Power Structures in a Family Business
May 12th 2008 01:40
When taking over a family business it is essential to observe and understand the existing power structure. Understanding your employee’s source of power is a very important thing to do before jumping in and “managing” them.
This specifically applies when:
• You have been brought up in the family business: Because you may need take a step back and reassess the intricate workings of your family
• You have been suddenly brought into the family business: Because you are only familiar with the family side of the situation
• You are an outsider to the family: Because you have very little idea of how things are actually being accomplished
Getting acquainted with the family business’s power structure will help you understand who actually makes decisions and why. This will also allow you to see how things are getting done, and who is contributing or hindering productivity.
So what happens when a family member works underneath of a non-family member? Some very complicated situations can occur!
Key Note: Power is influence potential, or how much sway a person holds over others with in their social sphere.
There are two main sources that people draw from in order to influence other people in any social situation: Position Power and Personal Power.
Position Power
Position Power is why workers show up on time, why sales associates sometimes try too hard, and why the stores you visit are clean and tidy. Simply put, if the worker did not perform properly, someone would fire him. That someone is the holder of the Position Power.
This type of power is built into the very framework of the business. There could be a board of directors that influences the CEO, then the CEO influences regional managers, who then in turn influence the district managers, who then influence the store managers, and the store managers are then responsible for instilling the corporate culture into each employee.
Key Note: Position Power is formal authority that is reinforced by the entire organization. This could mean issuing punishments or rewards.
You may have already felt the effects of this type of power in a not so obvious manner. Have you ever tried to reach the owner or manager of a company, and in order to do so been at the mercies of a receptionist or secretary? That individual has specific Position Power to be a gatekeeper to the manager.
Likewise someone might have an impressive title, such as Chief Inventory Management Specialist Officer (AKA stockroom guy), at a company but have very little influence potential.
Personal Power
This is a not so obvious mechanism that has dramatic effects in the family business. For instance, the wife of the owner walks into the store or office and the workers all act as if she was the owner himself. She may have no formal authority within the hierarchy of the business, but because of her connection to the owner, she has very real power.
Key Note: Personal Power is dynamic, and difficult to quantify. It takes careful and objective consideration to see the value and magnitude of such influence potential.
Typically there is no place in a company that explicitly records information about who has what type of ability to influence the company. It may be a good idea to record that information in the regular employee record keeping. An easy way to get a quick feeling about “who does what” would be to observe what happens when a given individual goes on vacation.
• What mistakes were made?
• How much did revenue drop or increase?
• What task went undone if any?
• Who had to pick up the slack and by how much?
You may find that you had an expert of some sort working for you. For instance, a computer guru that makes sure all things pertaining to the proper functioning of the company’s computers takes place. You may have an individual that knows all the intricacies of the companies operations and is a walking wiki of information about your company, and is always the go-to guy for solving problems. You may have a manager that is superbly adept at leading employees.
The key is to recognize and then properly reward these key employees to keep them around. After all, their power, if properly utilized, is your company’s power.
Opening Chess Possition
This specifically applies when:
• You have been brought up in the family business: Because you may need take a step back and reassess the intricate workings of your family
• You have been suddenly brought into the family business: Because you are only familiar with the family side of the situation
• You are an outsider to the family: Because you have very little idea of how things are actually being accomplished
Getting acquainted with the family business’s power structure will help you understand who actually makes decisions and why. This will also allow you to see how things are getting done, and who is contributing or hindering productivity.
So what happens when a family member works underneath of a non-family member? Some very complicated situations can occur!
Key Note: Power is influence potential, or how much sway a person holds over others with in their social sphere.
There are two main sources that people draw from in order to influence other people in any social situation: Position Power and Personal Power.
Glass Chess Set in Action
Position Power is why workers show up on time, why sales associates sometimes try too hard, and why the stores you visit are clean and tidy. Simply put, if the worker did not perform properly, someone would fire him. That someone is the holder of the Position Power.
This type of power is built into the very framework of the business. There could be a board of directors that influences the CEO, then the CEO influences regional managers, who then in turn influence the district managers, who then influence the store managers, and the store managers are then responsible for instilling the corporate culture into each employee.
Key Note: Position Power is formal authority that is reinforced by the entire organization. This could mean issuing punishments or rewards.
You may have already felt the effects of this type of power in a not so obvious manner. Have you ever tried to reach the owner or manager of a company, and in order to do so been at the mercies of a receptionist or secretary? That individual has specific Position Power to be a gatekeeper to the manager.
Likewise someone might have an impressive title, such as Chief Inventory Management Specialist Officer (AKA stockroom guy), at a company but have very little influence potential.
Personal Power
This is a not so obvious mechanism that has dramatic effects in the family business. For instance, the wife of the owner walks into the store or office and the workers all act as if she was the owner himself. She may have no formal authority within the hierarchy of the business, but because of her connection to the owner, she has very real power.
Key Note: Personal Power is dynamic, and difficult to quantify. It takes careful and objective consideration to see the value and magnitude of such influence potential.
Typically there is no place in a company that explicitly records information about who has what type of ability to influence the company. It may be a good idea to record that information in the regular employee record keeping. An easy way to get a quick feeling about “who does what” would be to observe what happens when a given individual goes on vacation.
• What mistakes were made?
• How much did revenue drop or increase?
• What task went undone if any?
• Who had to pick up the slack and by how much?
You may find that you had an expert of some sort working for you. For instance, a computer guru that makes sure all things pertaining to the proper functioning of the company’s computers takes place. You may have an individual that knows all the intricacies of the companies operations and is a walking wiki of information about your company, and is always the go-to guy for solving problems. You may have a manager that is superbly adept at leading employees.
Checkmate
The key is to recognize and then properly reward these key employees to keep them around. After all, their power, if properly utilized, is your company’s power.
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