How are Family Business employees similar or different than the working population as a whole?
According to a recent Gallup survey of 5.4 million working adults, 52% of employees say they are not engaged in their work. They limp to work, toiling without passion. That’s half the workforce! Another 18% describe themselves as “actively disengaged” – disgruntled and spreading bitterness among coworkers. With the exception of recession periods, the majority of employees start each New Year vowing to look for a new job.
McGill University’s Family Business facts reveal some interesting points.
Facts about Family Businesses
• 25% of the family businesses are planning the handover of the enterprise within 5 years.
• 50% of family business’ leaders wish to hand over their company to their children.
• Did you know that 2/3 of enterprises do not have clear criteria as to how to choose a family member who wishes to have a role in the business?
• About 50% of family businesses do not have a succession plan.
• Family businesses face a high turnover rate of employees not part of the family.
• 30% of family businesses survive the transition of leadership to the second generation.
• Market conditions are the main concerns of the family business leaders.
• Attracting qualified staff is a major issue for the future of family businesses. (Source: Enquête sur les entreprises familiales 2007-08, PricewaterhouseCoopers & Source: 10 Facts About The Family Owned Business, Cox Family Enterprise Center)
Denise Rousseau is a University Professor at Carnegie Mellon University, holds H.J. Heinz II Chair in Organizational Behavior and Public Policy. Dr. Rousseau developed the concept of a psychological contract in order to better specify how employers and employees understand the employment relationship. PCT also provides a basis for developing shared understandings in employment. It also addresses how to more effectively change the nature and terms of psychological contracts.
Family members in a family business are often employees. Do they have a unique psychological contract? Family businesses rely on non family members to operate and be successful. Both groups, family members and non family members, have psychological contracts. A contract is agreement having a lawful object entered into voluntarily by two or more parties, each of whom intends to create one or more legal obligation between them.
Successful businesses, family, privately held or public, work to help all understand its mutual obligations that create the best psychological contracts. Seldom are these obligations written, they can change with market conditions. Some key factors include trust, transparency and development, Employee feelings and attitudes are influenced by their treatment at work and their perception of how the company treats them. In addition to family members, family businesses have to deal with many other factors today. Some of these include generational issues, virtual teams, home/mobile working, matrix management; employees connected globally, FMLA, life work balance, life-long learning and forever changing benits, retirement plans.
Family firms need to communicate; trust and transparency need to be developed. Family businesses create an operational culture. These cultures are adaptable.
Trust and transparency are keys that permit, that cause, the psychological contract to adapt and develop successfully.