Why Should You Define Job Roles Within Your Family Business?

Why Should You Define Job Roles Within Your Family Business?

Author: Laura Troshynski, Senior Director, Business Owner Advisory Services

Operating a family business can be tremendously rewarding. However, such ventures also pose unique risks. Without clearly defined roles and responsibilities, discord can arise, impacting productivity and family dynamics. It’s crucial to consider and create job descriptions to help the family business runs smoothly,

What It Means to Define Business Roles and Why It’s Important

Running a family business is a lot like playing a team sport. Let’s consider football. The lineman protects the quarterback who throws the ball to the receiver. The receiver’s job is then to reach the end zone and score. Without clearly defined player responsibilities, chaos would rule, and the team would find it difficult, if not impossible, to make winning plays.

A family business is similar. To function properly, each person must have a clearly defined role to play. Imagine for a moment what would happen if your head of sales suddenly started running your finances. Or what would happen if no one knew who was keeping the books and multiple people were jumping in and out of the process.

To prevent these disconnects, each employee within the family business needs a clearly defined role that should include a written job description. Failing to specify job duties can create challenges, including:

• Overlapping responsibilities: When responsibilities are not defined, it’s easy for family members and employees to presume someone else is handling a critical task. This can lead to missed deadlines, late payments or lost profitability. It can also lead to duplication of work and inefficiencies.
• Unclear decision-making authority: When roles are ambiguous, it can be unclear who is responsible for making key decisions, resulting in missed opportunities for growth.
• Lack of accountability: When clear roles are lacking, it can be difficult to hold individuals accountable for performance and hard to fix issues that lead to poor productivity.
• Scaling and growth: Without a clear understanding of each employee’s core strengths and areas of expertise, your business will find it difficult to identify hiring gaps and scale to meet future growth.
• Resentment and conflict: The last thing any family wants is for the business to interfere with familial relationships, but without clearly defined roles and responsibilities, some family members may take on more work than others, leading to hard feelings and resentment.

By clearly defining roles and creating job descriptions, family businesses can avoid these common challenges and create an efficient operating environment. Clarity leads to improved communication, increased productivity and a stronger foundation for future success.

Some Tips for Defining Roles Within the Business

Defining roles within your business requires a thoughtful approach and input from all involved family members. A good place to start is with a working session, where everyone is encouraged to outline their current responsibilities and share their aspirations for the business, as well as their own career. Distribute a sample job description and ask family members and other key employees to draft job descriptions. It is often helpful to have participants write what they think their job description looks like now and what they think it should look like in an ideal world. 

Conversations like these can set a tone for the company’s future and help identify areas where one family member may be contributing far more than others. This type of discussion is also helpful when it comes to aligning responsibilities to individual strengths. It’s possible to discover that a sibling, son or daughter has different interests that would be better served by taking on a different role or even pursuing a career path outside the business.

Once everyone is clear on where the company and its key players are headed, it’s time to set the responsibilities. At a high level, you’re looking at a three-step process:

1. Make a list of all current business owners, including outside investors, and indicate who has a professional role within the organization.
2. For each family member, detail their current tasks, responsibilities and strengths.
3. Review the current responsibilities of each family member to identify areas of overlap. Then map current and future roles within the organization, keeping in mind the strengths of each individual.

There are job matrix templates available to get you started, but you may also want to vet the final outcome with your team of advisers, including your commercial banker and attorney. A third party can provide input that validates certain decisions and helps avoid disputes within the family over job obligations.

For your family business to thrive, it’s essential that each member understands their core obligations. Clearly outlining expectations through job descriptions sets a firm foundation for the business and the family, strengthening relationships through professional growth and joint success.

About the Author

As the Senior Director of Business Owner Advisory Services at FNBO, Laura brings her experience working with business owners, and as a former member of a family business, to the Business Owner Advisory Services team. With an extensive background in business and estate planning, Laura is well qualified to help others plan for business transitions.