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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
2
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
3
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 ….
4
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?
24
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?