• Sign In
  • Create Account
  • Sign Out
  • My Account
  • NEWS
  • PRODUCTS
  • CONTRACTORS
  • ENGINEERS
  • RADIANT & HYDRONICS
  • INSIGHTS
  • MEDIA
  • RESOURCES
  • EMAGAZINE
  • SIGN UP!
cart
facebook instagram twitter linkedin youtube
  • CONTRACTORS
  • BATH & KITCHEN PRO
  • BUSINESS MANAGEMENT
  • HIGH EFFICIENCY HOMES
  • TECHNOLOGY
  • WATER TREATMENT
  • PMC COLUMNS
  • PMC COLUMNS
  • Dave Yates: Contractor’s Corner
  • John Siegenthaler: Hydronics Workshop
  • Kenny Chapman: The Blue Collar Coach
  • Matt Michel: Service Plumbing Pros
  • Scott Secor: Heating Perceptions
  • ENGINEERS
  • CONTINUING EDUCATION
  • DECARBONIZATION | ELECTRIFICATION
  • FIRE PROTECTION
  • GEOTHERMAL | SOLAR THERMAL
  • PIPING | PLUMBING | PVF
  • PME COLUMNS
  • PME COLUMNS
  • Christoph Lohr: Strategic Plumbing Insights
  • David Dexter: Plumbing Talking Points
  • James Dipping: Engineer Viewpoints
  • John Seigenthaler: Renewable Heating Design
  • Lowell Manalo: Plumbing Essentials
  • Misty Guard: Guard on Compliance
  • RADIANT & HYDRONICS
  • RADIANT COMFORT REPORT
  • THE GLITCH & THE FIX
  • INSIGHTS
  • CODES
  • GREEN PLUMBING & MECHANICAL
  • PROJECT PROFILES
  • COLUMNS
  • SPONSOR INSIGHTS
  • COLUMNS
  • Codes Corner
  • Natalie Forster: Editorial Opinion
  • Guest Editorial
  • MEDIA
  • PODCASTS
  • VIDEOS
  • WEBINARS
  • RESOURCES
  • INDUSTRY CALENDAR
  • DIRECTORIES
  • EBOOKS
  • PM BOOKSTORE
  • CE CENTER
  • MARKET RESEARCH
  • CLASSIFIEDS
  • EMAGAZINE
  • EMAGAZINE
  • ARCHIVE ISSUES
  • CONTACT
  • ADVERTISE
  • PME EMAGAZINE ARCHIVES
search
cart
facebook instagram twitter linkedin youtube
  • Sign In
  • Create Account
  • Sign Out
  • My Account
  • NEWS
  • PRODUCTS
  • CONTRACTORS
    • BATH & KITCHEN PRO
    • BUSINESS MANAGEMENT
    • HIGH EFFICIENCY HOMES
    • TECHNOLOGY
    • WATER TREATMENT
    • PMC COLUMNS
      • Dave Yates: Contractor’s Corner
      • John Siegenthaler: Hydronics Workshop
      • Kenny Chapman: The Blue Collar Coach
      • Matt Michel: Service Plumbing Pros
      • Scott Secor: Heating Perceptions
  • ENGINEERS
    • CONTINUING EDUCATION
    • DECARBONIZATION | ELECTRIFICATION
    • FIRE PROTECTION
    • GEOTHERMAL | SOLAR THERMAL
    • PIPING | PLUMBING | PVF
    • PME COLUMNS
      • Christoph Lohr: Strategic Plumbing Insights
      • David Dexter: Plumbing Talking Points
      • James Dipping: Engineer Viewpoints
      • John Seigenthaler: Renewable Heating Design
      • Lowell Manalo: Plumbing Essentials
      • Misty Guard: Guard on Compliance
  • RADIANT & HYDRONICS
    • RADIANT COMFORT REPORT
    • THE GLITCH & THE FIX
  • INSIGHTS
    • CODES
    • GREEN PLUMBING & MECHANICAL
    • PROJECT PROFILES
    • COLUMNS
      • Codes Corner
      • Natalie Forster: Editorial Opinion
      • Guest Editorial
    • SPONSOR INSIGHTS
  • MEDIA
    • PODCASTS
    • VIDEOS
    • WEBINARS
  • RESOURCES
    • INDUSTRY CALENDAR
    • DIRECTORIES
    • EBOOKS
    • PM BOOKSTORE
    • CE CENTER
    • MARKET RESEARCH
    • CLASSIFIEDS
  • EMAGAZINE
    • EMAGAZINE
    • ARCHIVE ISSUES
    • CONTACT
    • ADVERTISE
    • PME EMAGAZINE ARCHIVES
  • SIGN UP!
Columns

Heir-Raising Tales of Nepotism

By Ellen Rohr
June 1, 2000
This article in a local business journal caught my eye ...

Lines Music Company No More After 123 Years, 5 Generations

“Lines Music Company, a Springfield entity for more than a century, no longer exists as a company. The company’s property is set to be sold in a foreclosure sale, the result of a shift in the company’s bankruptcy status from Chapter 11 (reorganization) to Chapter 7 (liquidation).”

What went wrong? Imagine the changes in environment, market and government that this company had survived. What force was so great that it destroyed a company with this kind of longevity? The same force that had held it together for so long. Family.

In the article, Bud Lines, fifth generation stockholder, said, “The transfer of stock wound through the family. We realized there wasn’t a lot of future left with that many stockholders. Through the years, I can remember my father and uncle wanted to try to come up with a buy-out with other family members, but it just didn’t work. It would’ve made things a lot easier if people who were in the company had held a majority of the stock.”

Just speculating, but, can you imagine a few members of the family working their fannies off in the business while dozens of cousins eagerly await their dividend checks?

Nepotism is defined as “favoritism; especially governmental patronage to relatives.” In other words, you get the post because you’re a member of the lucky gene pool. That can create problems. But there are lots of advantages with family-run companies. Let’s look at the pros and cons of keeping it all in the family.

“Bew’heir” These Pitfalls: Family relationships in business become dysfunctional when family members play the game with a different set of rules from the rest of the company.

Most folks mean well when they bring other family members into the company. If you give Johnny a leg up in the business, why, he won’t have to waste time making all the mistakes you made. He will rule the world in six months! Hmmmm. What if Johnny doesn’t live up to your expectations?

Conversely, what if Johnny is allowed to slide? You don’t hold him accountable because, heck, he’s just a kid (35 years old?) and once he grows up he’ll take on more responsibility. Sure. You are not doing Johnny a favor. You’re stripping him of his own power. And the other employees will resent you both.

What if a family member really needs the boot? Tough call. But if Johnny is not producing, wouldn’t it make sense to free him up to find a job for which he is well suited? If you fire Johnny you may be in for some cold shoulders at Thanksgiving dinner. But you are obliged to play a fair game. Hang tough. By next year, cousin Rosemary’s affair with the teenager will take center stage and you and Johnny will be forgotten.

It is important that every employee’s performance be measured against objective, measurable standards. Ask yourself, “Would I treat a non-family member in his position the same way?” Therefore ...

Expect no more and no less from a family member than you would from all other employees.

I asked a young fellow recently, “Do you like being the service manager at your company.” He responded, “Well, my dad wants me to be the service manager, so I guess I like it.” I laughed. He didn’t. Don’t sacrifice your life for the family business. If you choose to go to New York and be in the chorus line for “Cats,” do it. The family will get over it. Dan and Uncle Louie will find someone else to be the weekend dispatcher. Therefore ...

Do what you want to do, regardless of what the rest of the family wants you to do.

The article about the Lines Music Company indicated that too many relatives were drawing money out of the company. As each generation increases geometrically it can get crowded on the salary line of the income statement. I’m all for putting mother on the payroll. After all, she’s been a saint. Reward her for years of selfless dedication while y’all worked yourselves crazy and left Christmas dinner to catch drain calls. But don’t overdo this. If you pay more to relatives who don’t work at the company than to the employees who do, you may be heading for trouble. Therefore ...

Match compensation to performance, not blood test.

Frankly, in our industry, paying family members too much is the exception. More often, hiring family is one way to get free or cheap labor. Lots of contractors claim, “I can’t afford to pay someone so my wife does the bookkeeping.” Yikes! There are plenty of worthwhile non-profit organizations looking for volunteers. Your company should not be one of these. Price your services to cover generous compensation for all performers — related or not. As Frank Blau says, “Slavery is illegal, you Herman.”

Have you tried to run your company by committee? For fear of stepping on anyone’s ego, family business members can coast along aimlessly. One person must accept ultimate responsibility for the leadership of the company. You can still work as a team and support each other, but choose a “buck stops here” person. Somebody must make the final call when it comes to a split vote. Therefore ...

Decide who will be the boss.

F’heirly Run Businesses: Enough of the problems! A family-run business can be a wonderful environment for profits and personal development.

So don’t be afraid to hire your kids. Even little buckaroos can help out at the shop — stuffing envelopes, sweeping up, washing trucks, entering data. Hold them accountable. Everyone fills out a timecard. Performance appraisals are based on production, not last name.

What a terrific opportunity to show kids how to play the game. Be sure to spend time training them on the whole operation. If Bobby is dumping trash cans all day, he might not see the big picture. Commit to their business literacy. Show them numbers. Have them ride along in the trucks. Have fun! School breaks are nice opportunities to “test drive” a family member. Determine that the working arrangement is satisfactory to all involved. For instance, your daughter Sally wants to earn some money this Christmas vacation. The holiday season is a busy time for you, so it is agreed that Sally will work part time filing invoices and bills until school resumes. If Sally doesn’t deliver, you have an imposed time limit on the relationship. You can discuss why the job didn’t work out and develop a game plan for using the experience to her advantage. If Sally shines, great! See what fill-in-the-gaps work she can do over summer vacation. Also, you can pay each child up to $3,900 tax-free (not tax-deferred) every year. Cool, huh? Check with a tax accountant for details. You can teach your kids how to run a business and make money. This is empowering! Therefore ... Help your kids learn business skills. Today, big companies are setting up camp in the PHC marketplace — utilities, consolidators and home centers. You must differentiate yourself from them in order to survive. Why would folks choose your company over the others? Because you are a family-owned company that cares for its customers. There are customers who would love to fall in love with your family business. Can’t you hear them? “Oh, I always call Arnold Plumbing. They are so reliable! My mother used to call Arnold Sr. And now his son is my plumber.” Big companies will never match your ability to develop a personal relationship. Therefore ... Your family business can appeal to a market tired of big stores and poor service. Open book management guru Jack Stack claims that one of the higher laws of business is to give employees a stake in the outcome. If Johnny knows, “Someday this will all be mine,” he may be very motivated to make the company successful. Do you find that owners and employees usually have different motivations for their behaviors? When your name is on the sign on the side of the building you might go the extra mile to make sure you get the job and satisfy the customer. Therefore ... Reap the benefits of a company of owners. If you are operating a sound business with solid earnings, you could pass your successful business on to your kids. This is an admirable goal. What nicer inheritance than a cash cow? If you are intent on creating a legacy with your company, you better make sure the thing works. Put systems in, pull the bugs out and create the perfect company. If little Johnny grows up working in a sane and profitable company — well, who knows, maybe he could rule the world. You can create a legacy — or expand one into another generation. By the way, I wrote an article a few months ago entitled, “Why We Sold Our Business.” Since then I have interviewed the new owners, our former employees. Interesting conversation! Look for it in my next column. Thanks for reading — hope my words are of service to you.

Share This Story

Looking for a reprint of this article?
From high-res PDFs to custom plaques, order your copy today!

Ellen Rohr is the president of Bare Bones Biz, a training and consulting company.

Recommended Content

JOIN TODAY
to unlock your recommendations.

Already have an account? Sign In

  • Worker using the Milwaukee Tool SWITCH PACK drain cleaner

    Pipeline profits: Drain cleaning, pipe inspection create opportunities

    Drain cleaning and inspection services offer lucrative...
    Green Plumbing and Mechanical
    By: Nicole Krawcke
  • Uponor employee, Arturo Moreno

    The reinvestment in American manufacturing and training

    Plumbing & Mechanical Chief Editor Nicole Krawcke and...
    Plumbing News
    By: Nicole Krawcke and Natalie Forster
  • March 2024 Women in Plumbing hero image of woman engineer overlayed by circle of hexagon shapes with numbers from 1 to 10

    Celebrating 10 Influential Women in the Plumbing Industry

    Celebrating Women's History Month and Women in...
    Plumbing News
    By: Nicole Krawcke
close

1 COMPLIMENTARY ARTICLE(S) LEFT

Loader

Already a Registered User? Sign in now.

Manage My Account
  • eNewsletters
  • Online Registration
  • Subscription Customer Service
  • eMagazine
  • Manage My Preferences

IPEX celebrates grand opening of new Florida distribution center

IPEX celebrates grand opening of new Florida distribution center

NIBCO Press Solutions

NIBCO Press Solutions

AI can boost efficiency and profitability for plumbing, HVAC contractors

AI can boost efficiency and profitability for plumbing, HVAC contractors

Bell & Gossett Illustrates Path to Net-zero at AHR Expo

Bell & Gossett Illustrates Path to Net-zero at AHR Expo

More Videos

Sponsored Content

Sponsored Content is a special paid section where industry companies provide high quality, objective, non-commercial content around topics of interest to the Plumbing & Mechanical audience. All Sponsored Content is supplied by the advertising company and any opinions expressed in this article are those of the author and not necessarily reflect the views of Plumbing & Mechanical or its parent company, BNP Media. Interested in participating in our Sponsored Content section? Contact your local rep!

close
  • J.J. Keller CMV vehicles on road
    Sponsored byJ. J. Keller & Associates, Inc.

    The dash cam game-changer for small business safety

Popular Stories

Plumbing equpment parts and wrench on the white background close up.

Plumbing & Mechanical 2025 Plumbing Tools Survey

Latin American plumber fixing a toilet in the bathroom.

Troubleshooting common airflow plumbing issues

Empty modern room with large windows looking out onto a green lawn and trees.

Transitions: What do I do about cooling? (Part 1)

PM BEMIS June 25 Free Webinar: Optimizing Plumbing Solutions for Single-Family, Multi-Family & Public Spaces

Events

November 13, 2024

Future Proofing MEP: Navigating the 2026 High Efficiency Water Heating Standards

Join our deep dive into DOE’s new standards so you can future-proof your MEP practice.

EARN: 0.1 ASPE CEU; 1 AIA LU/HSW; 0.1 IACET CEU*; 1 PDH

View All Submit An Event

Poll

Will business be up or down in 2025?

Do you anticipate business in 2025 to be up or down in comparison to 2024?
View Results Poll Archive

Products

The Water Came To A Stop

The Water Came To A Stop

See More Products

Download the FREE Water Conservation, Quality & Safety eBook: Plumbing Trends Increasing Safe Water Availability

Related Articles

  • Training 101: Meaningful Meetings

    See More
×

Keep your content unclogged with our newsletters!

Stay in the know on the latest plumbing & piping industry trends.

JOIN TODAY!
  • RESOURCES
    • Advertise
    • Contact Us
    • Directories
    • Store
    • Want More
    • Supply House Times
  • SIGN UP TODAY
    • Create Account
    • eMagazine
    • eNewsletter
    • Customer Service
    • Manage Preferences
  • SERVICES
    • Marketing Services
    • Reprints
    • Market Research
    • List Rental
    • Survey/Respondent Access
  • STAY CONNECTED
    • LinkedIn
    • Facebook
    • Instagram
    • YouTube
    • X (Twitter)
  • PRIVACY
    • PRIVACY POLICY
    • TERMS & CONDITIONS
    • DO NOT SELL MY PERSONAL INFORMATION
    • PRIVACY REQUEST
    • ACCESSIBILITY

Copyright ©2025. All Rights Reserved BNP Media.

Design, CMS, Hosting & Web Development :: ePublishing

search
cart
facebook instagram twitter linkedin youtube
  • Sign In
  • Create Account
  • Sign Out
  • My Account
  • NEWS
  • PRODUCTS
  • CONTRACTORS
    • BATH & KITCHEN PRO
    • BUSINESS MANAGEMENT
    • HIGH EFFICIENCY HOMES
    • TECHNOLOGY
    • WATER TREATMENT
    • PMC COLUMNS
      • Dave Yates: Contractor’s Corner
      • John Siegenthaler: Hydronics Workshop
      • Kenny Chapman: The Blue Collar Coach
      • Matt Michel: Service Plumbing Pros
      • Scott Secor: Heating Perceptions
  • ENGINEERS
    • CONTINUING EDUCATION
    • DECARBONIZATION | ELECTRIFICATION
    • FIRE PROTECTION
    • GEOTHERMAL | SOLAR THERMAL
    • PIPING | PLUMBING | PVF
    • PME COLUMNS
      • Christoph Lohr: Strategic Plumbing Insights
      • David Dexter: Plumbing Talking Points
      • James Dipping: Engineer Viewpoints
      • John Seigenthaler: Renewable Heating Design
      • Lowell Manalo: Plumbing Essentials
      • Misty Guard: Guard on Compliance
  • RADIANT & HYDRONICS
    • RADIANT COMFORT REPORT
    • THE GLITCH & THE FIX
  • INSIGHTS
    • CODES
    • GREEN PLUMBING & MECHANICAL
    • PROJECT PROFILES
    • COLUMNS
      • Codes Corner
      • Natalie Forster: Editorial Opinion
      • Guest Editorial
    • SPONSOR INSIGHTS
  • MEDIA
    • PODCASTS
    • VIDEOS
    • WEBINARS
  • RESOURCES
    • INDUSTRY CALENDAR
    • DIRECTORIES
    • EBOOKS
    • PM BOOKSTORE
    • CE CENTER
    • MARKET RESEARCH
    • CLASSIFIEDS
  • EMAGAZINE
    • EMAGAZINE
    • ARCHIVE ISSUES
    • CONTACT
    • ADVERTISE
    • PME EMAGAZINE ARCHIVES
  • SIGN UP!