Avoid Family Run Security Businesses

This may be a polarizing topic.....

A lot of security / surveillance companies have family members in management.

The prototypical seems to be 'dad' in charge of sales (CEO) and 'mom' in charge of finance (CFO). Hire the kid, no experience, no brains, add him to management, etc.

In my experience, it's typically a recipe for disaster. Business decisions become radically more complicated when you throw in family issues / conflict / problems. Also, it's very hard to fairly and appropriately acknowledge when your family members are doing a poor job.

I avoid that at IPVM and, if I ever did work at another company, I would avoid doing so anywhere family members are in charge.

So what do you think? Vote and discuss:


My first two jobs were both family businesses.

In the first, the father was president, and barely involved unless things were really bad, but the son was operations manager. His projects took priority over pretty much all others, with the best staff going to them, and wouldn't you know it, they also made more money than the others so he was held up as a great example of a sales person/project manager/whatever he was that day. I will say after doing a couple of projects with him, though, that they were heaven relative to others. Anything you needed, you got, and once you were in with him, you were in.

In the second, there were (thankfully) no kids involved, but the husband was president/CEO, and the wife, in a truly baffling and maybe borderline illegal (and in my opinion, certainly unethical) decision, was HR manager. She picked our benefits plan. So on paper, when they said, "Hey these are our benefits, too!" you were supposed to believe that they were picking a great plan. But in reality, they (making probably a couple hundred thousand dollars per year, combined) could afford to not have vision or dental and afford to have really high copays and deductibles. And they changed it every year for 3 or 4 years. It was a horrible plan overall.

I think it depends on the fathers back ground. He needs to set up and run it as a professional organization. He needs to set rules and guide lines for the family members. Other employees must feel that they are treated equally. You need to create an environment where the other employees fell they are also part of the family. The reward will be a team that sticks together through the good and bad times.

How often does it happen that employee gets treated equally as the wife and kid?

I'll take the opposite side here. All the same problems that plague 'family' shops are as common and just as bad in other, larger, anti-nepotistic companies.

It might be easier to 'play favorites' and overlook terrible performance if you're related, but if you're susceptible to that, you probably would be that way with non-family members as well.

Don't get me wrong; I am glad IPVM has a strong anti-nepotism culture. I just don't think it guarantees success or eliminates problems.

"It might be easier to 'play favorites' and overlook terrible performance if you're related, but if you're susceptible to that, you probably would be that way with non-family members as well."

It's harder to criticize your spouse than your employees, if simply because you have to see them 24/7 and on the weekends. Let's not even get into one 'loving' their spouse co-worker having an impact on their interactions.

I agree that nothing guarantees success but the odds are you are going to have more issues as a non family member in a family business than otherwise.

I voted to avoid them (mostly), I am in a family business (son of the owner) we try and run a professional operation. A few years ago, one of the son-in-laws was fired for poor performance, kind of burned a bridge in the family (I was 14 at the time). My dad told me I had to earn a job. It pushed me to sell over 3 million dollars worth of product/services (for another company), go to college and work my way up in another company before I joined the family business.

When I joined our company I took a 50% pay cut and made sure the only people who made less than me are the part-time employees and interns. Took the on-call late nights and holidays for the past couple of years (with no pay) so the other employees could stay home with their families.

Good family businesses are hard to find, our employees have been with us for 20+ years, when I was 12 I started going out with our techs and installed with them. My father always encouraged me to earn their respect by working hard and learning from them.
If you’re thinking about working for a family business, ask the employees what they think of the owner, ask the kids what they do to deserve to be there. If they can’t look you in the eye and give you a good answer, walk away. Just my point of view.

Kudos to you, C!

I don't even know how this would even become a topic of discussion in this forum? I am being subjective on the matter since I work for family owned business but here is my take on the discussion:

In my situation we all work for the good of the family which are the owners AND the employees. Since we are a small company we are all like family trying to support everybody involved including the wives and children of our employees. The company does well and we all do well. If a family business was somehow as dysfunctional a company as you describe above they probably wont be around for very long anyway so they won't be grabbing too many talented people or market share of the work out there. I don't really think the scenario you describe above could possibly be the norm for family run businesses trying to make a name for themselves in any sector. If you did somehow get the wool pulled over your eyes, took a position and didn't see the warning signs almost immediately, then shame on you.

On the positive side, when you are small you have the oppourtunity to move up the chain quickly and make a real impact on all apects of the business. I am not employee #125933 working for Tyco who might possibly be working for company P a year from now and possibly company I a year later. If they are all so happy in the big company positions (as employee #125933) why are they always moving around and sometimes coming to me (in our small family run company) looking for a better workplace?

Most companies proabably started out family owned in some respect before they lose themselves to corporate america and I'm sure there is a lot of success stories with beginnings just like you described above. It's called growing pains and if you don't grow as a result of your shortcomings you wither and die. We just want to grow and make a living and ALL of us work towards that every day.

The choice isn't family business or multinational conglomerate.

There are many small tech businesses / startups that are not family run. And, as a non family member, you have far more of a chance to move up in a non family run business.

Btw, to be clear, I am not objecting to a family 'owned' business, I am objecting to a family 'run' / managed business. Ultimately, some set of people own any business. The difference / issue comes from multiple family members controlling key management positions.

Also, the issue becomes more severe the more technologically sophisticated the business is. For example, a family run pizzeria is much less an issue than a family run VMS developer.

Having previously been an employee in a couple of scientific businesses, unrelated to security, I would agree about avoiding family run businesses regardless of whether they are in the security field or not. In both cases, the husband and wife run businesses went through a terrible time due to stressed marriages. In one case the marriage collapsed and in the other case the business collapsed. It was not fun being an employee of either family business and clearly the friction between family members wasn't fun for them either. I've avoided family-run businesses in scientific and technical areas since.

It's hard to move up the corporate ladder in a family-owned company if you are not a member of the family. You often times end up working for a new son-in-law fresh out of college with no experience. BTDT.

I wouldn't avoid them all but would say proceed with caution. I have worked at two different non-family owned businesses BUT, my daughter worked with me in the sales department in both cases. As the one who IS the family member in that case, let me say that it is very difficult to draw the line between family & business sometimes. The family members have to have a clear set of does, don'ts and consequences outlined and then it must be obsessively adhered to. As an example, my daughter & I used each others first names, not our titles "Mom" and no endearments "hon", "baby", that may be used at home. We walked in the door every morning knowing we were co-workers not family members. Our biggest challenge was getting others to treat us that way as well. Vendors would see the resemblance and bring up the family thing which we would politely acknowledge and then get the conversation back on track to business. I think "C" is an example of a family run company that would be safe to work for because they seem to be very sensitive to the potential and go out of thier way to ensure family members are being held to the same or even higher standards as the rest of the staff. In one of the family run companies I worked for with my daughter, one of the two owners (partnership) had his son working for him in the installation dept. They didn't have the same commitment to keeping it business as my daughter & I did and we definitely saw major issues for others in thier dept. The father in the Operations Management role would give his son better jobs, better hours, more lenience when he screwed up, higher wages etc., causing a lot of strife amongst the other technicians. So even though my daughter & I both worked there, that company was an example of a family owned company to avoid.

F, thoughtful response, thanks for sharing!

Many years ago I worked for a family owned company. The father was the president, one son was in charge of the security/communications and another son was in charge of the electrical division. The company was very small at that time I had started and they were very good to work for. Occassionally you would see the typical brother vs. brother or father vs. son argument but it didn't have any affect on the operations. As the company grew more family was brought on to fill positions, daughter as receptionist and son in law in sales. Naturally when companies get larger more decisions have to be made and tension increases and this was apparent between the family members (and other owners) as time went on. I always felt that I was treated more than fairly and was always given great opportunities to advance, I worked their for five years and enjoyed it.

I worked for a distribution company started by the son of a well-off man who had several photography stores.

His brother-in-law with a degree in accounting managed the finances, his father, who funded the initial investment, helped him run his new business and he invested in his employees and sold the business for several million dolars in less than 10 years.

It really depends on where the family comes from and the business knowledge the family has. Strong families can run businesses because of their expertise.

I would add close friends to the exclusion list as well. Didn't work well for me.

John,

I happen to be the owner of a 50+ year business that my father and his brothers started. Any businessman knows that one of the key ingredients for succes is the staff that works for that business. If you have unhappy employees you will have below standard work going out the door. I find that people just want to be treated fairly and given a chance to succeed. Your statement about avoiding a family run business because there might be family members involved makes no sense either. I agree that if an individual or family member is put in a management or key roll it can damage the business. The problem is not that they are family members involved but rather that the family members were not managed correctly prior to placing them them in that position.

I would draw a different parallel, Let's work for a larger business that is not family owned, you think that the people in that business is all qualified to be in their key role postion. The problem you are describing in my opinion exist just as much in non- family business as it does in a family owned business. It is all about management, and yes I would tell anyone to look closely at how managment handles promotions and expectations of the staff before working for them. But to say it is better to avoid them is not fair.

Getting to see both sides over the years in working at large and nowrunning a family owned buinsess's for 30+ years I personally would say there are more favors, & unwarranted promotions in non-family business's.

Just my .02 cents

Tim,

Thanks for the thoughtful feedback.

"The problem is not that they are family members involved but rather that the family members were not managed correctly prior to placing them them in that position."

And my point is that it is fundamentally much harder to 'manage' one's loved ones than one's regular employees. Is this really that controversial a point? :)

Imagine I have a son, say John, and employees named Bob and Tim.

John and Bob are both bad workers but Tim kicks ass.

Will I have any reservations firing or not promoting Bob? Of course not. Will I have reservations firing or not promoting my son? Sure. Will I promote Tim over John? That's tough for me as a dad, right? What will my wife, the CFO, think about this? Think she might object to her baby being passed over?

Hi John,

You wrote: And my point is that it is fundamentally much harder to 'manage' one's loved ones than one's regular employees. Is this really that controversial a point? :)

I do understand what you are saying and I will agree that it takes more thought and consideration to manage a family member within the business. Yes there can be some touchy issues. What my primary point is don't avoid them but do your homework before working for them. Isn't that the same advice you would give anyone looking for an employement position?

I am going to take my quiz today and hopefully find out I retained some of what I learned. :)

Tim, that's a good point. Also, it depends on the employee's temperament and goals.

I run a 26 year old family business. When I started out, I sounded like John...no family...no way. My daughter stopped by 20 years ago to help out with a software problem, and is now running the company, and will sooner or later own it. My son, an IT geek, was called in 8 years ago to help us with this new-fangled IP CCTV flash-in-the-pan trend, and is now on the road with significant customers, assiting them to deploy security products onto their networks. He claims I am harder on him than other employees, and "why should he be the one to have to take the trash out, anyways?". I expect more of him, and encourage him routinely, and he is doing a great job.

Best advice on the topic was from a friend who owned a large succesful Chinese restaurant:

  • Run the business like a Chinese restaurant...several generations working together, no one watching the clock, employee honesty, but every once in a while you have to have a very loud conversation using strange language.
  • Never, under any circumstances, hire an in-law. How do you fire your daughter's husband without disrupting the entire company (and familly)?

I worked for a large, family run business years ago...great experience, but was told from the get-go that future ownership, stock, etc, was not an option. Went out on my own later with their blessings, and have always told my non-family employess the same story. Has not caused any issue, and most have been with me 20+ years.

Did this once and will never do it again. Partnered with a guy who followed the exactly the example you noted. Guy brought his son in as a 6 figure VP who did not know the first thing about security (although he was a very smart guy). and other relatives. Some very questionable trips for "meetings" with the famly members.

This may work ok for some and I truly believe it depends on the people involved; but my experience was not good. Advice..do it with care!!

Dear John,

In India we have many family owned business like TATA, Birla, Ambanis, etc..Today they are Corporate and MNC Managed Propesionally with Operation in many countries.

A familly "owned" or family "run" business is the key diffrentiator. Its not that any one of them is bad but its the statistic, which is stacked against family "run".. however Non Family Buisness is also know to make mess.. classic case of Steve Job Kicked out of Apple.

I have voted "Avoid" due to one & only one resaon.. the reasonability of the process, ability to keep the emotion of the family sepearte from business.

I know exactly the issue of what you speak. I came from a company that struggled primarily from alot of pampering on the father (owner) and the son (VP - Sales and whatever he wanted to be).

I joined another family owned business 9 months ago and couldnt be happier. (not just saying this because I want to keep my job!) Owner is solid, involved and operates a very efficient ship. Several of the family work there and its one of the best efficient ships I've operated on.

I've seen both sides. I've suffered a long stint at a huge integrator and the level of politics and inefficient operation was baffling. They were their own greatest enemy.

I worked for my family's installation business for years. Let me tell you, it's a lot easier to argue with your boss than to argue with your dad or your brothers, because you don't have to see your boss at the dinner table and your mother rarely yells about giving your boss gray hair.

And your boss rarely guilt trips you for years after for quitting and getting a better paying job somewhere else.

I have grown up in family businesses. Sometimes, there is a lapse in the transfer of culture. But everything that I have seen shows that a good family business with related members translates into a better operation and culture. I know. I grew up in a family business and started working when I was 8, and have experienced all sides. My current business has my brother as President with non-family members as partners. It has been an incredible personal and business success.

The rule is that a family member has to believe in the culture and can't just subsist. They have to produce 110% or they cannot participate. Otherwise, employees will emulate them and decrease the value of your business.

"It has been an incredible personal and business success."

Alan, I am sure it has been for you and your family.

How do you measure / check / validate how well it is for the employees? I know you run a sophisticated operation so I am curious how you do that.

I raised this discussion less from my current perspective as a business owner than my earlier experiences as an employee. I am sure those owners I worked for thought it was pretty great (for them :)

One pitfall of family owned businesses is when the CEO/Patriarch/Matriarch leaves or disconnects for any reason. The family members in unjustly awarded management positions are left to pick up the pieces and may have may qualifications or experience. A power vacuum is formed that results in the company fighting internal political battles more than fighting for market share. Those inexperienced managers may take the approach of either not making decisions or making decisions that take the least dollars out of the company / inheritance, resulting in the "stepping over a dollar to pick up a dime" syndrome. It truly is an evolution of feudal monarchies for the Information Age with all of the same pros and cons. The best strategy is to establish a clear line of succession not based solely on lineage. This is hard to do. For all of the business self help books out there I have yet to see one that identifies how to transition after the loss of the CEO in a family business.

Wow. The family is under attack again. Hegel would be proud of you, John.

I cannot see how a family owned business or a global corporation could be classified with a broad stroke. There is nothing that can happen in a family owned company that could not happen in a large corporation. There can be a husband and a wife in a big corporation and the chances are they work out of the same office. There are thousands of married couples that met at work. Human relationships do not get easier when the President and CEO have different family trees and there are just as many good and bad stories from both.

This question to me comes down to a misunderstanding of the free market economy. Work to get paid and use your property as you see fit. If your skills are worth more elsewhere then you have an obligation to go maximize your rewards. Everyone else in the free market is relying on your individual decisions.

We are blessed in America to have as many opportunities as we do for employment. If an employee works hard and with integrity it will all work out well in the end regardless if mom/pop or corporate monster cuts the check.........

"Wow. The family is under attack again."

Bill, it's called nepotism. That's what's under 'attack'.

What's being promoted is meritocracy. And I won't apologize for advocating such a position.

"There are thousands of married couples that met at work."

The issue is executives being married, because of the power involved. The service tech marrying the receptionist has far fewer implications.

"This question to me comes down to a misunderstanding of the free market economy."

Avoiding something, in favor of something else, is at the heart of the free market. I am encouraging people to make decisions (away from family run businesses). I am not advocating the government ban such businesses or relationships.

John,I am looking at this from a 50,000 foot view. The post subject as it is written is impossible to answer. There is no such thing as a good or bad family run business as a whole. The free market is what allows businsses to exist. This is made up of millions of individual decisions from which the good businesses succeed and the bad ones fail.
The free market is not avoidance. It is individual decisions. It is your choice not your reaction to what the market lets you do. If there is nepotism then the employee simply quits and finds a job elsewhere. The company does not have enough skilled labor and cannot deliver it's products and services so it goes out of business. The bad business will fail.
That is why the broad stroke of avoid family run businesses is impossible to answer. Every business has it successes and failures based upon millions of individual decisions. It is not a few huge decisions to avoid this at all costs and do this always. Many small individual ones make the market work.

"If there is nepotism then the employee simply quits and finds a job elsewhere. The company does not have enough skilled labor and cannot deliver it's products and services so it goes out of business. The bad business will fail."

In the long term, I agree.

In the short term, it's typically tougher.

Businesses can make bad businesses that go on for years and still stay in business due to established (though declining) relationships, accounts, market position, etc.

Employees cannot often not easily quit, whether its due to restrictions on moving or limited competitors in their local market or non-competes that some manufacturers use, etc.

I am mainly glad that this has shined some light on the pros and cons of family run businesses. It is not something I have seen discussed in our industry and I do think making people aware of these concerns is useful.

"If there is nepotism then the employee simply quits and finds a job elsewhere."

That sounds simple until you are the employee that gets passed over for the relative. Happened to me, and many others I could name.

Also, when a company goes out of business it leaves customers and employees unsupported and unemployed. Nepotism is a bad idea. You don't pick up knowledge about a field in your genes.

"You don't pick up knowledge about a field in your genes."

To play devil's advocate, if the kid is truly motivated, then they can get a huge head start on learning when they are young.

This applies to any field - if you parent is a pro athlete or a doctor, etc.

Of course, many are not motivated, and it becomes nepotism. I do acknowledge there are outliers where a kid can become great at a field, benefitting from their parents and powering it with their own desire.

You don't pick up knowledge about a field in your genes.

No, but you can pick up knowledge about a field through repeated early exposure.

Ari = case study.

"I hung my first camera on my crib and by age 5, my golly, I was managing a team of...."

Want to make sure the family business is successful, when the owner (daddy) brings his kid to work. Teach him everything you know, earn his respect and in turn he will earn yours.

Case Study, when I was 10 my dad helped me install a camera in my R/C car so I could drive it around the house, we used a small cube camera with a battery pack and hooked it up to a wireless transmitter that had its own battery pack and installed a receiver on a tv we had laying around the office. I thought it was the coolest thing in the world. I grew to love security systems and video surveillance.

I started working in the family business at age 12 in the office with customer service, programing Radionics and Vista security and fire panels, when I turned 15 I joined the apprenticeship program and started installing with our technicians part time, after high school (graduated early) I spent the next 6 months working full time installing, during those 6 months I pulled tens of thousands of feet of cable. Our employees taught me everything I know about the security business. They are the ones who raised me to be a good leader, they understood from the beginning that I would buy my father out someday and they made sure they weren’t out of a job.

After graduating college and working in midlevel management for a much larger company, my wife got pregnant and I decided it was time to move back home and work for the family business.

25 years ago my father told his employees that I would never make more money than them as long as he owned the company. I agreed with that and subsequently took a 50% pay cut when I came to work here. Our employees know I don’t get paid for being on-call or working in the field or going to a customer’s job on a Saturday that didn’t get finished on a Friday. They know I don’t get paid when I work Thanksgiving, Christmas, New Years, 4th of July, Memorial Day…etc. So they can stay home with their families.

Just trying to show that there are young people out there willing to earn for themselves.

As the son and managing director in a family-run security business you'd expect me to be irritated by this post. The assertion you make is a sweeping generalisation but it does touch on an issue that is worthy of comment.

You are probably right about some aspects of a family-run businesses. The family dynamic can be a challenge in that family members sometimes don't treat each other with the professionalism and respect that you would want. As we have grown we have enlarged the board by promoting talented colleagues and bringing in independent advisors which has I think fully addressed this issue. However this is only possible once the business reaches a certain size.

The big advantage that families generally have is the total trust in each other, however if family members are brought in, and worse promoted based on familial relationships rather than merit thats a bad thing.

At the end of the day it comes down to the values of the business, which generally mirror the values of the management team. At ATEC management value integrity and respect and this is reflected in the type of business that we run. Customers stay with us because they get innovation and value, and employees stay with us because they enjoy the nature of the work and the culture and the colleagues. Emloyees here trust management and our customers frequently say things like "ATEC deliver what they say they're going to deliver."

We've now won 6 UK Security Excellence Awards for Installer of the Year and Integrator of the Year so we're clearly doing something right. That said there are always ways that we can improve. It's our constant need to improve that keeps us successful.

So in summary one needs to look beyond the simplistic "family business = bad/non-family business = good" assessment, to the culture and values of the organisation. This is the deciding factor in whether you should employ any company, or go and work for them. Read their values statement and then talk to their customers or employees to make sure they are not just words.

Simon, thanks for the thoughtful response. I am encouraged to hear that you value the concerns and perspective of non family employees!

Absolutely John, we wouldn’t have much of a business without non-family employees. My proudest moments come when I see people we have hired and developed become specialised in a particular role and do a better job than I ever could.

If low staff morale/satisfaction is typical of family businesses - our first ever non-family employee, who joined us straight from schoool celebrated 25 years with us last year, and it’s common for colleagues to put forward their former colleagues/friends and even family members for new positions.

The thing is I doubt that we are the exception to the rule that family businesses should always be avoided. I don’t think that rule exists, despite the horror stories in this thread.

This is my very first post in IPVM although I have been following on and off for a few years. But as an owner and 2nd generation CEO of our family business, I feel directly concerned.

I understand the arguments that are put up against family-run businesses, but as already stated by others in this discussion: there are good and bad everywhere! Most of the really successsful medium sized companies in Germany are family-run and many of them are very successful worldwide and even listed as "hidden champions" because they are n° 1 worlwide in their niche.

Family-run businesses have one very important advantage - that is the long-term view of things. A family - at least in most German family businesses - tries to build up a business that will last through the own generation and into the next and even further. Decisions and strategies are not only driven by shareholders wanting to maximise their investments - at least in most family-run businesses. For a customer, the longer-term strategy results in continuity and stability which is important in security investments.

Of course, there might be a tendency to hand over to members of the family - although I must say that we have avoided that. But that depends very much - there are very professionnally run family businesses! For example, we have always told anybody who came to work for us in spite of their personal relationships with me or my husband (who is co-managing director), that they had to be better in what they do and to show even more integrity and professionalism than anybody else BECAUSE we know them. Otherwise the rest of our staff would soon lose motivation with all the negative effects that come with that.

So, to put it short: As always in life, there is no ONE answer to the question or topic at hand. It always depends! Of course, my opinion is biased. But I am convinced that our staff would vote pro-family-run businesses, based on their experience with us - and most of our customers would too.

Katharina, thanks for your first comment! It is great to see who set high expectations for employees that have personal relationships with you.

John, Boy you did raise a strom in tea Cup :)..

In anyway “People don’t leave companies, they leave their managers”.,

Are we in control of our decisions? :

I worked for a family owned and managed security software business near London that was a real eye opener. The internal CCTV system was reviewed to see who had left dirty coffee mugs in the kitchen, or worse still on a desk without using a coaster, and woe betide you if you stood with a colleague taking about work for a period of time. As someone would come and investigate why you were not at your desk.

As crazy as the above sounds, this was considered normal behaviour by the CEO (owner) and his family. Which explains why they fail to retain experienced staff and their churn rate is so high.

I have also worked for other SME's where a professional management structure was in place and staff were treated with respect and dignity. Those days were memorable and enjoyable.

I voted to avoid, but my reasons are somewhat different. While we share some interest, my children (3) all have very different interest and passions, even different than mine. I feel like I was born or built to do this. I read something some years ago, and it is still pretty accurate.

Current research shows that 88 percent of Family Owned Businesses THINK their family will still be running the business in five years. A stunning stat to me is that less than one in three make it into the second generation, and 12% make it into the third. 3% into the 4th. Fact is, just like all businesses, FOB's are just as subject to the same economic pressures as larger corporate entities (mergers, acquisitions and failures).

In my case, I could not and would not ask my children to preside over the death or sale of my company. I would not want them to feel as if they have somehow failed me or themselves in some way if the company dissappears, and it will. Companies have a lifecycle.

Let them be who what they were born to be. It is better in the long run. But just my opinion.