understanding the family business_3.19.16
TRANSCRIPT
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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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Three Sta)e" o' a Faily B("ine""
&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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Three Sta)e" o' a Faily B("ine""
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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/ey" to Faily B("ine"" S(!!e""
.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
Stron) Faily -al(e" Brin) Faily B("ine"" S(!!e""
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/ey" to Faily B("ine"" S(!!e""
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
Stron) Faily -al(e" Brin) Faily B("ine"" S(!!e""
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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
How Do Failie" Ma0e Good De!i"ion"?
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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
How Do Failie" Ma0e Good De!i"ion"?
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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
How Do Failie" Ma0e Good De!i"ion"?
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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"