The 3 P's of Family Business

on August 13, 2018

By Alleah Heise

In every family business there are three important Ps that must be addressed: Preparedness, Policies and Procedures. Though they are intertwined, each emphasizes an important aspect of the business.

Preparedness: Most family business owners and managers, especially in smaller businesses, may not immediately see the need to develop policies and procedures. Then it happens-- you hire a member of the next generation… or a nephew… or an aunt. Suddenly, you realize you need a family employment policy (see Davon’s article). Unless you are prepared with hiring guidelines, you will be in trouble. Additionally, you will need to prepare documentation to support issues as different as compensation and governance in the business. Preparedness is key.

Policies (or Guidelines): It is easy to choose one of the two ends of the policy spectrum – developing policies for every instance or taking a more “fly by the seat of our pants” approach. Neither is necessarily wrong, but having policies in place that set standards within your business removes ambiguity and increases both productivity and engagement. Policies create an environment where expectations are clear and where team members are encouraged to focus on what needs to be done within those guidelines.

Procedures: More specific than policies are procedures. These are often written to address a specific situation. For example, “What happens if something happens to me?” Clearly documenting procedures within your organization can both remove confusion for long-time employees as well as create an onboarding process where new employees can quickly reference a set of resources that empowers them to carry out their responsibilities.

Addressing the 3 Ps of Family Business is not something that is done all at once. Preparedness, Policies and Procedures are an iterative process. Documents will be revised and updated as your business and your family grow. The first step is to get something down on paper. Then engage your team in an ongoing conversation to flesh out questions and address ongoing changes and updates. Finally, check out Lance's Progressive Farmer article, Watch Out for the Little Things, where he outlines a few common issues that can be addressed through policy.