How to add Merit Selection in a Family Business

I was recently asked:

Our family is in diversified businesses across our state.

We don’t insist that family members (3rd generation) join the businesses, but they always have a place if they choose to.

Unfortunately, this has led to two problems. One, younger family members want to start near the top.  Two, they take us for granted, and use the business to launch their careers outside the business.

We want to solve this problem by putting a merit selection process in place.  How can we add merit selection in a family business? Your advice is appreciated.

New Culture

What you’re proposing is, creating a new culture (or changing the existing one) where merit selection is the new rule.

Let me suggest some steps. Implementing those steps is NOT trivial, so don’t take my brevity the wrong way.

Step 1, get written agreement from the elder family members on the PRINCIPLES to be followed — i.e. merit based selection; roles assigned based on proven ability and the true needs of the business(es); everyone starts at the bottom.

Step 2, empower a group of elders and trusted non-family members to spin up a PROCESS that embodies those Principles. Bake it into your bylaws. (For example, you might allow a family member to prevail in a hiring situation where they are otherwise a tie, but NOT allow them to prevail if they come in 2nd.) Make your Process extremely transparent. Expect family members to over-achieve or leave.

Step 3, put yourselves through it. Seriously. Like, resign your current role and re-apply for it and see if you get it back or not. (Or some comparable show of seriousness and faith in the process.)

Without the first step, you don’t have a compelling WHY driving the change. Without the third step, leaders aren’t ‘walking the talk’ and nobody believes in it.

Step 4, turn the Principles into pithy statements that you hold yourself to, like “everyone starts at the bottom” and “all work is honorable work.” Make sure the Elders go sweep floors and wash toilets once a quarter. Soak the Principles into the Culture.

Let me know if you want more details.

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