Balancing the Family and its Business: Checklist Before Hiring a Family Business Consultant

Balancing the Family and its Business:
Checklist Before Hiring a Family Business Consultant

Business Journal
by Jill R. Lock
Simon Master & Sidlow, P.A.

Before a family business owner hires a consultant for the firm, she must take into account many qualities that a consultant should possess.To fully understand the family business, the consultant needs to grasp the family’s relationships and aspirations. Knowledge of both organizational behavior and family systems is crucial.The consultant should have professional training in their area of expertise.Ethical marketing should be the foundation of the approach.In addition, the consultant and the organization must reflect a commitment to family issues.This commitment is reflected with the resources available from the organization.

How does the family business owner know when it’s time to seek outside advice?Here is a list of some signals of when it’s time to get help externally:

  • Lots of secrets and secret alliances among family members;
  • Tension or hostility in the business environment;
  • Owner needs to put out lots of fires;
  • The owner’s spouse being frequently brought in to be the peacekeeper;
  • Lack of communication among family business members and/or key non-family members;
  • Uneasy feeling about the future of the business;
  • Employee dissatisfaction (this may manifest itself in excessive employee turnover or absenteeism);
  • Excessive overlap of personal matters into the business;
  • Emotional outbursts in the workplace;
  • Owner unaware of what other key employees are doing that greatly impacts business;
  1. Too many informal lengthy meetings with no agenda or purpose. These adverse situations sometimes occur in an unstable work environment.The owner or key managers should become aware of these signals and act to create a more positive environment. One way to help create a more positive work environment is to hire an outside consultant.For many business owners this will be the first time they have hired such a person.How does one hire a consultant?First, the consultant needs to establish credibility.The consultant should meet all the possible clients including dad, mom, active kids and spouses, inactive kids and spouses and non-family key employees along with existing advisors.Everyone needs to be involved in the hiring process since the consultant’s role is to develop a common solution that benefits both the family and the business. The consultant should not be an advocate of one person’s ideas but rather a consensus builder for family and key non-family employees.The consultant should make certain the company is the client.To evaluate the consultant, the following criteria can be used:
    1. Master’s degree or higher in arecognized professional field relating to either business organizations or the treatment of individuals or families;
    2. Membership in good standing in a national or state organizational association that licenses or sets standards in that field;
    3. Proven track record working with family businesses;
    4. Minimum of 10 years professional experience in the field;
    5. Certification (if appropriate) in the field;
    6. Demonstrated mastery of literature on family businesses.

    References should be checked. Make sure the consultant has worked with firms in your size range.They must be able to effectively relate to older and younger generations and be able to command respect from both. Consulting fees range from hourly rates to per diems.Consultants won’t be cheap.However, a consultant’s fee may only be a fraction of what a business could lose in a forced buy-out, bankruptcy or poor estate plan.Consultants that serve family businesses must accept where the family is in its business cycle and help integrate possible solutions into its own unique personal needs and dynamics. These consultants are valuable to family businesses and help direct the business into a more cohesive unit.