What closely-held and family business owners get wrong—and what to do about it
Just about every business leader I’ve worked with truly cares about their people. They’ll tell you their team is their most important asset—and they mean it. But caring about your people and leading your people are two different things. In my work as a family business consultant, I’ve seen the same leadership mistakes happen over and over. And in many cases, these mistakes compound over time to erode the culture of an organization. The good news is that most of them are fixable. But—you must be able to see them first. Here are the three biggest/most frequent mistakes I come across:
1: Keeping the Wrong People in the Wrong Seats
Long-tenured employees carry a special kind of weight in a family business, be they family members or not. In some cases, these people were there at the beginning. In others, they’ve been around longer than anyone can remember. They are undoubtedly part of the success story of the company. But tenure doesn’t always mean effectiveness, especially if a person is in the “wrong seat.” Some employees outgrow their role, and some roles outgrow their employees. Either way, the result is the same—you have someone in a seat that no longer fits—and that mismatch can have consequences for everyone around them. I’ve seen plenty of cases where a team loses faith in leadership when they see another employee remain in a role they can no longer perform. However, it doesn’t necessarily mean you have to get rid of this employee. Is there another role that fits their skillset and style they should be fulfilling? That’s often the case. Either way, the conversation will be hard. But you must have it.
2: Ignoring The Signs Until It’s Too Late
When a highly valued employee quits “unexpectedly,” it catches a lot of leaders off guard. But it shouldn’t. “Unexpected” almost never truly is. The signs were there. They just weren’t acknowledged. A disengaged employee rarely quits loudly—it’s more of a quiet withdrawal. It can be hard to notice, unless you look a little closer. They stop raising their hand. They stop bringing ideas. They start doing the minimum. You must know the level of engagement of your employees. They’re clear signals into what is happening around them.
3: Assuming All is Good
Most family business leaders assume a once great culture is always great. But your culture doesn’t announce when it’s struggling. It just quietly deteriorates over time. And sooner or later, the turnover starts, the tension surfaces—and the performance dips. Assuming your culture doesn’t need attention because things “seem okay” to you is like skipping a doctor’s appointment because you feel fine that day. Stay on top of your culture. It’s full of signals.
The Solution
The fix for all three of these mistakes begins with understanding your employees’ level of engagement. Look for whether they commit to something or someone in their organization, how hard they work, and how long they stay on the job. Individual can be categorized into three types:
Engaged employees—The types who drive initiatives and consistently move the team forward.
Un-engaged employees—those who do the minimal amount of work necessary to keep getting a paycheck.
Actively disengaged employees— the ones who have a consistently negative attitude about work and can be disruptive.
As a family business leader, you need to know which category each of your people falls into—and you need to create or maintain a positive, proactive culture. Start by clearly defining your vision for the team. Then translate that vision into a standard for the behavioral style, work ethic, and priorities you expect from your employees. Assessing your team on a regular basis is key to this effort.
Ask yourself what factors in your business are influencing engagement—positively or negatively. And ask yourself what you can do to motivate and reenergize the employees who have a history of strong performance but are no longer showing up that way. Ultimately, the responsibility falls on your shoulders, and you must practice what you preach.
Communicate—frequently. Be clear and transparent. And don’t make assumptions. This means having conversations—both formal and informal. Annual reviews aren’t enough. Maintain ongoing dialogue with your employees. Are they satisfied? Do they like their current role? Do their career ambitions align with the direction of the company? Does the company align with them? Are they clear on what it takes to earn a raise or a promotion? You must be aligned on these questions. And if you’re not aligned, employee disengagement can happen before you can react. Often in these cases, it comes down to a conversation that never happened. Have that conversation.
When you communicate, be specific. Simply declaring your core values is not enough. You must get detailed on what behaviors you expect—and you must exhibit those behaviors yourself. The more concrete you are, the more your team can deliver on what you’re asking.
Your culture won’t fix itself. But with clear eyes, consistent communication, and the willingness to address the issues—you can fix it before it even breaks.
