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MGT 4550 - Family Business Management. MULTIPLE GENERATIONS - ROLES IN THE FAMILY BUSINESS Chapter 3 Family Business Management, Concepts and Practice by A. Bakr Ibrahim & Willard H. Ellis. Instructor: Dr. Irene Duhaime. Class Schedule - Week 3 .

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MGT 4550 - Family Business Management

MULTIPLE GENERATIONS - ROLES IN THE FAMILY BUSINESS

Chapter 3

Family Business Management,

Concepts and Practice

by A. Bakr Ibrahim & Willard H. Ellis

Instructor: Dr. Irene Duhaime


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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


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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 ….


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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 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

  • 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 Topics

PROJECT TOPICS DUE THIS WEEK !!!


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Class 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?


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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?


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