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
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
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 ….
Content • …. continued • Expectations and Exploitations • Zone of Comfort • Nepotism • Confusion • Supervising Family Members • The Art of Disengagement
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
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
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
Forming One’s Own Identity - Daddy’s Little Girl • Suppression of identity for offspring • Tendency for gender biases to influence decision-making
The Path of Self-evaluation • Offspring often: • crave autonomy • are not prepared for succeeding the founder
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
Zone of Comfort • “...establishing well-defined inter-personal boundaries is critical in family firms” • to avoid negative impact on family life
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
Confusion • Confusion over • Rules and Roles • Acceptable practices e.g. in succession or hiring
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.
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.
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
Project Topics PROJECT TOPICS DUE THIS WEEK !!!
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
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?
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?
Question 83 • Should advisors be or become personal friends ?
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?
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?