3 Things to Keep Discipline in a Family Business Environment

Don Errico manufactures metal fasteners at the midsize company started by his immigrant grandfather and great uncle back in the late twenties. The two orphan brothers and their toddler sister arrived at Ellis Island as stowaways on the Saturnia. They were bound for New York from Naples, Italy in May of 1928 bringing along a single beat-up suitcase and the tattered clothing they wore at sea.

Determined to succeed in America, Don's grandfather Giuseppe took several odd jobs at local businesses just to earn enough money for scant daily food rations and tenement shelter on the lower east side of Manhattan for his two younger siblings.

At one of his jobs, Giuseppe lucked out and became a tool and die apprentice at a precision metal stamping shop. The German born shop owner took him under his wing, taught him the trade and eventually made him a limited business partner. Since Hans had no family of his own, Giuseppe was willed the business upon his partner's death. By then, Giuseppe had brought his brother, sister and brother-in-law into the shop to make it a family-owned business.

By the early 2000's, The Hans-Giuseppe Manufacturing company had grown to become a $150 million dollar business with 168 employees - a traditional midsize family-owned company with several family members running or working in several departments.

Giuseppe worked long and hard simply to put food on the table and roofs over the heads of his struggling immigrant family. Even when he later on brought other family into the business he presided over a hard-working and no-nonsense business day from arrival to departure. As the company grew and added family outsiders, there was never any favoritism shown toward any family member in the business. Strict dedication to the job and fairness to everyone prevailed at all times.

The company culture under the next generation of Giuseppe's family began to change as the first American born kin brought along a different set of family and personal priorities, which included going off to war and returning to raise a future generation of better educated (than themselves), professionally-oriented children.

By the time Don took over the family business in the late 1980's, his teenage children were already beginning to express more modern career interests and displayed a significantly altered vision of personal success from those of the early family founders.

In recent years, Don's two sons and three nephews have joined the company in junior manager roles since college graduation. They brought with them their Generation Y reputation for seeking instant gratification and pushing back on traditional business formalities.

Older generations of co-workers have often interpreted their behavior as evidence of prima-donna-like entitlement. Don was often unfairly criticized for letting his younger family members to "get away with murder" at work; while others felt they were under a different set of rules that the family brats didn't have to follow". Obviously, this caused undue tension and occasional friction inside of the company. Don was perplexed and needed to do something as the family-business patriarch.

Here are a few ways for the family-owned business Patriarch or Matriarch to keep things under better control as the family generations change:

1. Honestly evaluate the managerial and professional strengths that family members bring, or don't bring, to the firm. Don't put family members on the payroll if they're not working in the company or can't make a real contribution to the business. I know one company in Illinois, Darley & Company, that has several family members who are part of the company but many others that aren't because they were 'not a fit' for the business.

2. Don't create two classes of employees-family vs. non-family. Be careful not to show family members special treatment. In my meetings with many family business owners, I've heard of family members who were fired for non-performance.

3. Create clear and firm guidelines and structures which clarify the relationship between the family and business - and stick to enforcing them, uniformly.

Family business experts concede that family ownership does have its privileges. But you have to really be careful and run the business in such a way that it's fair, it's transparent and it doesn't hurt company morale. Don is learning this lesson while trying to adapt his family-owned business to the changing realities of generational cultural shifts.