All things relative: HR in a family business

For HR professionals looking to further their career, working in a family business might seem a daunting prospect. But as Nick Martindale discovers, it can present the opportunity to gain a broader range of experiences than a corporate career might offer.

HR practitioners usually develop their careers in the relative comfort of larger private- or public-sector organisations where policies and procedures are long-embedded. But imagine being involved in the design and realisation of a new HR function in a smaller business. There may be a need to work around or adapt procedures that may have grown up alongside the business, but if that business is also family owned or family managed, there is also the potential for some tricky personnel politics.

For those coming from a non-family business, there’s likely to be a cultural change, says Jack Neill-Hall, communications manager at the Institute for Family Business (IFB): “Family businesses generally take a much longer-term perspective – much more so than private equity firms or public companies, which often have to report on a quarterly basis and deliver increased shareholder value over two- to three-year periods.”

He gives the example of the bakery Warburtons, which is now in its fourth generation and where the family is still actively involved in the governance of the business: “You see it in their advertising: ‘From our Family to Yours’. You have to understand the value and timescales these firms are looking at.”

Focus on the family culture

Dr Jill Miller is a research adviser at the Chartered Institute for Personnel and Development (CIPD) and specialises in the area of small businesses, a category many family firms fit into. She stresses the need to understand the values of the business and that HR policy – including the recruitment of future staff – must flow from that.

“The first thing is to gain a good understanding of the family values and the vision of the organisation,” she says. “You need to tailor your approach to meet the business needs.”

One example of this is the need to ensure any more formal processes that may have to be introduced – such as middle-management tiers – also reflect the values of the family, to keep alive the feel of the original business, she adds.

Putting in place or developing a more formal structure is likely to be a core part of the remit of any HR professional joining a family firm, particularly if it is the first time that business has sought to create an HR presence (only 20% of owner-managed family businesses and 19% of owner-governed family businesses have an HR strategy, in comparison with 35% of non-family-owned businesses).

This was the case for Dominic Ceraldi, HR manager at Pimlico Plumbers. Here, the challenge was not just to formalise processes, but also to demonstrate to the founder – managing director Charlie Mullins – just what HR could do.

“When I started out working at Pimlico there was no HR function in place and I honestly believe Charlie just saw me as his ‘recruitment bloke’,” Ceraldi says. “I knew it was integral for me to gain his trust by developing an in-depth understanding of the business and sharing his vision of how the company would move forward.”

For Ceraldi, the culture shock was even more pronounced, having moved from what he describes as a “bureaucratic government department”: “It was a really steep learning curve, but it stood me in good stead for my future with the company. I came to a very quick realisation that every decision that I made would have a direct impact on the family business, and that was rather daunting.”

The right person for the right role

Helen Broughton is director of people and standards at accountancy firm Danbro, and one of the family firm’s founders. She has seen at firsthand how people “fill in” certain positions while the business is growing and how this can cause issues further down the line.

“As the company grew, the people who were there at the start grew with it and teams were built underneath them,” she says. “But not everybody is cut out to be a strategic thinker and to set the direction of the company for the next 10 years. Sometimes you have to have difficult conversations about not being the right person strategically.”

This kind of situation could also face an HR professional coming in from outside the organisation, she adds.

Yet working for a family firm can be a good career move, partly as a result of having been through such experiences.

“If you have big corporate experience and then move into a family business, future employers may see it as a positive as you have been at the coalface of a business,” says Sona Sherratt, client director at Ashridge Business School.

She warns though, that much also depends on the nature of the family in question: “Are they consultative or dictatorial; structured or unstructured? Do they have a clear business plan and strategy? Do they delegate or micromanage?”

Family businesses may be be a little less predictable than more corporate environments, but you could quickly gain experiences that might otherwise be harder to come by.

As Miller points out, family businesses offer the opportunity to get involved in all aspects of HR and even wider business issues, which would be unlikely to be the case in larger corporates: “You’ll get the opportunity to be involved in everything because you’re not going to go into a huge HR team. You won’t just be focusing on reward or learning and development; you’ll be very much a generalist. There’s the opportunity to be really innovative.”

Personnel Today Jobs has a selection of job vacancies in small businesses.

Staff handbooks: Example staff handbook structure for small businesses.

There may be trouble ahead…

Any HR professional coming into a family business could find themselves caught up in tension between family members and a wider executive team – containing non-family members – over the wider business strategy, warns Julian Hemming, an employment partner at international law firm Osborne Clarke.

“The executive team will want to drive performance across the business, and that may be challenging to family members who may regard the business as a lifestyle choice to which they are only prepared to devote a restricted amount of time and commitment,” he says.

In some cases, this can result in the executive team working with a leading family member to exit other family members who may not be performing, he says, which can have a knock-on effect if others – such as spouses – then feel their position is untenable.

“The best family businesses that I act for tend to have a strong family leader to whom other family members accept they have to defer, or where the family recognise that the real value is in their shareholding and so it is in their interests to let the management team manage and to properly incentivise them through stock options,” he says.

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