Superstars and parasites

Non-family professionals often enter the family business if they are seen to fit the family culture, and if there are no eligible successors within the family.

They thrive if they are fulfilled, not just financially, but also psychologically:  they have the power to make major decisions and get things done quickly, and most of all, they have first-hand exposure to learn from and interact with dynamic founders.

Competence and loyalty are what family businesses value in professionals.

Based on these two traits, US family business expert John Davis classifies professionals into four broad types:

The superstar is loyal and competent.  The transient is not loyal but competent.  The family retainer is loyal but not competent.  The parasite is neither loyal nor competent.

Dealing with parasites is simple:  let them go.  Let us look at the other types.

Whether for good or ill, many family businesses prefer loyalty over competence.  Family retainers often outlast transients, who may readily be lured away by competitors.

Think on owners’ behalf

Businesses today (whether family-owned or not) complain that employees are transient.

They jump from one job to the next, with little loyalty to any particular employer.  Perhaps the workplace is unstable, the young feel entitled or crave change, or the grass is seen as greener in other pastures.

Someone who stays for years and is perceived to have the family’s interests at heart is extremely valued.

“We prefer employees who in Fookien can ‘tuhuwe-gun-shiung,’ think on our behalf,” says Totoy (not his real name), a Tsinoy founder of a food retail business in Manila.

“If a competent employee goes, I can go to the search firm.  But loyalty is hard to find, more a matter of luck and fit rather than personnel tests,” he adds.

Totoy started his business in the 1960s, and he prides himself on the fact that many of the people who began in his “little store” in Binondo are still with him now.

These retainers may not have the education pedigrees of today’s marketable professionals, but they have proven their trustworthiness.

“My children are running the business,” says Totoy.  “The young generation want to expand.  They say they need competitive compensation to attract competent professionals.  At first, this caused a problem, because the old-timers grumbled that their salaries are so low compared to the packages of the new hires.  I had to talk to them, and we reward their loyalty in other ways.  When we go abroad, we make sure to buy them bags, clothes, gadgets as gifts.  We educate their children and pay for the medical bills of their family out of our pocket, not just through company health benefits.”

More family businesses, more than professional firms, go out of their way to make outsiders “feel at home” in the business.

In professional firms, trust is often not a prerequisite, only competence, but in the Philippines and other Asian countries, trust is essential.

What if retainers are loyal, but their lack of competence may be harmful to the company?  Some can be trained.

Totoy encourages his people to take MBAs, which the company pays for.

As for those who cannot level up, they are often still not let go.  Instead, they become confidants to the owners, and often, valuable informants and advisers.

Respect

Superstars, of course, are most desired.  How can the family motivate transients to stay on?

Treat professionals with respect.  Make responsibilities and boundary lines clear.  Discuss with professionals what is expected of them, and once agreements have been reached, stay clear.  Give them time to accomplish their goals in their own way.

Avoid playing one professional against another, as this may promote rivalry and absorb their energy as they try to please the family rather than make the business work.

Treat professionals as family without compromising objectivity and other standards of fairness.  The family business is not an impersonal concern—that is one of its strengths.

Many management books advise that employees be treated “professionally,” that is, impersonally.

Yet in the Philippines, many successful businesses flourish because non-family members are treated as part of the family.  Yet treating them as family does not mean completely ignoring respect for hierarchical lines.  Extend trust and care, but not familiarity, since this may breed contempt later on.

Next week:  Meet a remarkable motorcycle dealer

Queena N. Lee-Chua is on the Board of Directors of Ateneo de Manila University’s Family Business Development Center.  Get her book “Successful Family Businesses” at the University Press (email [email protected].)  Email the author at [email protected].