SINGAPORE. I arrived over the weekend and after checking in, I immediately organized my calendar for the next three days here in Singapore and another three days in Jakarta. Typically, my work in Asia Pacific JK (Japan and Korea) is usually packed with Board advisory meetings, which I consider a part of my regular tasks, but there is one particular engagement that I am excited to facilitate: an enterprising family that started in the late 80s. 

Mom-and-Pop Business 

Like most founder-led companies, this mom-and-pop business started with no structures. The business was run based on pure gut and survival instinct. With this, despite their growth, the informal and centralized nature of the organization created many problems, while poor controls led to many misappropriations. And with the second generation's entry, the founder thought he could step back and let his children run the show, but things only worsened.

The children's roles were not explained. The father never bothered to lay down the rules. Compensation was equal. The lack of entry policies and mixed roles further aggravated the situation. Naturally, the offspring became entitled and complacent; soon after, other relatives were invited. With nepotism rearing its ugly head, revenues plummeted and the business veered sharply downward. 

Our advisory firm, Wong + Bernstein, was asked to step in and intervene after the family, exhausted from all the internal squabbles, made a conscious decision to proceed with crafting a critical document related to nepotism. We refer to this document as the "Family Employment, Entry and Exit Policy," better known as the "FEEE Policy." 

Reluctance then Acceptance to Change

It was at the height of COVID-19 (2021) that I opened the idea to the family to initiate the 'FEEE Policy.' At the time, they were clear that they were not ready, but after prodding them to embark on a planned organizational transformation, they finally agreed to commence with the process of eliminating nepotism. With the progress, I made sure that they fully understood the extent of the initiative, which can only be effective if there is consistent communication and enforcement, regardless of how inconvenient and uncomfortable it gets. Today, the family is starting to appreciate and embrace the "No Nepotism" initiative.  

Family Rules to Eliminate Nepotism

To give you a better context of the dangers of nepotism, I am sharing a sample of some of the initiatives we have done in the region. We only initiate this program when family members are ready to transform and be positively disrupted for the greater good. This is a separate engagement and set of policies dedicated to the elimination of nepotism in family-owned businesses, which I assure that business owners will find useful as they chart their own generational transition.

1. Nepotism is the practice of showing favoritism toward one's family members (or friends) in economic or employment terms without regard to merit. Upon the signing of a document to eliminate nepotism and entitlement, we can be on our way to finally addressing nepotism in the family business. 

2. As a family-run organization, we must be mindful that when we employ people who are related to us either by blood or marriage, it should always be based on the following non-negotiable metrics: outside experience, credentials, exceptional work in the past, and merit. We must reiterate that the family member's last name is not a birthright, and employment is never guaranteed. 

3. As a family-run business, our very existence depends on the quality and integrity of our employees. As working family members, we must set the bar when it comes to hard work and professionalism. As leaders, we must be exceptional role models and lead by example in all facets of our personal and professional lives.                                   

To be continued...