•Family Business
–A company in whose ownership and/or functioning two or more members of the same family are directly involved.
–A firm whose ownership passes from one generation of a family to another
Family and Business Overlap
•Family Concerns
–Care and nurturing of family members
–Employment and advancement in the firm
–Loyalty to the family
•Business Concerns
–Production and distribution of goods and/or services
–Need for professional management
–Effective and efficient operation of the firm
–Care and nurturing of family members
–Employment and advancement in the firm
–Loyalty to the family
•Business Concerns
–Production and distribution of goods and/or services
–Need for professional management
–Effective and efficient operation of the firm
Advantages of a Family Business
•Strength of family relationships during challenging periods of business change
•Financial sacrifices that family members make for the good of the firm
•Operation as a family business distinguishes the firm from its competitors.
•Higher levels of concern for its community and non-family employees
•Capability to plan and prepare for the long haul
•Emphasis on quality and value
•Financial sacrifices that family members make for the good of the firm
•Operation as a family business distinguishes the firm from its competitors.
•Higher levels of concern for its community and non-family employees
•Capability to plan and prepare for the long haul
•Emphasis on quality and value
The Culture of a Family Business
•Organizational Culture
–Patterns of behaviors and beliefs that characterized a particular firm
•Cultural Configuration
–The total culture of a family firm, consisting of the firm’s business, family, and governance patterns
–Patterns of behaviors and beliefs that characterized a particular firm
•Cultural Configuration
–The total culture of a family firm, consisting of the firm’s business, family, and governance patterns
Family Roles and Relationships
•Parental Concerns in Passing the Business On:
–Does my child possess the temperament and ability necessary for business leadership?
–How can I motivate my child to take an interest in the business?
–What type of education and expertise will be most helpful in preparing my child for leadership?
–What timetable should I follow in employing and promoting my child?
–How can I avoid favoritism in managing and developing my child?
–How can I prevent the business relationship from damaging/destroying the parent–child relationship?
•Husband–Wife Teams
–Opportunity to share more in each other’s lives
–Business differences interfere with family life
–Work doesn’t leave time for family life
–Sharing family responsibilities eases the load
•Sons and Daughters
–Personal preferences different from the business
–Personal qualifications insufficient to assume role in business
–Desire for personal freedom to choose another career
•Sibling Cooperation, Sibling Rivalry
–Best case: siblings work as a team
–Worst case: siblings compete as rivals
•In-laws In and Out of the Business
–Disagreements about how to treat and reward in-laws and family members/children
•The Entrepreneur’s Spouse
–Communication between entrepreneur and spouse is critical for them to perform as an effective team for both the business and the family.
–Does my child possess the temperament and ability necessary for business leadership?
–How can I motivate my child to take an interest in the business?
–What type of education and expertise will be most helpful in preparing my child for leadership?
–What timetable should I follow in employing and promoting my child?
–How can I avoid favoritism in managing and developing my child?
–How can I prevent the business relationship from damaging/destroying the parent–child relationship?
•Husband–Wife Teams
–Opportunity to share more in each other’s lives
–Business differences interfere with family life
–Work doesn’t leave time for family life
–Sharing family responsibilities eases the load
•Sons and Daughters
–Personal preferences different from the business
–Personal qualifications insufficient to assume role in business
–Desire for personal freedom to choose another career
•Sibling Cooperation, Sibling Rivalry
–Best case: siblings work as a team
–Worst case: siblings compete as rivals
•In-laws In and Out of the Business
–Disagreements about how to treat and reward in-laws and family members/children
•The Entrepreneur’s Spouse
–Communication between entrepreneur and spouse is critical for them to perform as an effective team for both the business and the family.
Family Business Relationships
•Welcoming New In-Laws into the Family Business:
–Introduce them to the family business.
–Give them an overview, and send them to a family business seminar.
–Act as an ambassador and show empathy with the newcomer.
–Emphasize strengths and achievements of sons- and daughters-in-law.Give newlyweds emotional space; allow them to develop their own traditions
–Introduce them to the family business.
–Give them an overview, and send them to a family business seminar.
–Act as an ambassador and show empathy with the newcomer.
–Emphasize strengths and achievements of sons- and daughters-in-law.Give newlyweds emotional space; allow them to develop their own traditions
Professional Management of the Family Firm
•“Best Practices” (John L. Ward)
1.Stimulate new thinking and fresh strategic insights.
2.Attract and retain excellent managers.
3.Create a flexible, creative organization.
4.Create and conserve capital.
5.Prepare successors for leadership.
6.Exploit the unique advantages of family ownership.
•Nonfamily Employees in a Family Firm
–Hazards:
ØCompetition with family members for advancement
ØGetting caught in the crossfire and politics of family competition within the firm
–Solution:
ØIdentify family-only reserved positions in advance.
ØTreat both family and nonfamily employees fairly in matters of reward and promotion.
•Family Retreats
–A gathering of family members, usually at a remote location, to discuss family business matters.
–Use of an outside facilitator may be necessary.
•Family Councils
–An organized group of family members who gather periodically to discuss family-related business issues.
1.Stimulate new thinking and fresh strategic insights.
2.Attract and retain excellent managers.
3.Create a flexible, creative organization.
4.Create and conserve capital.
5.Prepare successors for leadership.
6.Exploit the unique advantages of family ownership.
•Nonfamily Employees in a Family Firm
–Hazards:
ØCompetition with family members for advancement
ØGetting caught in the crossfire and politics of family competition within the firm
–Solution:
ØIdentify family-only reserved positions in advance.
ØTreat both family and nonfamily employees fairly in matters of reward and promotion.
•Family Retreats
–A gathering of family members, usually at a remote location, to discuss family business matters.
–Use of an outside facilitator may be necessary.
•Family Councils
–An organized group of family members who gather periodically to discuss family-related business issues.
The Process of Leadership Succession
•Available Family Talent
–Mentoring
ØGuiding and supporting the work and development of a new or less-experienced organization member.
–Allowing only qualified competent family members to assume leadership roles in the firm increases the value of the firm for all who have an ownership interest in it.
–Mentoring
ØGuiding and supporting the work and development of a new or less-experienced organization member.
–Allowing only qualified competent family members to assume leadership roles in the firm increases the value of the firm for all who have an ownership interest in it.
Conditions Favoring Successful Leadership Succession in a Family Firm
•A sound, profitable business
•Stable, healthy family relationships
•Advance planning for leadership succession
•Positive family leadership and a team-oriented management structure
•Presentation of career opportunities without pressure
•Open communication on family business issues
•Stable, healthy family relationships
•Advance planning for leadership succession
•Positive family leadership and a team-oriented management structure
•Presentation of career opportunities without pressure
•Open communication on family business issues
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