If you haven’t been in this situation yourself, you probably have one or more friends who have.  They  have rewarded a  highly productive employee by making him/her a non-family partner (NFP) in a family owned business.   

Maybe you’re about to do the same thing yourself.  That’s big of you, really; and some people might actually appreciate the honor you’re bestowing on them. Others will probably think “It’s about time!”  And then, it gets worse.  The loyalty formerly shown to the organization seems to vanish, and the imperial partner syndrome emerges. 

The secret to success in making people partners through stock purchase or phantom stock programs or some other form of participation is in picking people who won’t let their new status go their heads.  The characteristics of such people are balance, focus, and discipline.  People with these attributes consistently demonstrate that they get what the organization or the owners’ motivation and perspective are all about.  They want the same things. And, they have the capacity to help you get there.

The tricky part here is “capacity”.  Many people who are standout performers are generally thought of as being “indispensable” and worthy of protection through some sort of “retention program”.   That’s how many non-family members become “partners” in a privately/family owned business. Simply said, they focus on results.

They are so focused on results that they often forget to be kind to the people/colleagues around them unless those people can do something for them that will advance their cause:  greater participation in the ownership and/or direction of the company.  In effect,   they become something of an organizational terrorist focused on their personal agenda rather than the company’s.

So, before you make someone like this a partner/owner in any form, go back and ask yourself these  four questions:  Do they get it?  Do they want it?  Do they have the capacity for it?  Do I like them?  Unless the answer to each of the questions is unequivocally “YES”, then run, don’t walk, away from making them a partner through whatever qualified or non-qualified plan you may have in mind.  This is a scenario that has “Titanic” written across the bow.

If you’ve already made someone like this a partner, you may be wondering “How do I get out of this mess?”  Well, the way out of trouble is seldom as easy as the way in; but there is a way out. You may not like any of the options, but you still have some.

Assuming you still see some value in the relationship, get your partner a business coach who knows how to help people balance results and relationships; increase personal awareness of ineffective behaviors; can teach those who know it all how to build rapport; and can help your partner become more aware of effective ways to work with people for the organization’s interests.  

As an alternative, coach the partner yourself in each of these areas; but don’t expect the relationship to survive.  If your own approach is just a little off, you’ll likely be seen as someone who just doesn’t appreciate all that the partner has done for you.  

In coaching your partner, you want to ask yourself a series of questions:

  1. Has he/she ever held such a position before?
  2. Have I clearly communicated my expectations to my new partner?
  3. Does he/she need professional coaching to succeed in all aspects of this new role?
  4. Does he/she have the ability to “take one for the team?”
  5. Does he/she have the requisite Behavior, Attitudes, Skills, Knowledge, Experience, and Talent to perform and think like an “owner”?
  6. Could he/she do this if he/she wanted to?

There are lots of other variations you can try before implementing the nuclear option:  Mentoring, Coaching, Education (formal).  If none of those are successful, then you can go nuclear.  That, of course, is parting company that will definitely end the relationship.  Depending upon how you’ve structured the partnership arrangement, you may or may not need legal counsel; but it wouldn’t hurt to have talked with your business attorney before heading down that path.

No doubt you’ll give the partner the benefit of the doubt as long as possible.  But if it comes to a choice between whose goose gets cooked, it may not be as difficult a decision as it appears to be today.  Your business is your Golden Goose.  Take care of it by choosing partners wisely.

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