How to Get an ROI From Family Members in the Company

RCS Influencer Danny Kerr says finding clarity in roles within the company can help family businesses gain efficiency. 

Megan Ellsworth: Hello, everyone. My name is Megan Ellsworth here at rooferscoffeeshop.com, and we're going to be talking about family business today as our influencer response with Danny Kerr from Breakthrough Academy. Hi, Danny. 

Danny Kerr: Hey, Megan. 

Megan Ellsworth: So this month's topic is all about family business, and the question is, what is your advice for running and growing a family business? So what advice do you have for the people out there? 

Danny Kerr: Cool. There's many things that we could get into. I will focus on one thing that I see systemic with a lot of the companies we work with, especially when they first come into BTA, which is it's a family business. You've got relationships that transcend just business in the company day to day. 

What I often see is there's a bit of a muddying around roles and who's really delivering an ROI to the company, versus who's been around longer and who's kind of just organically fit into this position that they're doing every day. And there tends to be a bit of unhealthiness or a loss in efficiency when it comes to actually looking at it objectively, versus that's just what we did in the family so that's who does the role.  

What I mean by that is you might have dad and mom and the kids running the business together, maybe even some cousins kind of out there as well, helping, and everybody's kind of just doing their best. They're working hard, they're adding what they can, but there's not a lot of clarity often around what is everyone's actual job description, what are their responsibilities, where do they start, where do they end, and probably most importantly in all of this, what is everyone's deliverables? What are the numbers that they need to bring to the company to be worth their weight to the organization? 

And so often, you see this in most companies anyways, but in family businesses, it's even more prevalent where it's like, Sarah is my daughter and she's really good and I appreciate her and I want her to learn this business, but she doesn't do great at this part of her job, she's just been doing it for a lot of years, and I don't know if she's the best fit for the role, but she's my daughter. And so it's like, well, what do you do about that? 

I think the best thing an organization can do, especially if it's a family business, is everybody sits down and goes and builds out properly, what is the organizational structure of this company? Let's not put people's names in just yet, let's just put in what is the best structure for what roles should we exist and what numbers those should be in charge of and what responsibilities those roles should look like. And after you've built that objective view of what the most optimal way to run this company is, now you can and should put people's names in. The hard part about this is sometimes certain people's names don't fully fit. 

Megan Ellsworth: Right. That is hard with family members. 

Danny Kerr: That is the hard part with family members. So in this, I'm not going to tell you to go fire your family members. What I will say is try not to look at it from how do we fit our family members into the company. First, just look at it objectively as what is the best, most optimal organizational structure for the company based on those roles that we've come up with? What should those deliverables be by role and responsibilities be? Okay, now let's look at who we have and who should fit in what holes. From there, there's some decisions that need to be made. 

And for some companies listening to this, they know what those decisions are and they've probably known for a lot of year years, and they've been hard ones to make. And other people might find it just a good, organic, better fit for people that already exist. But yeah, that can equal a lot of things. One thing I'll say too is I see often family businesses transitions that need to happen. So, mom and dad need to retire over time, kids need to take over. They all want that to happen. But again, because of lack of clarity of roles, it's a slow moving molasses movement where real responsibility is truly transitioned over. 

Megan Ellsworth: Wow. Yeah. Wow. Well, I think that's kind of the hardest part of the family business that you brought up, is the actual family members and making sure that they are bringing something to that business and the business isn't just giving them something. So, great topic there. Anything else contractors should think about before hiring a family member? 

Danny Kerr: Just generally, I've seen it in business. It never makes the relationship better, it always makes it either the same or sometimes worse. Just know that when you're introducing family, and this is true for friends too, there's added complexity to it. And if it's unstructured in the organization right now, it's like, just come in and help, that often leads to an equation of frustration on both sides. And so one of the best tools for this, if you are introducing family members or friends to the business and you know that they're a good fit, make sure there's a lot of structure and clarity about what exactly their role is and a lot of expectations set early so that that's not an upset later on. 

Megan Ellsworth: Absolutely. Well, thank you so much for chatting today. And we look forward to hearing what you have to say in April. Thanks, Danny. 

Danny Kerr: Sounds good. Thanks, Megan. 

Danny Kerr is the Director of Assessment of Breakthrough Academy. See his full bio here.