Every family business owner thinks about succession. They may even invite next generation family members into the business with that as their stated goal. But few plan for the transition, mostly because they equate the term succession with retirement or death. Instead, I urge senior business owners to think of succession as their ongoing business development goal. The critical question is: When senior management leaves, will your company have the resources and capabilities to compete in the future?

Senior generation leaders often are the resource pool for their companies and the basis for its competitiveness. But if they leave the company without ensuring that those resources and capabilities exist in other places and other people, the company might lose its competitive advantage. Even senior managers who consider themselves important to the business do not always identify themselves as a resource or a capability.

"Familiness" is a term I coined to describe where family member's influence is critical to the resource pool of the company.  We assess this familiness factor as an "f+" or "f-".  For instance, a family business leader could be an f+ in industry knowledge, experience and networks, but could be f- in communication.

To ensure the future of the business, we tell CEOs that they need to develop a familiness succession plan. Such a plan has three parts:  picking, building and transitioning resources and capabilities. Picking is bringing replacement resources in from the outside, such as hiring or partnering with other safety specialists. Building refers to enhancing resources you already have, such as putting intellectual property into written books and materials. And transitioning is moving resources to other places, such as passing on the network contacts and industry knowledge to the next generation and having them become part of the brand for the future.

Taking a familiness perspective means changing your idea of succession from an end-of-life conversation or a dry set of documents into a lifetime of business leadership and development.

A recent phone call from a former student reminded me how difficult compensation conversations are for family members who work together.  His mother, the President, asked him to take the head sales position in the company, but offered to pay him half of what the previous person was making.  She said he was too young to make that much money; he said he was doing the same job and if he wasn't qualified she should hire someone else.

It is not at all surprising to me that compensation issues are complex and confusing to family members in family businesses.  When a person's professional success, financial well being, and familial health are all intertwined, compensation decisions are not as clear cut as some advisors try to make them.   

What is surprising to me, however, is how intimidating compensation conversations are for family members and how family leaders go to great lengths to avoid them.  I know that compensation is a "loaded" issue, but that is the point - it is loaded with opportunity for family members to have important conversations.  Compensation conversations can unpack and explore many of the professional and relational subjects critical to the long-run health of their family and business.  Avoiding these issues only allows them to fester until they are even harder to talk about or surface unexpectedly in the midst of conflict.   

Here is a quick summary of a few important "don'ts" in relation to compensation:  

• Don't avoid compensation conversations - step toward them as important business and family conversation about the future. 
• Don't take a parental approach to compensation conversations - hear the views and opinions of family members even if they're different from yours. 
• Don't make compensation just a functional conversation - understand that it represents much more than how much a position is worth.
• Don't pretend compensation issues are uncomplicated - know that there are a lot of different views and practices that should be openly discussed. 
• Don't blur the lines between employer and parent - acknowledge both roles and be willing to talk about the different perspectives.
• Don't play games when it comes to money - ensure that there is transparency and accountability on all compensation and financial issues.

In-laws seem to always be an issue in any family, but even more so in the complicated system of the business family.  Yet despite the connotation, it's not all bad. A highly qualified in-law can be a very productive and loyal employee.  Some families believe it would be a loss to not hire a highly qualified and dedicated in-law, simply because they happen to be married to a family member.  However, the decision to hire in-laws can dramatically impact the organization and the family.  Therefore, the decision must be made within the context of a discussion at the ownership level which defines the "rules of the game" for in-law involvement.  In broader terms, a family ownership group should define how the family and the business will interact. 

Once in-law hiring policy is set, the boundaries for an in-law employee should be very clear:  "you will be treated like any other employee."   In addition, he / she must be very clear on the hierarchy within the organization, and be willing to respect that hierarchy.   This requires a deliberate conversation prior to hiring the in-law.

Employee or not, in-laws also have an important and influential roll as stakeholders in the family business system.  Their influence (positive or negative) comes via their relationship with the family member and potential family business future (their children). Given this roll, they should be managed by the family business system leader and informed of issues which become to pertinent to the in-laws immediate family. 

The bottom line is: Be intentional with in-law involvement policy and give in-laws what they deserve: information and a voice.  In doing so you will build trust, and hopefully, ensure that their influence on the system is positive.

A younger family member recently spoke to me about his uncle's leadership of the family company. He struggled to describe a difficult person while trying not to seem disloyal, using such phrases as "a little touchy," "hard to approach," "you have to be careful," and "tough personality." At one point I asked him if he would describe his uncle as a "safe person." He laughed and said: "No one would feel that way about my uncle."   

When we coach CEOs of family businesses, there is an important question that we ask: "Are you a safe person?" We want them to reflect on their leadership style and how it affects other employees, productivity, and, ultimately, their legacy.

Consider the top 10 signs of an unsafe leader. Such a person:

• Bases all decisions on position and power.
• Reacts with anger and aggression.
• Looks for someone else to blame.
• Personalizes failure and puts people down.
• Never asks others for their views or advice.
• Thinks he/she is always right.
• Makes everything black or white.
• Ignores suggestions and input.
• Is erratic and unpredictable.
• Is driven by self-interest.

Few people feel good knowing that their employees or family members consider them difficult. But it's worse: Difficult people aren't just hard to be around. They don't lead healthy and effective businesses or families. 

It is fascinating to see how the family is avoided or embraced in companies and brands. Some companies marginalize family influence because it is seen by some as less professional. But "the Family Factor" is being exploited in many major marketing campaigns these days as well. SC Johnson even has "a family company" as their tagline. And there is serious power behind their claim that "Five generations of the Johnson family have kept us focused on constantly earning our reputation and your trust."

Many family controlled companies have an extensive section on their website which detail the history of the family and the company. They point to the values of the family as shaping the company culture, which in turn drives customer satisfaction and performance. For a few examples look at: Walgreens, Wrigley,and Marriott.

When I visited the section on the Marriott site I eventually stumbled across an interesting blog entry from Bill Marriott, Chairman and CEO of Marriott International. He writes blogs rather often to give updates on their various brands, community involvement or environmental initiatives. But the latest blog is a nostalgic piece on his own experience growing up and spending time with his family at a particular resort of theirs. It's a very interesting example of family influencing the brand and you can find it here.