Understanding the Family Business_3.19.16

8/19/2019 Understanding the Family Business_3.19.16

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UNDERSTANDING THE FAMILY

BUSINESSRedwin A. Duay


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What we will learn today?

•Dynamics, Dimensions and Complexity ofFamily Business

•Family Values, Legacy, Relationships,Business Cultue

•Vision and Values


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Dynai!"# Dien"ion" and $o%le&ity o'Faily B("ine""

!hat ma"es family #usiness complex$

Business issues

%wneship

Family issues


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Three Sta)e" o' a Faily B("ine""

&ntepeneuial 'tage

entepeneu foms the founding geneation

focused on ceation of new #usiness

e(eything is new, e(eything is diffeent, e(eything

has to #e ceated fist

owneship is not eally an issue

family is also not an issue


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&aly )eneation and 'malle Families childen of the foundes

thee is now a need fo consolidation #ecause of the

apid gowth of the entepeneuial stage that needs to

#e stuctued as pofita#ility comes to foefont the cultue tends to #e e(olutionay * #uilding on what

the foundes esta#lished athe than changing the

#usiness completely

owneship #ecomes an emeging and often emotionalissue

newe geneations feels a sense of tying to escape

fom the su#mission of the founding geneation, wanting

to ceate thei own pesonal woth


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Late )eneations and Lage Families

thee can #e se(eal hunded family mem#es all with

inheited shae in the #usiness

should the #usiness continue doing the old way+tadition o adapt to new ma"et needs +inno(ation

owneship issue eally comes to the foe

thee is a need to addess the lage degee of

di(esity * of inteests, #ac"gounds, needs and additionof new #lood though spouses


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Re!on!ilin) Ten"ion" 'or Lon)*Ter S(!!e""

identify which stage the family #usiness is at, and

highlight ele(ant issues and conflicts associated withthat stage

ta"e an unemotional, ational appoach that sepaates

out the thee dimensions of #usiness, owneship and

family econciling conflicts should come fom the #usiness

cultue

employ the family logic of -togethe we ae much

stonge


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Ti%" 'or Na+i)atin) the $o%le&itie" o' FailyB("ine""

E,ra!e the Intan)i,le" *family #usiness is the

em#odiment of a family/s (alues and cultue.Communication #etween family mem#e is impeati(e

De'ine and Se%arate yo(r Role" * definition and

sepaation of oles is an impotant and pogessi(e stepfo family #usiness to ta"e

Inte)rate B("ine"" Strate)y# S(!!e""ion and

In+e"tent * to gow effecti(ely and efficiently youshould ha(e one single ad(iso who is a family #usiness

expet


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Ti%" 'or Na+i)atin) the $o%le&itie" o' FailyB("ine""

$on"ider a Board * fomal #oad can diect stategy,

ma0o decision ma"ing, hiing and compensation ofmanages

Earn Yo(r -oi!e * it is impotant to sepaate mem#eship

in the family, a #ithight, with in(ol(ement in the family

#usiness, which needs to #e eaned.

Hone"ty i" a .oli!y * what may ha(e wo" in the past

may not #e good enough in the futue

/ee%in) the Dialo)(e Goin) * de(elop a system of

communication and accounta#ility that ensues all this

had wo" has lasting effect

1 "eeping the dialogue going, "eeping family mem#es

acti(e and in(ol(ed will only enhance pefomance of the

#usiness and satisfaction of family mem#es


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Stron) Faily -al(e" Brin) Faily B("ine"" S(!!e""

/ey" to Faily B("ine"" S(!!e""

E"ta,li"h $lear Role" and Re"%on"i,ilitie" *clealy

defined oles fo e(eyone helps the #usiness un

smoothe, and also limits the potential fo

disageements #etween family mem#es

1 the impotance of maintaining sepaate oles also

extend to managing family mem#es

1 wea two -hats that epesent you sepaate ole

as mem#e of the company and the family


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.lan Early 'or the Ne&t Generation * gadually

pepae the childen fo the tansfe of leadeship o

owneship

1 let them lean fom the gound up

1 expose to all aeas of #usiness if the child is goingto ta"e the leadeship ole in the futue



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The $(lt(re o' Yo(r B("ine"" Start" at Hoe * the

cultue of a family will tanslate to the cultue of the

#usiness

1 family (alues will influence the way wo" is done in

the #usiness

1 thee is no competition and the wo" is done

togethe e2ually



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How Do B("ine"" Failie" Ma0e De!i"ion"?

$a"tin) +ote" * accoding to one/s owneship

pecentage with a simple ma0oity +34 pecent o moe

caying the decision

$on"en"(" Style * utili5ed to gain #oad acceptance

and (alua#le suppot when it comes time to implement

the decision

De!i"ion*Ma0in) on Faily B("ine"" Matter"


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Family (alues6mission6(ision

Communication in the family

Family education

Family elations

Aiding tou#led family mem#es Resol(ing family conflicts

7hilanthopy

Family6#usiness elations

Family employment policy

Vacation home economics and use policy

Faily B("ine"" Matter" on whi!h a Faily ha" .riaryDe!i"ion Re"%on"i,ility


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$entrali1ed Leader 2 nomally the founding mem#e of

the family #usiness1 when faced with tough issues, many families

default to a senio geneation o senio family mem#e

1 decisions on family mattes elated to #usiness

may #e made #y the one who contols the #usiness

1 "ey facto is the le(el of tust and espect

commanded #y the leade. 8he moe tust and espect,

the moe othes will feel that the decision has #een

made with consideation of #oad input.

How Do Failie" Ma0e Good De!i"ion"?


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Di"ad+anta)e"3

4. aely last

9. #ecomes unfulfilling in that it does not allow all family

mem#es to feel they ha(e a (oice and may e(en

conti#ute to apathy and educed commitment to the

family mem#e

-otin) 2 can #ing decisions to 2uic"e esolutions

1 as long as e(ey#ody undestand the ules the goup

geneally will #e a#le to suppot the outcome1 may not achie(e the same #uy1in that would #e gained

#y those who see" consensus decisions

1 eligi#ility must #e defined, and it (aies #y the foum and

each family/s own ules fo -who will ha(e a (oice



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$on"en"(" 2 offes the oppotunity fo geate

implementation success due to #oad suppot dei(edfom the way the decision is made.

1 some define it as -4:: pecent of the goup must

agee on a decision +unanimity

1 ta"es time as goup ties to fomulate the 2uestionsunde consideation so that they may decide as a goup

1 one method is defining consensus as a ma0oity

(ote with an indi(idual (eto featue



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Ma4ority -ote with an Indi+id(al -eto Feat(re

Fo it

Against it +it/s not my fist choice #ut ; can li(e with it

A#stain + if the family mem#e feels he6she does not ha(e

enough infomation

%#0ect +no consensus if one o#0ects


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:1, ?:1, @:1 day cooling1off peiod in odeto allow futhe study to exploe an issue o get moe

data

!ite the aguments on #oth sides of the decisions

and allow a thid paty to weigh in and ende anopinion

Ceate a tas" foce to study the issue and attempt to

daft a new poposal



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- 8he most impotant pepaations happen yeas #efoe the

new family employee actually 0oins the family #usiness, ideallywhen they go to wo" at anothe company.

Do55

.lan ahead 2 outside expeience gi(es the new family hieinstant cedi#ility with othe employees that can othewise

ta"e yeas to de(elop

Start the new 'aily e,er at an a%%ro%riate le+el 2 this will

ensue that the 2uality of wo" they will gi(e to the #usiness is fitted tohis6he expeience if automatically at top position, thee is a is" that othe mem#es of he

ogani5ation who ae not family mem#es ae gi(en unfai ad(antages

if too low especially if with outside expeience, then you is" putting them in a

#oing situation o causing them a lot of fustation that lead them to lea(e

Do6" and Don6t" 'or Brin)in) the Ne&t Generation into theFaily B("ine""


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Do55

Announce the new family employee/s ai(al in amatte1of1fact manne


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Don6t55

Ceate a 0o# fo the new family mem#e

7ut all esponsi#ility fo the caee enty and

de(elopment of the new family hies on 0ust one

geneation

Do6" and Don6t" 'or Brin)in) the Ne&t Generation into theFaily B("ine""


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-i"ion * the a#ility o an instance of geat peception, esp. of futue

de(elopments

1 the stated aims and o#0ecti(es of a #usiness o othe ogani5ation

1 futue scenaio fo the company itself o fo the society

Mi""ion 2 a specific tas" o duty assigned to a peson o goup of people

1 a peson/s (ocation +mission in life1 the specific tas" of the ogani5ation * what the company does o commits

to do * in suppot to the (ision to ma"e it eal

-al(e7" 2 the desia#ility of a thing, often in espect of some popety such as

usefulness o exchangea#ility woth, meit, o impotance

1 the moal pinciples and #eliefs o accepted standads of a peson o

social goup

1 ae the pinciples of #eha(io in the company

-Collins &nglish Dictionay +9::>

-ISI8N and -ALUES


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a. concepts o #eliefs

#. petain to desia#le end states o #eha(ios

c. tanscends specific situation

d. guide selection o e(aluation of #eha(io, things and e(ents

e. specify an indi(idual/s pesonal #eliefs a#out how he o she

-should o -ought to #eha(e

E9.ANDED DEFINITI8N 8F -ALUES


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Sa%le $o%any -i"ion

: 8o #e the #an Resot of Refeence in &uope +


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- 8he (alues of family1owned fims ae often moe humane,

moe emotional and moe fundamental, wheeas the (alues innon1family #usinesses ae moe tansactional, moe impesonal

and diected towad economic outcomes +!ad, 9::

-ALUES $o%ari"on


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I%ortan!e o' -al(e" in Faily B("ine""

stongly detemines the "ind of #eha(io that will #eaccepta#le o unaccepta#le in thei ogani5ation

di(es "ey decisions in #usiness stategy, ogani5ational

stuctue, copoate cultue, go(enance, owne/s commitment

and leadeship style

diect thei appoach to the stewadship of assets and affect

thei attachment to the family legacy

damatically detemine how the family #usiness is go(ened

shape the family mem#es commitment to the fim

they di(e all that happens in #oth the family and the #usiness

-ISI8N and -ALUES


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Non*Faily Fir" +"5 Faily Fir" ;-al(e"<


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Genero"ity 2 the (alue of geneosity is fundamental in that it

will help to pese(e the heitage acoss geneations, and alsopo(ide families in #usiness with poweful esouces to deal

successfully with the thee of thei "ey challenges good

management of the family patimony, powe and status

H(ility 2 can often #e taced to the hum#le oigins of many

family #usiness, in which the founde launched the #usiness

though detemination, esponsi#ility, dedication and had wo"

$o(ni!ation 2 communication pocesses ae (ital to familyfunctioning and well #eing, helps family #usinesses o(ecome

una(oida#le challenges that go along with passing the #usiness

fom one geneation to anothe.

Analy"i" o' the -al(e" Uni=(e to Faily 8wned Fir"


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Ser+i!e 2 the se(ice offeed to customes in family1owned fims is a

eflection of the owning family hence it is not supising to find that

family owned fims (alue custome pactices that in(ol(es consideation

of employees and customes moe than solely financial pofit

$reati+ity 2 (alue of ceati(ity is an impotant competiti(e ad(antage it

is pat of thei histoy

E&!ellen!e and >(ality 2 ha(ing the family name on a #and gi(es

family #usiness leades a sense of stewadship and esponsi#ility

towad thei family and the society in which the company opeates

Entre%rene(r"hi% 2 this is deeply ooted in the histoy of family1owned

fims, especially within the founde/s initiati(e to set up a #usiness and

the existence of a #usiness climate in the founde/s family acoss

geneation

Analy"i" o' the -al(e" Uni=(e to Faily 8wned Fir"

Documents

Understanding the Family Business_3.19.16