What is Professionalisation?
I have to be honest and say that I am not a huge fan of the phrase “professionalising the family business”, for me it could suggest that there is an element of unprofessionalism.
For me the term “professionalising” in the context of family business is more akin to the formalisation of processes and structures within your family business to help create efficiencies needed for the business to continue to be successful.
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This can take a number of forms and over time it may be that there are different aspects to what is covered in this episode that you will face.
Some elements relate to changes in organisational structure, for example introducing a senior management team and / or bringing people in from outside of the family for the first time.
This might involve more formal job descriptions for everyone in the business and one of the most common areas I see in the work that I do is that family members in particular don’t have formal job descriptions.
Recognition needs to be given to the fact that it is not always the case that someones contribution to their family business fits within a specific job description, but documenting what they do could still be a good idea. If nothing else this provides some element of continuity should that person not be able to work for a while.
Another area that is commonly bought into focus when professionalising the family business is the introduction or formalisation of the Board. As you establish a business the requirement for board meetings are perhaps limited, however as it grows this is likely to be an area that will benefit from closer attention.
Professionalising the board within your family business is a part of the evolution of the business. Bringing in external voices to the board (as a Non-Exec Director) can help to diversify opinion around the table. It can be a way of shifting away from ‘group think’ that can be a feature of a family business if the only people around the board room table are family members.
Common Barriers to Professionalisation
Change can be difficult especially if it requires the giving up of control in a business that is part of your identity. This can lead to resistance within the family business when it comes to professionalisation.
Some may see it as a brake on their behaviour and therefore resist putting in place formal structures or processes, however this can create an unnecessary risk within the business. If there is no documentation for any of the processes within the business if that person is unable to work, the business could freeze if that person is unable to work.
Bringing in external people onto your board can be an intimidating prospect, you may feel that you will be ‘caught out’ and that the external person will come in and tell you everything that you have been doing is wrong. This is something that is within your gift to control though, you can be open an honest in your recruitment process and ween out the candidates that you think would not be a good fit.
You can also express your concerns with them and ensure that they possess the right level of skill to be able to introduce new ideas as appropriate without you feeling attacked.
You may also feel that an ‘outsider’ won’t get it (whatever ‘it’ is) and that they won’t fit the culture that you have created. If someone hasn’t worked within a family business before it may seem an alien, but probably welcome, culture when working in a family business for the first time. This is an opportunity for you to educate them in the culture that exists within the business and a way for you to celebrate this.
Taking on the process of documenting everything and ensuring everyone has a proper job description, as an example, can be a lot of work and so with a business to run it may feel easier to put that off until you have more time.
However, if you don’t have clearly defined roles and you start to bring people into senior roles within the business, they may feel stifled in their roles if some of what is expected by them is ‘unofficially’ being done by family members within the business.
If they feel this way they will firstly not be as effective as you want them to be and secondly, they will be unlikely to hang around for too long.
Benefits of Professionalisation
There are a number of benefits to the professionalisation of your family business and this phase can be seen as a positive reflection of the fact that the business has grown to have sufficient complexity to require professionalising.
One of the key benefits is that, although it may take some time initially, you are likely to save time by being able to effectively delegate within the business. If the business has grown to size that means that the founder or founders are unable to perform everything that is needed within the business, bringing in external expertise can free them up to do what they really want to be doing.
Bringing in the external voice can enhance the opportunity that your business affords you, it can elevate it to new levels and be a springboard for future success.
One key benefit is that is helps to position the business well for continuity and if you were ever looking to sell the business, processes and structure are a key part of the due diligence of any potential buyer.
If you aren’t looking to sell and would prefer to pass the business on to future generations, something that will smooth that process is understanding what is being passed on, whilst at the same time identifying any gaps that need to be filled is the documentation of job roles, the processes and systems that can often exist in a founders mind but not on paper.
Progression over Perfection
Your progression towards ‘professionalisation’ is an exciting phase of being in business together. It presents challenges but the benefit is that you can make progress towards your desired outcome without the need to have wide ranging changes within the business all at once.
If you wanted to start with job descriptions and then move on to establishing a board and then bringing in a non-exec, that is within your control and you can progress to it in a way that doesn’t hinder the business or cause too much disruption to the relationships within the business.
If you are looking for support, I can help just drop me an email firstname.lastname@example.org