Dangers of Poor Employee Communication in a Family Business

“We turned her down, and later found out she had approached the union, to stage the union drive, in order to win her job back.”

As family business entrepreneurs, we often tend to manage by hunch, figuring things out as we go along, especially in the earlier startup years. Many of the issues we face as our businesses grow; we plod through, without much advice from outside advisors. Surprisingly, most of the time it works out well. For our family business, this time it didn’t.

We had been in business for about 15 years, and our compensation plan was pretty basic; salary plus a holiday bonus. The bonus was pretty much automatic. One year we decided to revise the bonus portion, realizing that as longer-term employees’ compounded wages increased, it was increasing the bonus portion disproportionately. We decided to cap the bonus for the highest paid managers.

One of our long-term managers became upset with the new bonus program and decided to leave the company.

About six months later we had a group of employees, petition for a union organizing More…

Off the Bench – Family Business and the World Series

Full Disclosure: I’m a Red Sox fan.

Despite this, I couldn’t help but notice the great “family business” story behind the “other” team in this year’s World Series, the St. Louis Cardinals:

  • The Cardinals are a third generation family-controlled business. (the DewItts are majority owners, and there are also a significant number of minority non-family members)
  • It is managed by a father-son team (father majority owner and son is President)
  • No nepotism – Both worked their way through the organization
  • Professionally managed – run like a business, outside non-family minority investors
  • Long-term view – They have achieved a good balance between building a team over time and the impatience of fans wanting to win it now.
  • Financial discipline – with a team payroll of $116 million, they are slightly above average. They passed on re-signing their franchise free agent Albert Pujols, deciding not to “break the bank” but rather keep to their long-term strategy

It must be working, they are consistently finishing in the top of their division, winning the World Series in 2011 and just missing in 2012.

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