The Pros and Cons of Family-Run Businesses

I never planned to join my brother’s business, but one July, when we were all home together for my Mom’s birthday, we got to talking about my job. I was 36 years old at the time and doing well at Land O’Lakes, even though it was a rather male-dominated business, developing and delivering training programs for the sales team. Ray listened to me and then he said: ‘We may need your help.’

I wasn’t sure. I was reluctant to give up my secure job and I worried that working with family might lead to bad feelings. What if it all went wrong? So I chose to be a consultant for Great Clips, Inc. It took me four years to realize that being a fully committed member of Great Clips was a not-to-be-missed opportunity.

Working with family has many positives. You know your family about as well as you could possibly know anyone. There is a high level of trust and typically a shared belief in what you are trying to do. It’s unsurprising that in hair and beauty, an industry where getting started and staying ahead takes determination, commitment and long hours, there is an abundance of family-run salons and salon groups. Sharing the goals and the journey to those goals cements family values. And if the dynamics are good, it creates a climate where innovation is embraced and disagreements aired openly and resolved quickly.

But there are downsides to sharing your work space and career with your siblings, parents or children and being aware of the negatives is the only way to cope with them. The biggest concern, undoubtedly, is the specter of financial uncertainties. They are hard to shoulder at the best of times, but if it’s a whole family struggling the consequences are magnified.

Recruitment and retention might be difficult, with high-fliers seeing nowhere to go within the hierarchy if it’s dominated by family members. And if there is a tendency of the family to close ranks when a non-family colleague suggests changes or complains, innovation, improvement and sustainability can be threatened.

The perceived bottleneck is not the only concern. The longevity of the business as family-owned can also cause franchisees and their employees some jitters. What happens if the family decides to sell?

When I first joined Great Clips several of the franchisees were part of our family or the other partners’ family. It helped us grow rapidly and set down strong roots. But it is not an ideal situation and within a couple of years of joining I instituted a conflict-of-interest policy that means no one in corporate can become a franchisee, nor can their immediate family.

In companies without such an arrangement, other franchisees might be resentful. They might perceive favoritism in the management’s attitude to the family, even if there is none. It is so much easier if everything is transparent and protocol is established and followed rigidly.

Successful companies also must promote on merit. It might be nice to give a daughter or son a job, but not if the person isn’t qualified. At Great Clips we have made a point of bringing great people in to help run the business. And we’ve set out a clear plan of succession that not only ensures we keep the best people but makes our franchisees feel secure.

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Rhoda Olsen

Rhoda Olsen

Rhoda Olsen started with Great Clips in 1984 as a consultant, before becoming Vice-President of Human Resources and Training in 1987. She was soon also looking after marketing, communications, operations, and facilities and purchasing and in 1998 she was appointed President/Chief Operating Officer, making her fully accountable for the Great Clips organization. During Ms. Olsen’s tenure as President/COO, Great Clips grew from just over 1,000 salons in 1998 to more than 3,900, with revenues increasing four-fold from $200 million to just over a billion dollars. In 2011 Ms. Olsen was promoted to Chief Executive Officer of Great Clips, overseeing the largest salon brand, with locations in more than 180 markets across North America.

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