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When your adult child has to be let go from the business

By Henry Hutcheson
Henry Hutcheson
Henry Hutcheson is a nationally recognized family business speaker, author and consultant in Raleigh. He can be reached at Familybusinesscarolina.com.

There are few things in life that can match the joy of working with the ones you love. However, nothing causes more consternation than trying to figure out how to handle an underperforming child who is involved in a leadership position in running the family business.

Sometimes they are not the best choice to run the business, and are better suited for a different role in the company. Other times, they simply need to be let go.

Here are some indicators that members of the next generation are not a good fit to lead:

•  They show a lack of initiative, ability and/or desire.

•  They are unable to complete tasks.

•  They have an abrasive, confrontational, arrogant or argumentative communication style with employees and clients.

•  Their attitude is overly passive or laid back.

•  They show an inability to fully grasp the financial elements of the business.

•  They make excuses for their poor performance, blaming obligations and interests outside of work.

Next steps

So, how to proceed?

Step one is to be sure the child’s other parent is fully apprised of the situation. You do not want to take any action, only to come home and have your spouse exclaim, “How can you do this to our child!” Instead, when the child informs the other parent of their dismissal, the spouse’s response should be, “Yes, we have been discussing it all along and we both think this is best for the company and you.”

The next step is to lay the groundwork. Perform the same level of due diligence on your child as you would a regular employee. This includes providing training, seeking other areas of the company where they may be more effective, and conducting performance reviews.

Most of all, ensure that their managers are not afraid of providing “constructive criticism” about your child. This is harder than you think. Anonymous employee surveys are useful here.

No hard feelings

Also, be sure to place the situation in context for your child. Running a company is difficult, and no one should feel ashamed of not attaining the top post. Leading a business is an all-encompassing, round-the-clock job, and the ability to run a company differs from other functional skills such as sales or accounting. Perhaps your child’s greatest contribution is focusing on what they do best or where they add the most value.

I had a client where the dad passed the business on to the accomplished sales director son. But once the son was at the helm, the company headed south. Dad put him back in sales, and the company rebounded.

You also can point to the business’s bottom line as a way to address your child’s disappointment over not succeeding dad, or not being as good as a sibling. In reality, the company is the family’s financial asset, and its success or failure impacts everyone.

But after you have given your child every chance to succeed in the business, you owe it to them, the family, and the employees to let them go. There will be excuses and even anger. But this is the time for tough love. Here are some words you can use:

We have tried to find a spot for you here where you can be happy and successful, but it is clear that at this time in your life this work is not a good fit for you. As your boss, I am obligated to let you go. But as your parent, please know that I love you and will do everything I can to help you. My suggestion is that you try to find a vocation that you are truly passionate about.

Henry Hutcheson is a speaker and author and president of the consulting firm Family Business Carolina. Email your questions about family business to Henry@familybusinesscarolina.com.
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