Family business

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Family business is a commercial organization where decision making is influenced by several generations of families - related to blood or marriage or adoption - who have the ability to influence the business vision and willingness to use this ability to pursue different goals. They are closely identified with the company through leadership or ownership. Owners of entrepreneurial enterprise managers are not considered a family business because they lack a multi-generational dimension and family influences that create unique family dynamics and business relationships.

Video Family business

Ikhtisar konseptual

Family business is the oldest and most common model of economic organization. Most businesses around the world - from corner stores to multinational organizations listed with hundreds of thousands of employees - can be considered a family business. Based on research from Forbes 400 richest Americans, 44% of Forbes 400 member wealth comes from being a member or in connection with family business.

The economic prevalence and importance of such businesses are often underestimated. Throughout much of the twentieth century, academics and economists are attracted to the "improved" new model: large publicly traded companies operate in a seemingly rational, bureaucratic way by trained "organizational people." Entrepreneurs and families, with a special management model and complex psychological processes, often fall short when compared.

Private or family-controlled companies are not always easy to learn. In many cases, they are not subject to financial reporting requirements, and little published information about financial performance. Ownership can be distributed through a trust or parent company, and the family members themselves may not be fully informed of the ownership structure of their company. However, because the 21st century global economic model replaces the old industry model, government policy makers, economists and academics turn to entrepreneurial and family ventures as the main source of wealth creation and employment.

In some countries, many of the largest listed public companies are family owned. A company is said to belong to the family if a person is a controlling shareholder; that is, a person (rather than a state, a company, a management trust, or a mutual fund) can collect enough shares to ensure at least 20 percent voting rights and the highest percentage of voting rights compared to other shareholders.
Some of the largest family businesses in the world are Walmart (United States), Samsung Group (Korea) and Tata Group (India).

The "Global Family Business Index" comprises the 500 largest family companies worldwide. In this index - published for the first time in 2015 by St. John's Family Business Center Gallen and EY - for private companies, companies are classified as family companies if the family controls more than 50% of the voting rights. For a public company, the company is classified as a family enterprise if the family holds at least 32% of the voting rights.

Family-owned businesses include more than 30% of companies with sales of more than $ 1 billion.

In the family business, two or more members in the management team are taken from the owner's family. Family businesses can have owners who are not family members. Family businesses can also be managed by individuals who are not family members. However, family members are often involved in operating their family businesses in some capacity and, in smaller companies, usually one or more family members are senior officers and managers. In India, many businesses that are now public corporations were once a family business.

Family participation as a manager and/or business owner can strengthen the company because family members are often loyal and dedicated to family firms. However, family participation as a manager and/or business owner can present a unique problem because the dynamics of the family system and the dynamics of business systems are often unbalanced.

Maps Family business

Problem

The interests of family members may not be in harmony with business interests. For example, if a family member wants to be president but is not competent as a non-family member, the personal interests of family members and business welfare may be in conflict.

The interests of the whole family may not be matched by their business interests. For example, if a family needs its business to distribute funds for living and retirement expenses but businesses require them to remain competitive, the interests of the whole family and business are not aligned.

Finally, the interest of one family member may not be in tune with the rest of the family. For example, a family member who is an owner may want to sell a business to maximize their profits, but a family member who is the owner and also a manager may want to retain the company because it represents their career and they want their children to have the opportunity to work in company.

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Three circle models

The challenge for the business family is that family, ownership, and business roles involve different, sometimes conflicting values, goals, and actions. For example, family members place a high priority on emotional capital - the success of families that unites them through successive generations. Executives in this business are concerned about strategy and social capital - their company's reputation in the marketplace. Owners interested in financial capital - performance in terms of wealth creation.

The three-circle model is often used to denote three major roles in family or controlled organizations: Family, Ownership, and Management. This model shows how roles can overlap.

Everyone in the family (in all generations) obviously belongs to the Family circle, but some family members will never have a stake in the family business, or have worked there. Family members are concerned with social capital (reputation in the community), dividends, and family unity.

The Ownership Circle may include family members, investors, and/or employee owners. An owner is concerned with financial capital (business performance and dividends). Management circles typically include non-family members employed by family businesses. Family members can also be employees. An employee is concerned with social capital (reputation), emotional capital (career opportunities, bonuses and fair performance measures).

Some people - for example, founders or senior family members - can hold all three roles: family members, owners and employees. These individuals are strongly linked to the family business, and are concerned with any or all of the sources of value creation.

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Genogram

The genogram is an organizational chart for the family. It is an enhanced family tree that shows not only family events such as birth and death, but also shows relationships (close, conflict, cut-off, etc.) among individuals in the family. This is a useful tool for finding patterns of cross-generational relationships, and decrypting seemingly irrational behavior.

Family myths - a set of beliefs shared by family members - can play an important defense and protection role in the family. Myths help people cope with stress and anxiety and, by prescribing ritualistic behavior patterns, will enable them to build a common front against the outside world. They give reasons for the way people behave, but because much of what shapes the family myth goes deep beneath the surface, they also hide real problems, problems, and conflicts. Although these family myths can turn into blueprints for family action, these myths can also turn into harassment, reducing the flexibility and capacity of families to respond to new situations. ( See also: Nexus family.)

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Parallel planning process

All businesses require planning, but business families face additional planning tasks to balance family and business demands. There are five important issues where family needs and business demands overlap - and require parallel planning action to ensure that business success does not pose a family or business disaster.

1. Capital How is the company's financial resources allocated between family and different demands?
2. Control Who has the power of decision making in the family and company?
3. Careers How are individuals selected for leadership positions and senior government in companies or families?
4. Conflict How do we prevent this natural element of human relationships from being the default interaction pattern?
5. Culture How are family and business values ​​maintained and passed on to younger owners, employees, and family members?

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Fair process

Justice is a fundamental issue in family business decision making. Solutions considered fair by family and business stakeholders are more likely to be accepted and supported. A fair process helps create organizational justice by involving family members, both as owners and employees, in a series of practical steps to address and resolve important issues. A fair process lays the foundation for the continuation of family participation from generation to generation.

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Emotional dimension

The challenges faced by family businesses and their stakeholders are recognizing the problems they face, understanding how to develop strategies to overcome them and more importantly, to create narrative, or family stories that explain the emotional dimension of the problem to the family.

The most difficult family business problem is the business problem facing the organization, but the emotional issues that bring them together. Years of achievement from generation to generation can be destroyed next, if families fail to cope with the psychological problems they face. Implementing the psychodynamic concept will help explain behavior and will allow families to prepare for life cycle transitions and other problems that may arise. Family-run organizations require a new understanding and a wider perspective of the human dynamics of family enterprises with two complementary, psychodynamic and family systems.

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Setup

When a family business is basically owned and operated by one person, that person usually performs the necessary balancing automatically. For example, a founder can decide a business needs to build a new factory and take less money out of business for a period of time so that businesses can raise the cash necessary to expand. In making this decision, the founder is balancing his personal interests (taking cash) with business needs (expansion).

Most first generation owners/managers make the most of the decisions. When the second generation (your partnership) takes control, decision making becomes more consultative. When the larger third generation (cousin consortium) takes control, decision-making becomes more consensus-based, family members often vote. In this way, decision-making across generations becomes more rational.

Family owned assets, in most family businesses, are difficult to separate from assets owned by businesses.

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Scenario

Balancing competing interests often becomes difficult in three situations. The first situation is when the founders want to change the nature of their involvement in business. Usually founders start this transition by involving others to manage the business. Engaging others to manage the company requires the founder to be more aware and formal in balancing personal interests with business interests because they can no longer perform this alignment automatically - others get involved.

The second situation is when more than one person has a business and no one has the power and support of other owners to determine the collective interest. For example, if a founder intends to transfer ownership in the family business to his four children, two of whom work in business, how do they balance this unequal difference? The four siblings need a system to do this themselves when the founder is no longer involved.

The third situation is when there are some owners and some or all owners are not in management. Given the above situation, there is a higher possibility that the interests of both springs that are not employed in the family business may differ from those of the two people employed in the business. Their potential for differences does not mean that interests can not be harmonized, it simply means that there is a greater need for the four owners to have systems where differences can be identified and balanced.

These three scenarios can be reduced by following the TMP guidelines, or "The Maria Principle"

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Succession

There appears to be two major factors affecting the development of the family business and the succession process: family size, in terms of relative volume of business, and suitability to lead the organization, in terms of managerial, technical and commitment abilities (Arieu, 2010). Arieu proposes a model to classify family firms into four scenarios: politics, openness, foreign management, and natural succession.

Successful candidates with professional experience outside the family business may decide to leave the company to find new ones, whether with or without family support. Conversely, successors tend to be characterized by professional experience only in the family business. Potential successor education is an important issue in the succession process as it affects the endowement of the company's managerial capabilities. & lt;/ref & gt;

One of the biggest trends in family business is the number of women who take over their family companies. In the past, succession was reserved for the eldest son, then moved on to any male heir. Now, female accounts around. 11-12% of all family enterprise leaders, up nearly 40% since 1996. Girls are now considered one of the least-utilized resources in the family business. To encourage the next generation of women to become valuable business members, prospective women successors must be nurtured by assimilation into family firms, mentoring, sharing of essential tacit knowledge and having a positive role model in business.

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Success

Successfully balancing the different interests of family members and/or the interests of one or more family members on the one hand and business interests on the other hand requires the people involved to have the competence, character and commitment to do this work.

Family-owned companies present special challenges to those who run them. They can be unique, develop unique cultures and procedures as they grow and mature. That's good, as long as they are continuously managed by people who are deep in tradition, or at least able to adapt to them.

Often family members can benefit from involving more than one professional advisor, each having special skills required by the family. Some of the skills that may be required include communication, conflict resolution, family systems, finance, law, accounting, insurance, investment, leadership development, management development, and strategic planning.

Ownership in the family business will also show business maturity. If all stocks are resting with one individual, the family business is still in infancy, even if the income is strong.

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Example

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See also

• Bamboo network
• Nepotism
• Palace economy

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References

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Further reading

• Colli, Andrea. Family Business History, 1850-2000 (Cambridge UP 2003), comparative history. online
• Rose, Mary B. Family Business (1995), in the UK

Source of the article : Wikipedia