Don’t set up your in-law for failure (part 2)

If the family is unprepared to embark on this journey due to lack of commitment and emotional capital, they can pursue a code of conduct tailor-fitted to family members and in-laws active in the business

In most emerging economies in Asia, there are more families that openly encourage in-laws to work in the family business. And guess what? Typically, the entry of in-laws has already been pre-ordained by the business leader long before the official marriage is celebrated. For other family enterprises, there is a clear rule in prohibiting in-laws from working in the business, believing they bring too many complications. The latter mindset is a growing trend.

With clearly articulated entry and exit rules, both approaches can actually work, as each approach has obvious advantages and disadvantages. However, for in-law entry without any restrictions, there is real danger.

For better appreciation of the risks involved, I have outlined the consequences of what can happen. When it will happen will just be a matter of time.

-The new in-law becomes a threat to other in-laws already working in the business.

-Married couples working in the same office can cause more harm than good. No checks and balances plus the added sense of entitlement can be a dangerous combination

-An underperforming in-law, a philandering inlaw, or an in-law that exhibits bad behavior and lack of interpersonal skills. Who will confront the in-law when the offspring spouse is subservient?

-The family is forced to create a job opening to accommodate a non-qualified in-law.

When the leader has already made up his mind in hiring in-laws, the best approach would be to anticipate and manage future, unwarranted in-law complications. I am articulating several recommendations that a senior leader can consider.

The first urgent activity is for family members (especially the offspring spouse) to understand and embrace why his or her in-law is needed in the business subordinating the need to hire professionals. Is it about the three C’s--competence, cost and culture-or simply the trust that the leader wants to extend to the in-law?

The second approach is to pursue family governance. Rules are best established prior to any entry, as they form the core of family interaction in and outside the family business.

A major pre-requisite in good governance is a document referred to as a family constitution or charter. The latter requires a process and will extend to several emotional meetings as family members struggle to share their experiences, past hurts included.

If the family is unprepared to embark on this journey due to lack of commitment and emotional capital, they can pursue a code of conduct (COC) tailor-fitted to family members and in-laws active in the business.

Why is a COC for family members and in-laws important?

A COC is the central “best practices guidepost” for family members and in-laws. It is an expression of the family’s values, codifying ethical dilemmas and setting rules in managing sensitive issues.

It can also be a guide to the difficult process of communicating in a fair manner and contains a set of expectations related to the enforcement of pre-agreed rules. Any breach or accountability will be dealt with in accordance with disciplinary procedures.

A well written code also clarifies the family business’ culture, its mission while aligning them with fundamentally sound HBO (human behavior in organizations) standards that can be applied to family and non-family professionals.

To reiterate, a COC is all about regulating family member and in-law entry into the family and the business. But looking beyond just the operational issues, what about in-laws inevitably inheriting shares?

As a family member, will you allow ownership? Allow a widowed in-law in the board?

Time to rethink.