Employee Reviews: A Challenge in Family-Owned Businesses

Cultivating Successful Family Business Leaders

It has long been a tenet of successful businesses that regular and honest performance reviews are essential. However, in a family-owned business, employee reviews can be torture for both non-family and family employees alike. In many instances, a non-family manager finds themselves in the awkward position of having to review an owner family member who works for them. Even veteran managers with the strongest relationships to family owners will think twice before offering negative feedback about an heir apparent. Obviously, this silence can lead to diminished function, productivity and satisfaction within the company.

Here are a few guidelines for how family-owned businesses might successfully conduct reviews:

  • Consider hiring an objective party to conduct the review process each year. This will help ensure that all involved feel safe in being forthright and comprehensive.
  • Deploy 360-degree reviews (reviews that solicit input from peers, subordinates and superiors as well as a self review from the subject) to help diffuse the inherent tension and emotion by creating a constructive atmosphere of conversation rather than criticism.
  • Use confidential web-based tools to solicit honest feedback from both the supervisor and the subject of the review.
  • Create a review framework that enables both sides to focus on improving future performance rather than criticizing the past.
  • Ensure that both sides understand each others’ long-term roles. For example, if a manager understands that the young family member they are reviewing is there to be taught the ropes and mentored, rather than as a potential replacement, they are much more likely to be candid and constructive. Similarly, if the family member sees the review as part of their personal leadership development process, they are more likely to use it productively.
  • Keep the process as simple as possible with concise, constructive agendas for any discussions and easy-to-use questionnaires.
  • Once each individual reviewer has completed his/her review, ensure confidentiality by having a neutral party create a summary report that initially goes only to, the subject’s manager. The summary report should be carefully edited to preserve the anonymity of all whose opinions are shared. The manager then should meet with the subject to go over the results. Following that meeting, the report might be filed with HR, senior management, board and family members, as appropriate for the situation.

Using a well-designed review process with an objective third party in charge supports a more positive, efficient and constructive review experience. The compiled results help improve the alignment of the goals of the business with the desired career path of family employees. Done well, the review process is not an ordeal, but an opportunity for family employees to grow and learn, leading to greater satisfaction and improved workplace performance.