Business

Gary Miller: When should you fire your kid from the family business?


John Marce had dreamed that Alex, his son, would take over the family business someday. John was the second generation of business ownership since his father had founded the company 47 years earlier — Marce Distribution Co.

It had a large presence throughout the Midwest. Clients included wholesalers, retailers, Amazon and other online channels generating over $30 million a year in revenues and pre-tax earnings of $550,000 per year. The company had an excellent reputation, low employee turnover and a “family” culture environment. Each year’s growth goals were met for the past 10 years.

Mark T. OslerGary Miller

When Alex graduated from college, John put him in a managerial role almost immediately. Alex had a strong personality and had always demonstrated leadership skills while growing up. Alex’s first assignment was managing the warehouse logistics and the supply chain of the firm.

Things started off fine, but soon it became clear to other managers that Alex had little affinity for the business. He appeared uninterested in filling and shipping orders accurately and on time. Vendor relationships began to deteriorate. Employees soon became discouraged and resented Alex’s presence.

Alex treated warehouse employees with disrespect — displaying a condescending attitude toward them. As a result, productivity and morale declined. John begin to realize that he had a bigger problem as longtime trusted employees were handing in their resignations.

As time went on, revenues began to decline, and customer complaints began to increase. Soon John received calls from customers complaining that they had not received their shipments on time or that their orders were improperly packaged, or short of the merchandize they had ordered.

John investigated the situation. The employees unloaded on him about all of the problems that his son was creating. They told John that his son was abrasive, abusive, arrogant and downright mean to them.

John now realized that the rise in employee resignations and customer complaints were because of his son’s personality and lack of management experience. However, John ignored the red flags and created a new department. He assigned Alex to develop and launch new product lines. But, one initiative after another failed. The sales department complained bitterly that Alex refused to listen to their feedback and advice. They told John they could not sell the new products as designed. Customers would not buy them.

As time went on, revenues and profits continued to fall. Disappointed, John reluctantly realized that Alex was not a good fit and would not be capable of leading the company in the future. If he kept Alex on, he could very well damage the company beyond repair. There was simply no place for him in the company.

Questions looming in John’s mind were: “Can I really fire my only son?” John kept asking himself, “What will this do to the family? How will it affect Alex’s and my relationship?

The fact is there is no easy way to fire your children. According to Harvard Business Review, “The consequences of firing your children are life long … no matter how well it is done.”

So, here are …read more

Source:: The Denver Post – Business

      

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