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journa l homepage: www.e1. Introduction

Families in business face unique challenges. These aretraditionally attributed to the overlap of the family and businesssystems where, often, the emotional bonds between familymembers become intertwined with business issues (Craig &Lindsay, 2002; Lansberg, 1983; Sorensen, 1999). As a result, thefamily business is rarely viewed as a total system (Schneider,1989). Family business is usually seen from either the businessperspective, from the family perspective, or as two conictingsystems. A family business, from the business system perspective,is a system that is task orientated and competency based (Davis &Stern, 1980). The primary task is the generation of goods andservice through organized behaviour for the purpose of making aprot. As a result, social relations are very much inuenced andguided by the norms and principles that facilitate the productiveprocess. As such, the family business is an enterprise that is basedupon the concept of merit and is a system that values the personbased upon what s/he does (Lansberg, 1983, p. 42).

Alternatively, from the family system perspective, the familybusiness is a kinship system in which members are related byblood or law. This system operates within the environment of thehousehold, is not a place, but rather a pattern of appropriateconduct, coherent, embellished and well articulated (Goffman,

1959, p. 75). In this system, the glue that holds the family togetheris cooperation and unity, its emotional bonding and affectionateties that develop between and among its members, as well as asense of responsibility and loyalty to the group as a system (Aldrich& Cliff, 2003; Schneider, 1989). It is a system largely based on theconcept of need. That is, the familys primary social function is toassure the care and nurture of its members. Specically, socialrelations in the family are structured to satisfy family membersvarious developmental needs and tend toward valuing the personbased upon who he/she is (Kepner, 1983, p. 60). Family businessresearch has now evolved to the point where to understand thefamily business we must recognise that the two subsystems(family and business) co-exist and it is their relative powers thatmake a family business unique (Sharma, Chrisman, & Chua, 1997,p. 20), a notion recently supported by Basco and Perez Rodrguez(2009).

Motivated by Basco and Perez Rodrguez (2009) ndings thatapproaching the family business as a single system yields betteroverall (family and business) results (see also, Pieper & Klein, 2007;Whiteside & Herz-Brown, 1991), this study is an action-basedverication of the single-system view which we apply to a novelcontext (i.e., the Australian eco-tourism industry) and through adifferent lens, the Balanced Scorecard (BSC).

The purpose of this paper, therefore, is to demonstrate using anaccepted strategic management and measurement tool, theBalanced Scorecard (BSC), how family system and business systemgoals can be aligned. Specically, we enlist an innovation actionresearch (Kaplan, 1998) process to address the following researchquestion: How can the four perspectives of the Balanced Scorecard,namely nancial, customer, internal business processes, and

* Corresponding author. Tel.: +61 7 55951161; fax: +61 7 55951160.

E-mail addresses: jcraig@bond.edu.au, kmoores@staff.bond.edu.au (J. Craig),

kmoores@staff.bond.edu.au (K. Moores).1 Tel.: +61 7 55951161; fax: +61 7 55951160.

1877-8585/$ see front matter 2010 Elsevier Ltd. All rights reserved.doi:10.1016/j.jfbs.2010.04.003Strategically aligning family and busines

Justin Craig *, Ken Moores 1

Australian Centre for Family Business, Bond University, Queensland 4229, Australia

A R T I C L E I N F O

Article history:

Received 4 February 2010

Received in revised form 24 March 2010

Accepted 9 April 2010

Available online 12 May 2010

Keywords:

Balanced Scorecard

Strategic planning

Strategy formulation

Family business

Family dynamics

Action research

A B S T R A C T

We take an integrated appr

innovation action research

reference to family busines

members and managemen

scorecard development is

statements, strategic objec

stakeholders to ascertain co

family domain, the BSC assi

business system perspectiv

this too has benets in co

introduced and propositionsystems using the Balanced Scorecard

ch to align issues that inuence the family and business, systems. Using

Kaplan, 1998) we illustrate how the Balanced Scorecard, that includes

challenges can be introduced and used to assist family, members, board

n a third-generation Australian family-owned business. The process of

scussed and the development of the core essence, vision, and mission

es, measures and targets, which can be scrutinized by family, business

istencywith the vision of the company, is outlined.We suggest, that, in the

in the education of, and communication among, family, members. From a

the BSC is a useful tool to link and align the family with, the business, and

munication and education terms. A conceptual mapping, framework is

that will guide future projects are detailed.

2010 Elsevier Ltd. All rights reserved.

usiness Strategy

l sev ier .com/ locate / j fbs

J. Craig, K. Moores / Journal of Family Business Strategy 1 (2010) 7887 79learning and growth perspectives, be adapted to align thepotentially divergent family system and business system goalsthat exist in family-owned businesses? We show how the BSC canbe adapted to the family business context as a measurement andmanagement, as well as a communication, tool that is easilyinterpretable by those involved in family business (see also, Craig &Moores, 2005). We address a gap in the literature by focusing ourlens on how family goals and business goals can be concurrentlyaddressed. Specically, we highlight a framework that can assistfamily businesses understand that, as their rm morphs into anincreasingly complex business, strategy becomes increasinglyimportant as strategic decisions affect, and need to be communi-cated to, an increasingly diverse group of family and non-familystakeholders.

We begin with a brief introduction to the literature thatdistinguishes strategy in the family business domain. Followingthis, we present an overview of the BSC including an outline of thefoundation vision and mission statements, which are at the core ofthe scorecard development process. Then, using a case study of athird-generation family business in Australia, we show how theBSC can be adapted to the family business context. We detail theprocess how the four perspectives of the BSC have been introducedto the family business and include the objectives, measures andtargets that the family has established to ensure the alignment offamily and business strategic goals. Finally, we include aconceptual process model and introduce a series of propositionsthat will drive future projects.

2. Family business strategy

Aligning family and business goals is a challenge in developingfamily business strategy. Sharma et al. (1997) point out familybusiness is more likely to have multiple, complex, and changinggoals rather than a singular, simple, and constant goal (p.17).Harris, Martinez, andWard (1994) suggest that the assessment offamily business characteristics and their inuence on strategyleavesmore questions than answers (p. 171), and Chrisman, Chua,and Sharma (2003) later contended that this situation was stilllargely the case. However strategic planning and strategyformulation are ways in which family and business goals can bealigned (Astrachan, 2010; Pieper, Klein, & Jaskiewicz, 2008) toachieve the competitive advantages enjoyed by many sustainingfamily rms (Miller & Le Breton Miller, 2005).

The integration of the social-centered family system to thebusiness system is signicant in strategy planning terms(Nordqvist & Melin, 2010; Zahra, Hayton, Neubaum, Dibrell, &Craig, 2008). Though seemingly a subtle distinction, simply addingthe family to the business system understates what distinguishesstrategic planning processes in business families. As an example,families have the opportunity to participate in impromptu,informal meetings and discussions that create a valuable senseof unity and consensus about organizational goals and values(Habbershon & Astrachan, 1997). Used as vehicles to integratefamily and business systems, these forums act as a valuable sourceof competitive advantage by allowing the family rm to achievethemany benets of strategic planning without necessarily havingto formalize the process (Eddleston, Kellermans, & Sarathy, 2008;Miller & Le Breton Miller, 2005). While non-family rm membershave the opportunity to participate in informal, face-to-facemeetings, due to the social foundation around which a familybusiness is centred, suchmeetings take on greater signicance andprovide a vehicle for the between and among generation sharing ofvalues, beliefs and goals (Corbetta & Tomaselli, 1996; Fama &Jensen, 1983; Suare & Santana-Martn, 2004). Families in businessare familiar with, and have intimate knowledge of, businessmatters that is garnered from a long association with the business,and, obviously, the family (Demsetz, 1988; Schulze, Lubatkin, &Dino, 2003).

Strategic differentiation that family rms have over non-familyrms, i.e., trust, family culture and family values (Gudmundson,Tower, & Hartman, 2003; Steier, 1998; Zahra, Hayton, & Salvato,2004), has contributed to them being labeled as strategicallyconservative. However, this conservatism potentially enablesthem to be more exible in relation to formal strategic changewhile simultaneously making signicant incremental changes(Moores & Barrett, 2003; Shepherd & Zahra, 2003).

3. The Balanced Scorecard

Endorsed bymany of theworlds most successful organizations,the Balanced Scorecard (BSC) was developed by Kaplan and Norton(1992) to link the measurement of nancial and non-nancialindicators with rm strategy. Though originally developed as aperformance measurement tool, the BSC has evolved into anorganizing framework, an operating system, and a strategicmanagement system (Kaplan & Norton, 1996). As exclusivereliance on nancial measures in a management system isinsufcient, the BSC highlights the difference between lagindicators versus lead indicators. Financial measures are lagindicators that report on the outcomes from past actions (Kaplan& Norton, 2001, p. 18). Examples of lag indicators are return oninvestment, revenue growth, customer retention costs, newproduct revenue, revenue per employee, and the like. Theselagging outcome indicators need to be complemented (supple-mented) by measures of the drivers of future nancial perfor-mance, that is, lead indicators. Examples of lead indicators arerevenue mix, depth of relationships with key stakeholders,customer satisfaction, new product development, diversicationpreparedness and contractual arrangements.

The BSC also addresses the measurement and management oftangible versus intangible assets. Examples of tangible assetsinclude items such as inventory, property, plant and equipment(Chandler, 1990) while examples of intangible assets arecustomer relationships, innovative products and services,high-quality and responsive operating processes, skills andknowledge of the workforce, the information technology thatsupports the workforce and links the rm to its customers andsuppliers, and the organizational climate that encouragesinnovative problem-solving and improvement (Kaplan &Norton, 2001, p. 88). The BSC enables the rm to distinguishfour distinct strategically important perspectives: nancial,customer, internal processes, innovation and learning. Theseare individualized by the organization around the vision and themission, and enable the management team to establishobjectives, measures and targets. Theoretically, as Kaplan andNorton point out the academic literature, rooted in the originalperformance management aspects of the scorecard, focuses onthe BSC as a measurement system but has yet to examine (indetail) its role as a management system (Kaplan & Norton, 2001,p. 100) and it is our aim to address this in the context of family-owned businesses.

At the core of the BSC, and an integral step before attemptingto build what Kaplan and Norton (2001) refer to as strategymaps, is the necessity to review mission statements: why thecompany exists, the core values and what the company believesin. A strategic vision can then be developed. The vision creates aclear picture of the companys overall goal...the strategyidenties the path intended to reach that destination (Kaplan& Norton, 2001, p. 19). The BSC provides a framework fororganising strategic objectives into four perspectives: (1)nancial, (2) customer, (3) internal business processes, and (4)learning and growth.

J. Craig, K. Moores / Journal of Family Business Strategy 1 (2010) 7887803.1. Financial perspective

Economic growth strategies are usually approached from arevenue growth or productivity perspective. Revenue growthinvolves either increasing revenue from new markets, newproducts and new customers; or increasing sales to existingcustomers. Productivity strategies involve either improving coststructures by expense reduction; or the more effective utilisationof assets (Kaplan & Norton, 2001). These widely accepted metricsform the nancial perspective of the BSC.

3.2. Customer perspective

The unique mix of product, price, service, relationship, andimage that the company offers, is at the core of any businessstrategy, and are introduced in the BSC via the customerperspective. This customer-value proposition denes how thecompany differentiates itself from competitors and is crucialbecause it helps an organisation connect its internal processes toimproved outcomeswith its customers (Kaplan &Norton, 2001, p.19). Value propositions include operational excellence, customerintimacy and product leadership and sustainable strategies arebased on excelling at one of the three while maintaining thresholdstandards with the other two. Identication of a value propositionallows the company to know which class and type of customer totarget. In addition, the customer perspective identies theintended outcomes from delivering a differentiated value propo-sition, e.g., market share in targeted customer segments, accountshare with targeted customers, acquisition and retention ofcustomers in the targeted segments and customer protability(Kaplan & Norton, 2001).

3.3. Internal process perspective

The internal process perspective captures the critical organisa-tional activities that will determine the means by which thecompany will achieve the differentiated value proposition and theproductivity improvements for the nancial objectives (Kaplan &Norton, 2001). These are captured by (1) spurring innovation todevelop new products and services and to penetrate new marketsand customer segments; (2) increasing customer value byexpanding and deepening customer relationships with existingcustomers; (3) achieving operational excellence by improvingsupply-chain management, internal processes, asset utilisation,resource-capacity management, etc.; and (4) becoming a goodcorporate citizen by establishing effective relationships withexternal stakeholders. Related nancial benets typically occurin short-term, intermediate and long-term stages.

3.4. Innovation and learning perspective

The foundation of any strategy is the innovation and learningperspective. Employee capabilities and skills, technology, andcorporate climate are needed to support the strategy. Theseobjectives enable the company to align its human resources andinformation technology with the strategic requirements from itscritical internal business processes, differentiated value proposi-tion, and customer relationships (Kaplan & Norton, 2001, p. 20).

Each of the four perspectives are individualised by theorganisation around the vision and the mission, and objectives,measures and targets are established accordingly. The BSC can beused to accomplish four important management processes: (1)translating the vision: objectives and measures; (2) communicat-ing and linking: by bringing understanding to employees relatingto critical objectives and how they will be measured; (3) businessplanning: helps organisations integrate plans by using objectivesto set targets; and (4) feed back and learning: tests the viability ofoverall strategy. As such, the BSC benets shareholders, manage-ment and employees. Shareholders are provided with an improvedunderstanding of the workings of the operation, are able to realisethat the business is more than just money orientated and a greaterfocus can be placed on building a stronger operation rather thanjust nancial performance. Management are provided with greaterability to communicate the vision, deal with change and growth,provide more relevant and structured information, create aworkforce that has an interest in the strategic direction of theoperation and is working toward the achieving the same missionand are better able to measure true performance. Employees havegreater ownership of their position, a belief in the strategicdirection of the operation through their input, a say in thedevelopment of their skills and an understanding of how theirperformance is measured.

4. Research methodology

The method adopted in this research is a form of actionresearch. People, however, have different meanings and inter-pretations about action research. The form adopted here is thatwhich Balanced Scorecard creator, Kaplan (1998), labeled innova-tion action research. In innovation action research, scholarsdevelop and rene theory (of new management practice) theybelieve to be broadly applicable to a wide variety of organizations.

Scholars engaged in innovation action research play an activerole in implementing their ideas in actual organizations. Theconcepts must promise sufcient benets (i.e., they represent asolution to a real problem) and be articulated clearly enough thatorganizations are willing to commit their own resources to animplementation experience. The research cycle in innovationaction research involves:

Observing and documenting innovative practice (see, Craig &Lindsay, 2002; Craig & Moores, 2002, 2004; Moores & Barrett,2003);

Teaching and speaking about the innovation (see, Moores &Craig, 2002, 2003);

Writing articles and cases (see, Craig & Moores, 2005); Implementing the concept in a new organization (current paper).

Bracketed references address how we have followed thisresearch cycle.

5. Case study: OReillys Rainforest Retreat

OReillys Rainforest Retreat is a family-owned and family-operated business that was established in 1926. It is located in theLamington National Park in Queensland, Australia. The Retreataccommodates up to 180 guests, employs 80 full-time staff(increased from 27 staff in 1990), and enjoys a 70% year roundoccupancy. The business has developed an international reputa-tion in eco-tourism and is the winner of numerous training, familybusiness, and tourism industry awards.

Currently, the business is managed by the third generation. Thisgeneration is made up of members from two family groups: 4 off-spring of Peter and Karma OReilly and 10 off-spring of Vince andLona OReilly. The CEO is the eldest son of Peter and Karma. Thefamily has been pursuing a professionalisation agenda for anumber of years, especially under the leadership of its currentthird-generation CEO, who learned business outside the familybusiness in the hospitality industry both in Australia and overseas.Included among its professionalisation initiatives are an activeboard of directors, a Family Council, and regular family retreats.The seven-member board of directors meets monthly and is

J. Craig, K. Moores / Journal of Family Business Strategy 1 (2010) 7887 81chaired by a non-family independent director and includes twoother independent non-family directors. Additionally, the familyhas been holding family meetings since the early 1990s, whichprompted the instigation of the Family Council. These meetingshave now evolved into retreats that are typically held over 2 daysand include all family members plus spouses/partners.

Board of director reporting was targeted as an area to furtherimprove. To that end, an external consultant was engaged toexamine the key nancial drivers with a view to targeting areas toimprove performance, and the reporting thereof. Coinciding withthis initiative, senior management were encouraged to align theirreports to the board of directors more closely with the keyobjectives in the current strategic plan. This was to be renedfollowing the adoption of the annual strategic plan. In preparationfor this planning, it was necessary for family stakeholders to clarifytheir expectations in terms of the vision and goals that they heldfor the family rm. The BSC was adopted as the mechanism toframe the new reporting policies.

5.1. Beginning the Balanced Scorecard introduction process

The clarication of family stakeholder expectations occurredat the rst of two family retreats held annually. In anticipation ofthis meeting, the results of a survey of family members that hadbeen circulated some months earlier were summarised andpresented for discussion, conrmation or amendment. The 26surveyed family members represented a demographic cross-section: G1 = 2, G2 = 16, G3 = 8; employed by the business infull-time capacity = 6, part time capacity = 4; management = 4;board members = 5. Reponses to the question related to theirpersonal vision and goals for the family business over the next510 years were classied according to (1) family as owners, (2)family as employees, (3) family as family, and (4) family ascommunity. The emergent themes distilled from these responseswere that the family were in favour of (1) growth of the totalbusiness through diversication away from the mountain, and(2) the consolidation of its mountain retreat operation byenhancing the guest experience. As well, there was agreementthat the family were to be encouraged to be involved in thebusiness and that education would be used to develop thisinterest. The family felt strongly that the business continues toacknowledge the history of its foundation by perpetuating thevalues of prior generations and developing exible ownershipstructures to enable continued generational involvement. Also,family members were especially united in their goal toemphasise environmental responsibility, an acknowledged keyideology of founding generations. Refer Appendix 1 for summarydetails of this survey.

These responses were further tested in an open forum and ingroup discussions during the second family retreat later in thatyear. The emergent set of family expectations was ratied as thefamilys vision for the business and circulated to the family and tothe board of directors. The key outcomes, as reported to the familyand to the board of directors, were:

Family as owners: To grow the family business. To consolidate the core operation. To diversify and grow the business, thereby providing increasedopportunities for family to work and have career paths withinthe business.

To implement structures (i.e., ownership, nancial, strategic) toaid this growth and diversication.Family as employees:

To encourage family members to pursue career options viaemployment in the diversied business. To develop two distinct employment policies for familymembers(1) for operations (lower level/internships andvacation employment), and (2) for management.

To emphasise that respect has to be earned and is a vital part ofthe company framework. A separate induction program will berequired for family members so that they know and appreciatethe extras demands and expectations placed upon them in thefamily business work environment.Family as family:

To encourage all family members (including those not workingin the business) to contribute to the perpetuation of the familysvalues by their representation of the family in various forums.

To further improve communication, especially to celebratemilestones that will be maintained in part via internal news-letters.

To encourage family to stay (holiday/visit regularly) in themountain resort.

To ensure the development of succession plans and to considerdeveloping more exibility to enable the identication of exitstrategies for those needing them.Family as community:

To be known as a leader of eco-tourism in Australia. To build further the familys reputation as ethical, honest, fairand supporters of the broader local community.

To be known as an employer of choice. To recognise the indigenous heritage of the region.

Using this shared and articulated vision for the family and thebusiness, senior family members and non-family managers heldtheir strategic planning meeting in the rst meeting of thefollowing year (February). The purpose of this meeting was toidentify a 3-year plan and direction for the family business inaccordancewith the familys (owners) expectations andwithin theboard of directors planning parameters.

Subsequently, each manager developed objectives, measuresand targets within a Balanced Scorecard framework for theirassigned area of responsibility. These were to be consistent(aligned) with the agreed direction and plan and be available forteam discussion and agreement for submission to the April boardof directorsmeeting. From this agreed 3-year plan, a budget for thepending year can then be developed to resource the achievementof agreed targets.

5.2. Applying the Balanced Scorecard to the OReilly family business

5.2.1. Core essence

Whereas vision andmission statements at the centre of the BSCare effectively management tools, in family businesses, there is aneed to identify the core essence of the family and therefore thefamily business. The OReilly familys core essence statement wasestablished earlier in the professionalisation process as part of thesecond to third generation transition, as:

We treat strangers like friends, friends as family and family asgold

This core essence statement encapsulates the values thatserve as the foundation for the vision and mission. The currentsenior management team conrmed the key values for thebusiness as:

To respect, support and trust each other and our guests. To act fairly and decisively. To recognise success is due to team efforts and cooperation. To behave ethically with integrity and honesty. To maintain our culture and be proud of our heritage.

To support our local community.

To believe in and deliver sustainable tourism practicesproviding a net benet for the social, economic, natural andcultural environments of our area.

Importantly, these core values were consistent with theinformation collected through the previous survey collectionprocess, demonstrating evidence of alignment.

5.2.2. Vision statement

A companys vision is arguably at its strongest in the foundergeneration and is at risk of being diluted over time (Gallo, 2000).Members of the OReilly family team developed their visionstatement (that addressed their core ideology and envisionedfuture) by taking cognizance of family expectations, origins andhistory of the business and parameters suggested by the board as

With the core essence, the vision andmission decided upon, theBSC framework then enabled the OReilly family to decide what isrequired to adhere to these statements in order to remainnancially sound, customer focused, professional and innovative.

5.3. Financial perspective (FP)

From anancial perspective, family businesses have been foundto have long-term rather than short-term nancial goals (Ander-son, Mansi, & Reeb, 2003) and this inuences strategic decisions.Family business success has typically not been tied to, orestablished from, the same performance measures as otherbusiness types. Often, ownership transition and efciency of thefamily business system rather than wealth-creation and nancialperformance are used to monitor successful performance (Hab-bershon & Pistrui, 2002; Sharma et al., 1997; Sorenson, 2000).

Table 1Financial perspective.

BSC code Objective Measure Target

FP1 Return/growth/sustainability (with particular

emphasis on building a strong business that meets

the requirements and expectations of current and

future members of the OReilly family)

The capital budget 50% invested in the current business and 50% invested

in new growth opportunities with a 20% variance and

implemented this current nancial year. Minimum

investment in dollars to be $250,000 each.

Return on capital

employed (ROCE)

12% (Stepped to 10% this current year)

on

s o

us

de

n t

ito

p

m

nd

eli

J. Craig, K. Moores / Journal of Family Business Strategy 1 (2010) 788782follows:

To grow the business by applying professional managementguided by our core values and the strong ethical business ethicsof the founders, to achieve global recognition as a leader withinAustralias ecotourism sector

5.2.3. Mission statement

In their aim to make every guest feel special by exceedingexpectations, members of the OReilly family team developed theirmission statement as follows:

Make every guest feel special

Table 2Customer perspective.

BSC code Objective Measure

CP1 Provide enjoyable and educational

experiences strongly linked to nature while

ensuring exposure to, and acknowledgment of,

the contribution of previous generations of the

OReilly family.

Participation rates m

tracking of awarenes

involvement in the b

Feedback forms inclu

family involvement i

CP2 To ensure that every guest feels special with

consistent acknowledgment of the fact that the

resort is a guest house owned and operated

by members of the OReilly family.

Feedback forms mon

questions related to a

role of the OReilly fa

Return and recomme

(monitored using FidCP3 Remain competitive, innovative and relevant

to our customers while at the same time

retaining strong links to the legacy of previous

generations of the OReilly family.

Earnings before interes

Earnings before interes

Break-even for the Gue

Feedback Forms

CP4 To be managers of our destination and

be cognizant that the incumbent generation

should be aware that decisions made now will

potentially effect future generations.

Documentation of capa

risks, future planning a

facilities within the des

Family members to pro

the processThe OReilly family divided their nancial perspective objectivesinto: (1) return, (2) growth, and (3) sustainability; with theunderstanding that the business is a family business and that theincumbent leadership develop strategies that address both currentand future generational needs. As illustrated in Table 1, theidentied measures and targets ensure that, from a nancialperspective objective, capital investment is directed to achievelong-term growth and sustainability.

5.4. Customer perspective (CP)

The OReilly family divided their customer perspective objec-tives into: (1) the experience, (2) the differentiation on our value

Target

itored and to include

f OReilly family

iness.

$20 pppd of total unbundled guests Ensure all guests

meet with at least one member of the OReilly family

during their stay.

reference to OReilly

he business.

Discovery activities are rated at 6 or above (out of a

max score of 7), Answer yes to the question related

to meeting at least one OReilly family member during

their stay.

red and include

preciation of the

ily in the business.

Exceed expectations on 60% of all returned forms

Answer yes to question related to being aware of

the involvement of OReilly family.

ations guests

o system)

Return business to make up a minimum of 55%

of all guests

Consistent reference to the fact that family

involvement is a reason for the decision to return.t and tax (EBIT) A minimum of 8% growth EBIT per year.

t and tax (EBIT) 20%

sthouse operation To be at the maximum level of 55% of

turnover by (insert year)

95% report their holiday reason was satised and that

the OReilly family factor was appreciated

city, potential issues,

nd development of

tination.

Documented by September 05 with

representatives of both OReilly families

having input.

vide input to Implementation started (insert time)

ill

s is

ildin

ness

s rev

em

ma

amil

e bu

st E

n

on

onse

ct a

ity/c

orts

ana

J. Craig, K. Moores / Journal of Family Business Strategy 1 (2010) 7887 83proposition, and (3) market share. Specically, the customerperspective objectives are tomake every guest feel special throughthe provision of enjoyable and educational experiences stronglylinked to nature. This is to be achieved by remaining relevant to

Table 3Internal process perspective.

BSC code Objective Measure

IPP1 Communicate and build on the culture of our

organization with particular emphasis being

placed on the fact that OReillys is a family

business.

Feedback forms w

fact that OReilly

committed to bu

competitive busi

shared vision.

Induction proces

and non-family m

Revisit employee

employees and f

socialized into th

IPP2 Eco-tourism Leadership that carries on a

signicant legacy in that previous members

of the OReilly family were pioneers of

eco-tourism in Australia.

Compliance again

Management Pla

Guide accreditati

Contribution to c

Innovation

Indigenous respe

IPP3 Build and maintain a prole as a good

corporate citizen in the broader community

and ensure that members of the family

understand the responsibilities that come

with being a member of the OReilly family.

Budget commun

philanthropic eff

family members.

Environmental mcustomers through competitive management of the destination.The identiedmeasures and targets for these customer perspectiveobjectives are outlined in Table 2 and, as can be seen, the statedobjectives include adherence to the family aspect of the familybusiness.

5.5. Internal process perspective (IPP)

It has been suggested that the family, as a family, developsinternal processes that facilitate the containment, confrontation,and resolution of family problems (Davis & Stern, 1988). Mooresand Barrett (2003) suggest that (1) managers of family rmsshould adopt management systems which are adequate for thedemands of their external and internal environments, as well astheir rms stage of development, (2) management approachesshould form an internally consistent package of strategies,structures and systems, (3) management systems must dynami-cally evolve as the business grows and matures, (4) professional-ism in management is vital for systems development, and (5)without succession plans, professionalisation of the rm isseriously inhibited (p. 148). Thus, internal processes for familybusinesses (like all businesses) are necessary to include in strategydevelopment. Arguably, what makes internal processes (particu-larly changing these processes) more problematic in familybusinesses, is the inuence of the founder or the incumbentgeneration and the preparation for succession.

The OReilly family divided their internal process perspectiveobjectives into: (1) operational excellence, (2) eco-tourismleadership, and (3) good corporate citizenship. Specically, thefamily business decided to plan to build further the culture of theorganization that was founded on eco-tourism leadership andensure that this feature is communicated both inside and outsideof the business, thereby enhancing its reputation as a goodcorporate citizen. The identied measures and targets for theseinternal process perspective objectives are summarized in Table 3.

Target

include reference to the

a family business that is

g a sustainable and

that has at its core a

90% of guests from all returned forms say their

name was remembered

iewed or family

bers.

All staff to go through an induction within

6 weeks of starting at OReillys

nuals to ensure that

y members are

siness.

nvironmental Commission an independent audit of the plan

every 12 months

Minimum of three guides to be accredited at

all times

rvation Provide $5900 per year toward fauna/ora

research.

Active participation in relevant professional

associations: EA, WTA, IA.

Minimum of two improvements to the

delivery, display or interpretation of our

natural/cultural environment.

nd sensitivity. Traditional owners or representatives are involved

in the development of interpretative material that

presents their heritage.

harity involvement and

ensuring input from

1% of total room nights and or the equivalent

of $50,000. $5000 in current year growing by

5% per year for the life of this plan.

gement plan. Monthly implementation.The stated objectives are inuenced by the values that have beenestablished by previous generations of the OReilly family.

5.6. Innovation and learning perspective (ILP)

Family rms have been shown to place substantial importanceupon innovation practices and strategy. Successful family rmshave been found to manage and adjust their innovative strategy(Craig, Cassar, &Moores, 2006). Like innovation, continual learningin the family business is crucial to survival, as highlighted byMoores and Barrett (2003):

Just as the element of family in family-owned businessesinuences how they are managed, that is, how the managerdealswith the contextual factors such as life cycle stage, contextand control, the element of family can be expected to inuencehow people in family-owned businesses learn to manage them.In fact, having to deal with the additional layer of complexitycreated by the family means that the tasks and prioritiesinvolved in learning tomanage a family business lead to specicand enduring paradoxes. The family will turn out to be just asimportant a contingency factor as any of the others in thebusiness context and often more so. And just as understand-ing the stage of the business life cycle helps illuminatemanagement priorities in general, it can help in understandingthe paradoxes that come with each stage of learning the familybusiness (p. 32).

The OReilly family divided their innovation and learningobjectives into: (1) culture, (2) capabilities, and (3) technology.Specically, to become an employer of choice by developing both a

f t

s t

ha

ion

e

Re

ew

e

ut

J. Craig, K. Moores / Journal of Family Business Strategy 1 (2010) 788784Table 4Innovation and learning perspective.

BSC code Objective Measure

ILP1 Have a learning culture throughout our

company and, in particular, ensure that

family members are given the opportunity

to develop an understanding of the OReilly

family business.

Documentation o

detailed strategie

family members

make a contribut

ILP2 Develop people for internal succession and

continue to ensure that family members are

aware of their responsibilities while

acknowledging that each generation knows

that the challenges that they will face will be

Internal appointm

involvement of O

Performance revi

including objectiv

members contriblearning culture and internal succession processes with particularreference to developing competent family members to ll theneeds of the growing family business. The identied measures andtargets for these innovation and learning perspective objectives aresummarized in Table 4.

To ensure that the strategy map adhered to the direction andexpectations that the family had decided upon in their priormeetings, the Board was able to summarize and tabulate theirprogress. This provided them with two outcomes. First, it enabledthem to ensure that both the family and business systems werealigned and second, they were able to identify areas that stillneeded to be addressed. The summary table appears in Table 5.

different to the ones faced by generations

that have preceded them.

Employee feedback

members are treate

Management growt

family members co

ILP3 Be seen as an employer of choice which will

include providing an attractive working

environment for family members who wish,

and have the required competencies, to join

the family business.

Recruitment spendi

Rating against othe

Compare with simil

Staff recommend O

employment

Family members de

be actively involved

matters

Retention rates

Table 5Synthesis of family expectations and BSC perspectives.

Family expectations

1. Family as owners 1.1 To grow the family business

1.2 To consolidate the Guesthouse operation

1.3 To diversify and grow the business, thereby providi

work and have career paths within the business.

1.4 To implement structures (i.e., ownership, nancial,

and diversication.

2. Family as employees 2.1 To encourage family members to pursue career opt

business.

2.2 To develop two distinct employment policies for fam

(lower level/internships and vacation employment), an

2.3 To emphasise that respect has to be earned and is a

3. Family as family 3.1 To encourage all family members (including those n

contribute

to the perpetuation of the familys values by their repre

various forums.

3.2 To further improve communication, especially to ce

maintained in part via internal newsletters.

3.3 To encourage family to stay (holiday/visit regularly

3.4 To ensure the development of succession plans and

exibility to enable the identication of exit strategies

4. Family as community 4.1 To be known as a leader of eco-tourism in Australia

4.2 To build further the familys reputation as ethical, h

broader local community.

4.3 To be known as an employer of choice.

4.4 To recognise the indigenous heritage of the regionTarget

raining plan that includes

o ensure that OReilly

ve the opportunity to

to the family business.

Completed by April each year Implementation

of the planmonthly

nts include, where suitable,

illy family members.

10 personnel per year are promoted to a

new position

s for all employees

reviews of family

ion.

Full review each year in May with a review in

November.6. Discussion and propositions

Successful business families have been able to align theexpectations of their owners (family)with the commercial realitiesof business (Carlock & Ward, 2001). That many family businessesare not able to survive multiple transitions can be attributed tothem not being able to align family needs with commercialrealities. The BSC application introduced in this paper demon-strates how this obstacle can be negotiated. In particular wesuggest that, in the family domain, the BSC assists in the educationof, and communication among, family members. From a businesssystemperspective, our experience is that the BSC is a useful tool to

ensuring that family

d equally

75% state they are developing skills to assume

greater responsibility.

h includes developing

mpetence as managers.

40% of all management positions to be lled

internally

ng

rk a

J. Craig, K. Moores / Journal of Family Business Strategy 1 (2010) 7887 85link and align the family with the business, and this too hasbenets in communication and education terms, specically, inenabling the family business to be focused in accordance withfamily owner expectations. In this way, the BSC enhancesaccountability of governors to owners and emphasises their needto apply independent thought and action to monitoring achieve-ment of these expectations.

As a consequence of this process, we are able to introduce therst propositions resulting from this innovation action research.

P1a. Multigenerational family rms can align their family system andbusiness system by the adoption of a BSC framework to generate

outcomes of (i) family respect and (ii) business clarity.

P1b. With (i) family respect and (ii) business clarity outcomesgenerated, family system and business systems can be further aligned

through the adoption of a BSC framework to generate outcomes of (i)

family engagement and (ii) business direction.

Increased family harmony was evident at subsequent familymeetings at which family members could see that their expecta-tions had been clearly acknowledged in the business plans by thedirectors and senior management. Specically, family membersarticulated without prompting that it was refreshing to see thattheir input was valued. We therefore introduce our secondproposition as follows:

P2. With family respect and business clarity in place, family engage-ment and business direction conrmed, family system and business

Fig. 1. Conceptual mapping framewosystems can be further aligned through the adoption of a BSC frame-

work that generates outcomes in which (i) family stakeholders feel

valued and (ii) the business has sharper focus.

With the BSC framework now introduced to the business andfamily members seemingly satised and condent with theprocess, this project is now entering the monitor and evaluationstage.We are not therefore able to assess or report signicant long-term advantages for both the family and the business systems.However, given the initial response and informal feedback fromfamily and non-family stakeholders, and for the sake of completingthe innovation action research cycle, we tentatively introduce thenal proposition as follows:

P3. With family respect and business clarity in place, family engage-ment and business direction conrmed, family stakeholders feelingvalued and a sharper focused business, family system and businesssystems can be further aligned through the adoption of a BSC frame-

work that generates outcomes of (i) family harmony and (ii) businessachievement.Each proposition delivers colleagues an invitation to join thisaction research initiative. Given the inclusive nature of this projectvis-a`-vis the integration of the BSC perspectives and the over-lapping systems approach to family business, scholars from manydisciplines can play a role. Progressing to the theory testing stagewould involve moving the propositions, which have beendeveloped in terms reective of our single case study experience,to testable hypotheses. While it is comparatively easy to link someof the concepts with extant literature (e.g., commitment) andvarious performance measures, there is scope for scholars tocontribute to the family business eld in novel ways byintroducing new measures under the banner of, for example,respect and harmony.

Proposition 3, in particular, holds great promise for furtherresearch. Anchored around robust family (i.e., family harmony) andbusiness (i.e., business achievement) dependent variables, a studythat captures the relationships among the various family andbusiness independent variables (i.e., family respect and businessclarity, family engagement and business direction, family stake-holders feeling valued and business focus) would add considerablyto the understanding of how to optimize the integration of familyand business systems.

Finally, in Fig. 1 we introduce a conceptual mapping frameworkthat summarizes the process and the family and businessoutcomes resulting from family and business system alignmentusing the BSC.

7. Conclusion

ligning family and business systems.The introduction of the Balanced Scorecard framework to theOReilly family business has proved benecial to the variousstakeholders, i.e., family, directors, and managers. The BSC hasenabled the family to be assured that their expectations havebeen installed as a central consideration in the development ofthe business strategies and plans. The methodology of scorecarddevelopment ensures at least recognition of the visions of keystakeholders. The subsequent development of missions, strategicobjectives, measures and targets can then be scrutinized bystakeholders to ascertain their consistency with these visions.The board of directors more regularly undertakes this scrutiny onbehalf of the stakeholders in its endeavor to balance the familysneeds with those of a business nature. The Balanced Scorecardprovides a reporting regime that reects both these needs and,importantly, reinforces in both the strategy formulation andstrategy implementation process, the criticality of familybusiness alignment. Management can then be encouraged bythe scorecard reporting requirements to focus on the operational

196214 under the title From vision to variables: A scorecard tocontinue the professionalisation of a family rm. We thank theEdward Elgar Publishing organization for allowing us permissionto revisit thiswork and also acknowledge the support of the editorsof that publication Professors Poutziouris, Smyrnios and Klein.

Appendix A

Survey of family member goals and visionsFamily as owners Grow as a family business

Consolidate as a family business

No growth

Great, better, best experience

J. Craig, K. Moores / Journal of Family Business Strategy 1 (2010) 788786Illustrative comments that exemplify each of these goals andvisions are the following responses:

Family as owners The business needs to keep a family orientation, as that is whatmakes us different to our competitors. A long-term focus ofgrowth is necessary, with emphasis on minimal environmentalimpact.

To grow and become more successful. To still be a familycompany in 10, 50 or 100 years.

For the future, I see the expansion and updating of the companyas being fundamental, however, the maintaining of the currentculture will be as important.

Avenues found for diversication of the core business. I personally want a successful and protable business to handonto the 4th generation. We should consolidate our business andmake it the very best it can be, which I believe is the best in theindustry.

As the business continues to grow I think that it should not justlook at future projects before rst looking after what it hasalready achieved, making sure that it is all up to the familystandards.

Family as employees Encouragement

Education and interest

Family as family Perpetuating values

Ownership structure

Family as community Environmental leadershipaspects of the rms strategy in its reporting to the board ofdirectors.

While our conclusions are constrained by the limitations of asingle case study in that the ndings lack generalizability they dohave the added credibility of being part of an action researchproject. As such the project is constantly evolving in the context ofthe case rm effecting change in pursuit of stronger alignmentbetween family and business goals. However, notwithstanding therm specic credibility of our conclusions the robustness of thesendings will be enhanced by further research that explores the useof Balanced Scorecards to foster and bring about the alignment ofbusiness and family goals in various contexts. To this end, thenature of family expectations that impact business goals across thefour scorecard perspectives needs to be claried. Adams, Manners,Astrachan, and Mazzola (2004) provide useful guidance in thisregard when they demonstrate the signicance of nancialaspirations that family members need to articulate as expecta-tions for those leading their businesses.

Acknowledgements

An earlier version of this paper appeared as a chapter in ElgarPublications 2006 Family Business Research Handbook on pp. I feel that, thoughwe need to grow and take risks, we should alsolook at consolidating what we have already.

To my mind, the guest house and accommodation is big enoughconsidering it is a family business.

I think we sometimes forget what a great business we have. Weshould be bursting with pride, and at the same time, striving todo better.

To become the best resort/guesthouse in the region. Certainly agoal of this magnitude is 510 years away but if we strive for thisgoal by ensuring every single guest encapsulates the OReillyexperience after every visit, it is not unachievable in the longterm. I want people to come to OReillys with no expectationsand leave as though theyll never nd an experience like itanywhere else.Family as employees

All family members should be encouraged to work in thebusiness but it is not an automatic right. They must be able andbe prepared to contribute to the business.

Continue to provide opportunities for future involvement offamily members and encourage them to be involved

Educate3rd and 4th generation in business basics via familycourses.

I have a personal goal to one day be associatedwithmanagementin the company. Currently doing business at university to aid inachieving this goal!Family as family

Communication amongst family members continues to developstrengthening relationships, supporting each other and helpingone another realise their dreams.

Acknowledge history and sacrice that was made before thecurrent leadership, i.e., what they gave.

Our family business needs to always retain that personal touchand not leave it to staff. Family in the businessmust lead theway.People (guests) need to be made to feel specialthat is part ofour Mission Statement.

Ownership structure with more exibility to enable continuedgenerational involvement without adversely affecting thebusiness.

The problems at the moment are to do with exit strategies of thebusiness. I hope that the family does not become too concernedwith the money factor, as growth within the company is rising ata level not seen before in the company.Family as community

The main goal I would like for the family business is to be moreenvironmentally aware and focused. As the business hasexpanded we have lost our obligation to preserve the naturalenvironment, which was the key ideology of the foundinggenerations.

I would also like to see a greater emphasis placed on ourenvironmental responsibilities.

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Strategically aligning family and business systems using the Balanced ScorecardIntroductionFamily business strategyThe Balanced ScorecardFinancial perspectiveCustomer perspectiveInternal process perspectiveInnovation and learning perspective

Research methodologyCase study: OReilly's Rainforest RetreatBeginning the Balanced Scorecard introduction processApplying the Balanced Scorecard to the OReilly family businessCore essenceVision statementMission statement

Financial perspective (FP)Customer perspective (CP)Internal process perspective (IPP)Innovation and learning perspective (ILP)

Discussion and propositionsConclusionAcknowledgementsReferencesAppendix A