Every family member who works in the business should be placed in the position where they can bring the greatest value to the company and themselves. That place is what we call “home,” or the spot that is matched to his or her skills, gifts, education and experience. Once in that position, he/she must have the understanding and discipline to wear the right hat. Simply put, an owner cannot wear his/her shareholder hat while serving in their functional role.

Of course, as an owner you have a responsibility to interact with all of your employees and build relationships. But what do you do if an employee comes to you looking for advice about an issue from a different department outside of your functional area? When an employee approaches you, listen to his/her idea. Ask if he/she has spoken to his manager. If yes, what was the result? If no, suggest that he/she go back to their supervisor. Then, talk with the manager yourself. As an owner you can help with follow-through by removing the obstacles or providing the necessary resources to implement the idea, but let the manager do their job and lead the department.

Resist the urge to become too involved. Nothing can deteriorate the effectiveness of a management team more than when an owner jumps into the proverbial sandbox, kicks over the castles, and then leaves it for the manager to put back together. It will undercut the authority of the manager and he/she will be at risk of losing the respect and credibility of his/her team. It also eliminates or reduces the level of accountability to which you can hold the manager. Once you as the owner step in you release the manager of accountability on that specific issue. It also confuses employees, as they don’t know where they should turn with issues in the future. Having the shareholder hat in the wrong place creates inefficiencies and diminishes the benefits of a team.

It is imperative that the owners and shareholders respect the structure and deal with issues through the appropriate channels. The larger the organization the more important this is.

To make it easier to keep the right hat on I suggest a couple of ideas to business owners and shareholders.

•Hold consistent shareholder/board meetings – The place the shareholder hat fits best in a consistently held shareholder meeting. The shareholders or Board of Advisors/Directors should be meeting at least quarterly if not monthly. It makes it easier for owners to keep their functional hat on when they know a shareholders meeting is coming up on their schedule.

•Keep list of shareholder topics – When you are working in your functional role keep a note pad with you and when a shareholder topic comes up write it on your list for the next shareholder meeting.

It is critical that owners and shareholders understand the difference between their functional and shareholder hats. Recognizing the difference to their leadership team and organization has become so important to several SM Advisors’ clients that they have two hats in their office – one that says “Shareholder” and one that says “Functional.” It’s a lighthearted approach to a critically important topic. Take steps now to make sure you are always wearing the right hat. Remember, Those Who Plan – PROFIT!

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