Credibility for the Family Business
Family Business Forum News
by Jim Klaes
“Business is simple,” Tom Monroy told students and others in McNeill Auditorium at UTEP’s College of Business this past June.”We over-think and make it harder than it has to be,” said the Ph.D. from Baldwin-Wallace College.
“I myself learned everything I needed to know from my grandmother, who started our family business,” be said.”It was not until 1943,” he pointed out, “that Harvard Business School taught the first course…ever…in general business management.”
Monroy named six disciplines a company leader must have to establish credibility: discovering personal strengths and weaknesses, appreciating those who do the work and supply the goods, affirming shared values, developing capacity (of the individuals and, therefore, the company), serving a common purpose, and sustaining hope that the shared goals will be achieved.
The issue in family business, Monroy said, is to separate ownership from management.Regarding pay for family members he said, “What do others in other companies make for doing the same job?How do others within the company compare in terms of duties and pay?This gives you a balance.”
For family members who work in the family business, he suggested paying fair wages for the job they do.For others who don’t work in the family business, he suggested gifting money for ownership participation (at board meetings) even if it means more taxes.
Regarding the family business itself, Monroy suggested that company leadership focus on “how we do things (systems) in order to measure our own impact,” instead of focusing on “results (bottom line, etc.) because we’ll never know where we stand.”
He also suggested having a Board of “Advisors” (not Directors) who are paid to attend a short (1-4 hours) meeting to tackle one or possibly two issues only.If there is conflict in the meeting, good!”That means you have a variety of strong opinions and you can only benefit from that,” Monroy stated.His ideal board would include the business owner, a supplier of vendor, a customer, a family business owner who is NOT in the business, and one of the following: the company’s attorney, accountant, or financial planner.
“Don’t be afraid to let employees know the company’s financials,” Monroy said.”They usually have great misunderstandings about how much the company and its owners make.”
In conclusion, Monroy left the audience one guideline that younger members in a family business should ask of their parents each day: What can I do, today, to learn more about how to make this business better?”It will increase communications between the generations,” Monroy said, ” and itwill get each generation what it wants: the youngsters will get input and the elders will see a growth in experience.”