The pros and cons of structuring a company like a family

What is your company’s greatest asset? Like most business owners, you would likely put your employees at the top of the list. And there is a good reason for that: many modern businesses are service providers. They don’t provide products. They provide skills.

That means employees’ skills and talents are more important than ever, and companies are doing whatever they can to hire and retain the best employees. Many employers now talk about treating their company like a family, but is that really the right approach?

Below, we look at some of the pros and cons of treating a company like a family, so you can decide.

On the plus side...

Treating your company like family can have some distinct advantages. You can have a feeling that your business is more ethical, more invested employees, improved internal communication and better hiring practices.

An ethical approach

Most employers who treat their company like a family do so because it feels more ethical. To them, their business is as much a way for employees to support themselves and their actual families as it is a way to increase profits. This can translate into a more trustworthy feeling around the brand, which can of course lead to better PR and a consumer base that feels good about working with your company.

More invested employees

Treating employees like family – where they feel cared for both inside and outside of work – can created an amazing atmosphere. When employees feel valued as more than just productivity machines, they become more motivated. When they feel completely cared for, they develop a sense of loyalty and emotional investment that gives them internal drive to become more productive and innovative.

Improved communication

When employees feel that level of emotional involvement in your company, they have no problem doing whatever they have to do to make things work. And when they feel like their opinions and points of view matter, they will happily open up about the ideas they have and the challenges they face. Suddenly, people aren’t overprotective of their role or scared of asking for help. Instead, they communicate openly.

Read: Six pieces of family business wisdom every entrepreneur should read

Improved hiring practices

One of the most interesting aspects of this approach is the fact that it changes what you look for in a candidate. Where before, you might hire the person with the best CV, when you treat a company like a family, you look for the person who will best fit into the company culture. You look at things like personality and their ability to work in a team, as well as their skills and education. And when you find someone who will fit in well from the beginning, you find someone who is more likely to stay on and grow into the role – and the company.

On the down side...

As with most things in life, there are downsides to treating a company like a family. You may find that business decisions become more personal, that management can become trickier and that employees might become infantilized.

Business decisions become personal

When a business is a family, everything becomes more emotional. You aren’t just making workers redundant to save costs; you’re tearing apart the social bonds workers built with each other. That means the remaining workers begin to feel resentful or worry about whether or not they are safe, which can lead to a fearful environment. Then those you kept on might begin to look for new jobs.

Management can be tricky

Families do have hierarchies, but they are not nearly as structured as traditional businesses, especially once everyone has reached adulthood. This can make management tricky, especially when one employee has been promoted over a colleague they once worked beside. If it is not handled well, it can feel like one sibling is bossing another around, which can cause some obvious conflicts.

Employees can become infantilized

If it’s not managed appropriately, employees can go from functional adults into children getting their allowance from Mum and Dad, Ltd. In other words, if your company treats employees like children, you risk losing the entrepreneurial spirit that your employees need to have in order to create innovative solutions. Instead, you’ll have a workforce that, instead of being self-starting, will be reliant on the company for instructions and motivation.

When you treat a company like a family, you get some real advantages and disadvantages. You get more engaged, more productive employees, but you also make your business decisions a lot more personal. Of course, there are ways to manage the disadvantages – asking workers to take unpaid leave to avoid making anyone redundant, for example – and there are ways to get similar advantages in other management systems. But for employers with the ethical ideals and wherewithal to see it through, treating a company like a family just might be the best choice.

This is a guest blog and may not represent the views of Virgin.com. Please see virgin.com/terms for more details. Thumbnail from gettyimages.

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