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MGT 4550 - Family Business Management

MULTIPLE GENERATIONS - ROLES IN THE FAMILY BUSINESS

ChapterChapter 3 3

Family Business Management, Concepts and Practice

by A. Bakr Ibrahim & Willard H. Ellis

Instructor: Dr. Irene Duhaime

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Class Schedule - Week 3 Class Schedule - Week 3

MULTIPLE GENERATIONS - ROLES IN THE FAMILY BUSINESS

Reading: Chapter 3 Dual Relationship

Case:

The Steinberg Family, FBM, p.57

Precista Tools, FBM, p.157

Questions 73, 74, 78, 90, 91 from FBAB

PROJECT TEAMS TO BE ASSIGNED

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Content Content

The Social and Business Functions The Overlap between Functions The Problem of Carry-over Forming One’s Own Identity - Daddy’s

Little Girl The Path of Self-evaluation continued ….

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Content Content

…. continued

Expectations and Exploitations Zone of Comfort Nepotism Confusion Supervising Family Members The Art of Disengagement

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The Social and Business Functions

Dual Relationship Social Function (Family)

Decision-making based on emotional and biological imperatives

Business Function (Family Business) Decision-making based on objective, rational

economic model

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The overlap between functions

Value Conflict Consists of different sub-systems of the

family and the business Each sub-system affects and is affected by

the other parts of the system Overlaps cause dysfunction

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The Overlap between Functions

Econom icM odel

O bjective

Perform ance

Profit

TheFamily

Business

O wners

M anagers

Em ployees

TheFamily

Socia lN orm s

Em otional

B io log ica l

Belonging

Figure 3.1 T he O verlap Between the Socia l and Business Functions,Fam ily Business m anagem ent, Ibrahim & E llis

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The Problem of Carry-over

Create situations of: no-win transfer of family problems to non-family

employees disruption due to family feuds difficulty in distinguishing between roles

in family & roles in the business

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Forming One’s Own Identity - Daddy’s Little Girl

Suppression of identity for offspring

Tendency for gender biases to influence

decision-making

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The Path of Self-evaluation

Offspring often: crave autonomy

are not prepared for succeeding the founder

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Expectations and Exploitations

Offspring are often required to meet family

expectations

Elder family members may exploit younger

family members difficult to say ‘no’

working long hours

little compensation

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Zone of Comfort

“...establishing well-defined inter-personal

boundaries is critical in family firms” to avoid negative impact on family life

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Nepotism

“The advancement of family members on the basis of their relationship in the social function rather than on their qualifications...”

Causes some family businesses to lose talented staff

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Confusion

Confusion over Rules and Roles

Acceptable practices e.g. in succession or

hiring

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Supervising Family Members

Hard to criticize elder

Hard to evaluate close family members

Family members must learn the

art of constructive criticism.

Senior family members must take the lead to

explain the benefits of being open and

candid.

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The Art of Disengagement

Box 3.2 The Art of Disengagement

Formulate clear organizational goals, objectives and strategy.

Design job descriptions. Establish policy and procedure guide. Design the organization chart. Develop the strategic plan. Prepare a code of conduct. Establish performance evaluation measures. Develop a succession plan.

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Cases Cases

THE FOUNDER AND MULTIPLE GENERATIONS

Cases:

The Steinberg Family, FBM, p.57

Precista Tools, FBM, p.157

Questions

73, 74, 78, 90, 91 from FBAB

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Project TopicsProject Topics

PROJECT TOPICS DUE

THIS WEEK !!!

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Class Schedule - Week 5Class Schedule - Week 5

CONFLICT MANAGEMENT IN FAMILY BUSINESS

Reading: Chapter 4

Case: Northern Construction Inc., FBM, P.203

Questions 9, 24, 59, 70, 77, 85, 86, 90 FBAB

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Question 73

Is it a good idea to spend time together away from the business?

Can you ever really have a separation between family and business?

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Question 74

When you and your sibling are contemplating joining the family business, what should you, your sibling and your parents have in mind concerning sibling relationships and roles?

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Question 83

Should advisors be or become personal friends ?

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Question 90

What are the different types of company cultures that can exist in a family business and does it matter for family harmony and good business ?

What can you do to emphasize more, the culture’s good points and change its negative ones?

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Question 91

How do you get management and employees to buy in to culture?

How do you also market that culture to attract employees and customers plus impress others in the industry?