Broken and non-existent processes lead to sudden fires. When a new employee joins, when a key customer has an issue, when a critical component does not get procured on time. In other words, unnecessary stress for you and your employees! Streamlined business process result in a repeatable quality outcomes.
Organisation structure
This is critical! Every professional organisation needs to have an organisation structure. The role of each function needs clarity. There need to be clear reporting relationships. And each employee should be clear on their roles and responsibilities. And how those roles and responsibilities correspond to their progress in the organisation. An organisation structure depends on multiple elements. The company’s strategic plan is the most critical element to base it on.
Closing thoughts
Professionalising is a key inflection point for a family business. Done well, it can put the business on the path to ever greater success. Done badly, and it can flatline the organisations growth. Or thrust it into the downward spiral towards ultimate failure. The most important person in professionalisation is the leader. If they are fully committed to professionalisation, the employees will know. And it will be that much easier for change to happen.
Before closing, a word of caution. The level of passion in family businesses is unparalleled. It’s rare to see similar levels of passion in other businesses. While professionalising, family businesses should be careful to not lose that unique character. To much ‘professionalisation’ can make a company yet another faceless, heartless entity. So do professionalise, but retain the unique culture of your organisation.
