Family Business is a dominant business figure in the economy of most countries.
The numbers and percentages of participation in the GDP are cited, in the offer of jobs, participation in all companies, etc.
Beyond statistical data, RUs are a reality of all economic scenarios and interact with other companies, marketing as clients and suppliers of the different value chains.
They have characteristics that make them very convenient and agile to negotiate with non-family companies, large companies and export companies.
Its constitution, business culture, management model and willingness to trade are related to the family history, training and experience in actions of the members and drivers of the companies, making each EF unique and unrepeatable.
As a result of this particular characteristic, the life cycle of the complex is very uneven, grouping a high percentage of closings in the first years of life and with a higher permanence throughout the following years. This concludes that, despite the great initial expiration, there are family businesses that are over a hundred years old with absolute strength and a certain future.
Needless to say, older PEs have outpaced the entry and management of different family generations and the modification of economic contexts, showing great agility to adapt to changes.
The difference and difficulty encountered by RUs is that they must manage the "Property", "Family" and "Company" aspects in unison, when non-relatives focus their attention on the businesses that support the company, without getting involved in the family which naturally complicates the action.
The three circles that graph this relationship are well known and accurate:
In the analysis of these three circles separately the question is clear:
PROPERTY: They are the shareholders who placed capital in the company as an investment from which they intend to obtain an income and demand security for the invested capital and legal security, demanding that the company carry out lawful activities while preserving the environment and respecting the values at stake.
COMPANY: Here are those who manage the activity of the company and seek clear objectives and goals, sufficient resources and freedom of action and decision.
FAMILY: It is what gives it the character of a Family Business and it compromises a lot of emotionality in the participation, it hopes that the organization contributes jobs, secure income and the membership of the members.
In this situation, which is the most common, the actions, interests and conditions begin to overlap.
By ceasing to be pure situations in which each space has absolute clarity of its responsibilities and conditioning, by overlapping also responsibilities, conditions of participation overlap and emotions, care, controls, interests, risks, fears, comparisons are put into play Finally, evaluations, this intertwining of situations makes each Family Business unique and unrepeatable and becomes more complex as the number of participants increases, because each one enters with their personal baggage and expands the range of alternatives.
In the definitions of "Family Business" there is a very wide range, which emphasizes the company in some cases or the family in others. Some definitions rely on the economic, focused on property and actions without considering the family component, while others lean towards the family, endangering the company as a business.
Let's look at the concept of Family Business that prevails in the European Union:
The definition approved in Brussels by the European Group of Family Businesses (GEEF) and in Milan by the FBN Board is as follows:
- The majority of votes are owned by the person of the family who founded or founded the company; or, they are owned by the person who has or has acquired the share capital of the company; or are owned by their wives, parents, child (ren) or direct heirs of the child (ren).Most votes can be direct or indirect. At least one representative of the family or relative participates in the management or government of the The listed definition of a family business applies to listed companies if the person who founded or acquired the company (its share capital), or their relatives or descendants hold 25% of the voting rights to which the capital is entitled Social.*
To the definition of Brussels we can add qualitative arguments that give a truly familiar character.
Have generational continuity with strategic objectives based on the desire of founders and successors to keep control of the property, the government and the management of the company in family hands.
In the extension of the concept we can consider the Family Business (EF) with the following definition:
Family Business is one that has the participation of one or more relatives in the management and payroll, they are legally owners and, in turn, influence the destiny of the company, considering it part of the economic and cultural heritage of the family.
CONSTITUTION OF FAMILY BUSINESSES
EFs are constituted A) from birth, B) at maturity, C) in adulthood.
What does this classification refer to?
- The EFs that are formed from birth are those that, when training, do so with one or some relatives. Already from the beginning of the idea, proposal or constitution, this type of companies do so by registering as a company, integrating monetary, intellectual or other capital, distributing the shares or participation in the defined percentages. maturity, are those that are initiated by a person and over time, regardless of the evolution of the business, the process of entry of relatives into the company begins. This income can be given to fill vacant positions or, badly, creating positions to occupy these incoming relatives. The E. that become F. in their adult state,they generally do so to give it functional continuity based on the statement that the founders want to stop participating operationally in day-to-day management.
These three cases open a range that will later be reopened according to other different characteristics, but it is important to take them into account because the behavior of each of the three is usually different.
In the first case, the Objectives, Vision and Mission of the company as well as the Values are elaborated among the relatives who start it. The positions or responsibilities are distributed according to the estimated needs.
In the cases in which the relatives enter during the maturity of the company they do so when the principles that govern the company are already defined and, even, have installed management models, working with routines that are more of uses and customs than of design of functional processes. Sometimes the entrants agree and accept the pre-existing situation and, in others, they do so with complacent attitudes due to the need to have a job or because they intend to modify them in time. It is also the case that the evolution of business may require professionals to attend to specific topics and, in due course, some of the family members have this knowledge, so the entry is proposed.
When the companies reach adulthood, having passed several years since their initiation and their founders express a desire or need to leave the activities, it is convenient to begin a planned process of generational transfer, to avoid that the change in driving is abrupt or disorderly. The processes of driving changes should be implemented with enough time to train and train successors, professionally and emotionally, so that the company does not experience any setbacks and, at the same time, attend to the situation of family members who leave the activity so that they make sense in transcend and support from outside the company.
In another order of things we have to differentiate the conditions in which the relatives enter the companies:
- - VACANCIES, these cases enable the entry of people who may be relatives of the holders. The creation of positions for the entry of family members is not recommended, not only because it generates costs without justification, but also creates disagreement in the work team. - SPECIFIC TRAINING, the entry of a relative to a job, vacancy or created, without the specific training to fulfill the functions that the position requires, places the person in a position to manage with the possibility of making mistakes, which may create operational problems and resentment among the rest of the staff. Ideally, their training should be related to that required by the position. - WORK EXPERIENCE,It is convenient that an incoming relative has worked for about two years in another company before joining the relative. When a family member enters without having ever worked in another organization, it means that they do not have knowledge of how a company works without the imprint of their family and how relational issues are solved where only business interests are at stake. The attitude of these people is very different and more demanding than those who know how organizations without affective bonds operate. - ENTERING CHARGES, it is not recommended that family members enter directly into positions with positions, it happens that leadership or functional credit it is obtained from the employees towards the officials and this is gained by putting into play a series of virtues that abolish the position,otherwise authority is obtained by power, which is not the most recommended. - SUITABLE PERSONALITY, the personality of the entrant should be adjusted to the one that the company forged during its existence, companies forge their culture during the time of activity. It is very common to find companies that define policies or develop processes more in line with the way of being of their drivers than with manual models. It is convenient that the entrants have a personality and conduct appropriate to the specific ways of functioning so as not to generate friction with the existing teams. - SOCIETARY BALANCE, it is important to preserve the balance of the family branches, when the PE are constituted with more than one family shareholder,It is convenient that the incoming relatives keep a balance with the share distribution because it is inevitable that the members of a family branch agree among themselves and can tip the functional power in one direction or another. - FAMILY HARMONY, the personality of the entrants must be related to those of society as a whole, there are usually people who are stinging within families and are generators of continuous problems. The entrance of these people transfers the problems of the family to the company. - CENTERS OF DIVERSE INTEREST, it is convenient that the relative has a broad vision and center of interests, if a member of the PEit does not have different centers of interest and it focuses its attention exclusively on the company or everything is filtered by family relationships, it happens that the opinions do not have an open mind and, it is difficult to bring useful news and suggestions to the company. - PRETENSIONS, the claims family members of the company must be appropriate to the uses and customs that apply to all staff. Claiming or making use of unusual benefits creates problems for the rest of the family and staff because they understand that treatment is not equitable.Claiming or making use of unusual benefits creates problems for the rest of the family and staff because they understand that treatment is not equitable.Claiming or making use of unusual benefits creates problems for the rest of the family and staff because they understand that treatment is not equitable.
The first three classifications that we identify with A, B and C are descriptive of how companies have been formed.
The second section from 1 to 9, are weighted, so it allows us to see which is the most convenient case to propose income.
Points 1, 2, 3, 5, 6, 7 and 8 are valued close to the maximum "two" when the condition is met.
Points 4 and 9 are valued in reverse, if they enter charge without having belonged to the plant or have excessive claims that do not meet the usable criteria, they approach “zero”.
We are going to graph three cases in which we will see different situations.
Case 1 we find an average of 1.58 and the graph is quite horizontal.
Case 2 we have an average of 0.46, fairly even in the individual values but all low.
Case 3 Here we see a lot of variation in the individual values but with an average of 0.77 In this case, we must analyze whether the low values complicate the performance of the company or can be ignored.
This analysis is recommended to be done in all cases and compared among applicants to avoid problems and surprises. Other specific items can also be added for each company.
EF ON THE GO
EFs function just like any other company, they have the same needs, the same aspirations, the same problems and the same commercial, industrial and administrative difficulties.
The only difference, which is not small, is the one that originates in the family relationship, which makes family and company end up being a functional / emotional unit.
This unit is not limited to family members who work in the company, but reaches family members who do not work in the company but are related to those employed in the organization.
When a family member who works at the company returns home at the end of the day, he talks with his wife, husband, parents or children about the day that has passed. There, the comments and exchange of opinions and ideas that remain in the employee's mind are generated and travel with him to the next job meetings.
Proposals or questions are heard more than once in the company, which were generated in family talks outside the company. In family meetings with different reasons, company issues almost always slip in, and even the family leader becomes a labor leader, or vice versa. Those family gatherings sometimes end up turning into bataholas for discussing PE issues.
Families should strive to maintain differentiated roles for family and business relationships.
To graph it is like a boat that should sail level. Not only does it have to travel level to avoid sinking, but it is also necessary to avoid “heading” in the hull of that ship where water begins to enter and flood the compartments.
In this figure we try to show, rudely, that the way to navigate safely is to keep the ship level, an issue that is achieved with consensual agreements, formalized in writing and that in some way morally compel the participants to maintain proper conduct to the objectives business and good family relationship.
When we analyze an EF, we try to internalize the particular characteristics of that company. It is not the same to address the problems of a company that is born from a family with some training and intends to train it over time so that it becomes family heritage, than one that arises from a family in urgent need and requires immediate results.
Companies that have some training in standardized management such as those that are certified in ISO or similar have easier to incorporate management models than those that are not trained.
Differences are also observed between organizations led by people who have some training and worked for a time in active companies, and had the opportunity to critically analyze the management performance of those organizations, than those that are led by those who had a idea and they transformed it into an enterprise with some money, some knowledge, some improvisation and a lot of enthusiasm.
All of the examples mentioned, and many other cases, have possibilities to advance, succeed and become a prosperous great company, but the starting points to be by your side and facilitate the growth process are different. The methods and procedures to accompany them in solving the problems that arise or may arise, are different and you have to be very insightful when putting knowledge and management tools into them, you have to detect what they can accept and incorporate, at what speed and how to secure progress.
LET'S SEE IT FUNCTIONALLY HAPPENING:
| FUNCTIONS | PROFESSIONAL MANAGEMENT | SPONTANEOUS MANAGEMENT |
| DIRECTIVES | ||
| DEVELOPING | DEVELOPING
PROFESSIONALLY PLANNED FROM ADDRESS ALIGNED WITH THE VISION AND MISSION OF THE COMPANY AND THE MARKET CONTEXT |
DEVELOPMENT UNDER
DAY-TO-DAY ANALYSIS SUBJECT TO MARKET SWING |
| BUDGET | PREPARED BASED ON
EXPECTED STATISTICS AND SCENARIOS |
WITHOUT BUDGET
FORMAL OR GROUPED IN LARGE CENTERS OF COSTS AND REVENUES |
| INNOVATION | WILLINGNESS TO ASSUME CALCULATED RISKS.
FUTURE MARKET ORIENTED |
WILLINGNESS TO ASSUME
HIGHER RISKS. WITHOUT PROFESSIONAL ANALYSIS SUBMITTED TO IMPULSES |
| LEADERSHIP | ACHIEVED BY PRESTIGE,
EMPATHY AND COLLABORATION WITH THE TEAM |
BASED ON THE POWER OF THE POSITION |
| CULTURE | PROFESSIONAL ADJUSTED TO
EFFICIENCY AND LEAN MANUFACTURING |
ADJUSTED TO
FORMATION AND HEADLINE EXPERIENCE |
| BENEFITS | RESULT OF
COMPLIANCE WITH PROGRAM AND BUDGET |
CONSEQUENCE OF DAILY PERATION |
| PLANNING | DESIGNED BASED ON
PROCESSES AND DEFINED GOALS |
ONLINE INFORMAL USES AND CUSTOMS |
| ORGANIZATION | CONSEQUENCE OF
FORMAL STRUCTURE AND EXPLICIT DEFINITION OF FUNCTIONS |
LACKING OF
ORGANIZATION CHART AND DESCRIPTION OF FUNCTIONS AND POSTS |
| CONTROL | TABLE OF MANAGEMENT INDICATORS AND RESULTS | ON THE BASIS OF EXPECTED RESULTS |
Some risks of PE
PRISONERS AND JAILERS
Several of the PE participants become prisoners of this employment relationship and others become jailers.
Several participants who had the possibility of having an undemanding job that provides them with a certain degree of security and allows them to be occupied with very little effort, are POWERS OF COMFORT.
Other participants become PRICONEROS DE LA INCAPACIDAD because they discovered that in the family business they were going to have a job without having to train or become professional, and they stayed there, with many difficulties in finding employment in another company.
POLITICAL PRISONERS, who are in-laws who, at the suggestion or pressure of immediate family members, feel compelled to join the family business.
PRISONER CHILDREN are very affected when their real vocation is not taken into account, but are trained to enter the company, whether or not it has to do with their vocational desires.
PRISON MEMBERS who feel unable to stop working or sell their shares, in the first case in order not to lose sight of their capital and in the second so as not to have to sell their stake in the company.
LEAD PRISONER is one who by personality, knowledge or legal power makes his domain felt and becomes the virtual jailer of prisoners.
Within each of the family members who participate in the company is hidden his own INTERNAL JAILER who does not want or is not encouraged to open his own cell.
CONFLICTS IN THE FAMILY COMPANY
THE FAMILY COMPANY AS AN OBLIGATION OR OPPORTUNITY
Conflicts are presented in the EFs in the same way as in all companies, with the difference that, on occasions, "Bandos" or "Armies" made up of family branches are formed.
Conflicts in themselves are not negative and occur in all social organizations and contribute to the development and growth process, the issue involves knowing how to deal with it and having a collaborative attitude to reach agreements that satisfy the parties.
OVERLAP BETWEEN THE COMPANY AND THE FAMILY, when there is no clear separation between the family and the company, the roles become confused and the family history, its values, interpersonal conflicts begin to emerge, and they overlap with business management working on the ideology of the company, a toxic environment is generated for the members of the family and the company.
HIERARCHICAL RELATIONSHIPS, When in the company the situation arises in which a family member is functionally in charge of another, head employee, relationship conflicts usually arise that are manifested in the company and are projected onto the family.
FULL COURSE, during the growth of the family, jobs are covered in the company until one day, there are no more functionally justified jobs and people could only enter if jobs were created add cost without adding value. Here we are faced with a dilemma because if we refuse to enter another family member in the described circumstances, the family question is generated that supposes that they are facing a discriminatory injustice. And if we enter it, we make a business mistake adding unjustified cost. Here, the Family Protocol, prior to this situation, resolves the controversy.
INSUFFICIENT ECONOMY, the company worked well, the monthly earnings were enough to meet the salaries of the entire workforce and total costs and expenses. Lately things did not work as before, sales, turnover and, consequently, the profits that allowed us to function comfortably decreased. Do we solve the problems of the company or those of family members? Do we unlink a family member if it is economically justifiable for the company?
COIN CONSORTIUM, this situation is linked to the previous two. The family grows exponentially and the company cannot house the cousins, too. Neither are the cousins so close to the founders as to share their "entrepreneurial idea", and sometimes they do not share the original culture and background. It is very important to maintain a firm and rigorous business / family leadership to prevent the avalanche of relatives from destroying the company.
ORGANIZATIONAL RENEWAL, the training and skills of the family members who govern the company are those that define the process of generational change, the decentralization and professionalization of the organization. The founders' open-mindedness facilitates the company's evolutionary process, inversely to what happens when the founders cling to a conservative management model.
PLANNING THE SUCCESSION, the ideal is that the founders who have advanced in age or who cease to have an interest in participating operationally in the management, promote or allow the initiation of the generational transfer process avoiding the tension between the people involved in the succession, family members, company sectors, customers or suppliers.
The treatment of Family Businesses is an inexhaustible topic and you will find innumerable articles and notes on web pages, courses and books and there is always something missing and there is room for something more.
The large number of variables in which PEs are shown, plus the plethora of consultants and academics who look at the problem from their particular point of view and their experience, makes it impossible to tackle all the proposals available.
We have been working with EF for more than twenty years trying to help them keep pace with their operation and, in general, the results enable us to contribute, also, our point of view
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