In global market economies, there is a wide variety of business entities ranging from the smallest individually owned companies to gigantic corporations. No matter what type of organization * it is, they all tend to satisfy existing needs, and achieve some kind of utility. In the midst of all this, in the future of business, the name of family businesses appeared. This variety includes those organizations in which the capital and its government are in the hands of one or more families that exercise management control **.
It is interesting to observe all the efforts that are made today, in the world, to help many families to maintain the so-called "Family Businesses". And when attention is paid to these efforts, a common fact arises: they all focus on solving family behavior and its relationship with the power of government in the fate of these organizations.
The family in the company
When you analyze companies that were born out of a family effort, their stories are divided into before and after the company was founded. The first generation, with its founder, becomes a saga of efforts aimed at shaping that first idea, surely born from the need to establish and develop as a family. There was no time to waste on other things. The objective was to achieve synergy and critical mass to reach the necessary productive rhythm that would give sustainability to that initial idea. Those times are usually remembered, by the following generations, as heroic times of some member of the family, generally assisted by other brothers, cousins or close relatives. They are stories of hard efforts for an "all or nothing",crowned many times by the glory of success (small or large, it doesn't matter). That first dream came true and reached a certain degree of sustainability and prosperity.
All those relatives with more or less successful results participated in those stories. Some initial moments of certain deprivations were progressively overcome by flattering results. Is that finally, that initial venture, became an advantageous company. Critical mass has been reached and is now projected as a virtuous undertaking towards a promising future.
This is the axis that divides history in two. A first “moment”, in which the founder and his collaborators started from scratch for a prosperous future. These were moments when there was no time for anything other than the effort of hard work, although fruitful.
Then, a second “moment”, whose second generation begins in a different instance than the previous one. Instance with a certain prosperity achieved that provides a degree of comfort that allows them to focus on other management issues. It is in that “second moment” in which certain inequalities tend to appear in the conception and attributions of the use of Power by this new generation. It is that there are those who understand that this or that family members, in that first moment, made more efforts than others, or that this or that contributed greater results to the success of the company.
It is the moment where the family history (real or imagined) acquires preponderance and is strongly projected in the management of the company. This is where the so-called power asymmetries are born.
Does the same happen in all companies?
A company, of whatever type it may be, is an institution made up of different types of resources (human, technological, productive and innovative) whose purpose is the generation of profits and benefits for its shareholders and employees, in addition to the necessary growth in equity of the organization. In parallel and relevant way, it must also produce the personal development of each and every one of its members. In other words, on the one hand, the company must obtain productivity through its resources, and on the other, balancedly generate well-being for those who participate in it.
Regarding this last mentioned point, the natural organizational objective of any company should be to achieve a work environment where human beings (shareholders, owners, managers and employees) carry out with pleasure what they know how to do best, complementing and achieving the interests of all parts. This is how I think we should imagine companies. As rational structures that seek to satisfy certain common interests of the entire society. However, there is evidence that this is not what always happens in companies. Those who participate in them often generate complex asymmetric relationships. The search for Power, becoming powerful, generates relationships that come to acquire dysfunctional and risky manifestations for the well-being of its members. On these occasions, such an attitude ends up focusing on the exclusive search for power, economic growth and personal status, in clear competition with the company's mission. But is that perhaps, is not this the same thing that also happens in "family businesses"? Yes, and we all know that it is a common situation and known to all, that occurs every time three or more people get together, no matter in what type of organization and for what purposes. And this also occurs within the family.
For the new generation of the family in the company, it is no longer a matter of hard climbing the hill to achieve the desired dream. That dream has come true and you can now enjoy it by managing it. The problem that usually arises is that it is no longer enough to carry the founder's last name to continue the saga of successes. Some family members recognize it and prepare to be participants in development, but some do not understand it that way. Others, convinced that the entrepreneur capacity is transmitted only by proximity to the founder, are noted in the game and go through the management generating laughter among the most cautious.
Knowing what the complexity of family participation in this type of business means, there is no doubt that the focus must be on their productivity (which the family will live on). Family problems are decisive for the future of such companies, but their solution goes through different instances. It is not about family businesses with problems, but companies whose families that control them have problems to solve. And this is the point to attend.
In short, they are companies that were born as family companies and that for their growth will need professional leadership. If some members have such conditions… welcome be. What effectively matters in the conduct of companies is the leadership and management capacity you have.It is that we have not realized that managing is a profession. I am sure that in your particular case you would not leave an important criminal case in the hands of someone not professional but with the ability and "waist" to handle the situation. Or in the case of having to go through a vital surgery, surely you would not trust any initiate in the matter. So why do we leave so much responsibility (financial, human, productive, etc.) in the hands, often, of "non-professional experts" ?, or of skilled types but with little specific training.
They are all companies within the same scenarios and with similar problems. From my point of view, there should be no difference between a family-owned company from any other company made up of diverse partners.
I propose to start thinking about companies where the family participates. The professional complementarity of the members and other available resources to achieve the desired productivity and satisfaction are key to the sustainability and progress of all types of companies.
How to have a professional administration in family businesses?
From agreeing that the business problems of a company with family participation is similar to that of any other organization, the actions to be implemented will be those that lead to achieving professional management. The focus must be on its ability to produce efficiently with management teams. This is independent of the family name that each manager carries. This globalized and highly competitive world does not give margins for amateur decisions.
As a first measure, related to positive family participation, I consider that the concrete definition of an action protocol for management should help promote the unity and harmony of the members and foster their commitment to the continuity of the company.
Let's keep in mind that what is convenient is to rescue and put into practice the personal and professional qualities of each one. For this, it is very helpful to create a protocol that includes the following conditions, regarding the participation of family members in the company:
- When and under what circumstances family members may work in the company. This implies defining: required education, previous experience, concept of vacant position, minimum age required to work in the company, concept of family internships, entry conditions for in-laws, Method of Evaluation of the Performance of family members, What will career plans be like? to access management positions. Criteria for setting remuneration in order with the company's salary policy. Specification of the difference between being a shareholder and an executive. Description of rights and powers that concern them.
And regarding the rights to share ownership and the future development of the company:
- Specify how to access the property, share syndication pact for the sale and purchase. Determine the criteria for setting the share price, stipulate alternatives for the case where a family member wants to dispose of their shares. Establish a preference criterion in the purchase of the Shares. Point out criteria for the limitation of businesses that could compete with the company by relatives. Establish the company's dividend policy in terms of the needs that may arise. Establish how the future retirement will be treated of the directors and the corresponding succession. Values and Beliefs to be maintained Definition of the Mission, Vision and Objectives of the company. Definition of the governing bodies of the company. Define what type of company is to be achieved (Strategic Plan).Define responsibilities in the fulfillment of the Business Plan.
conclusion
By way of conclusion, it is worth emphasizing that the challenge faced by a company with family members in management is to achieve the desired degree of productivity. For this, it will be very useful to implement a management protocol for the family that is complied with, in order to achieve professional management based on results, and not on the family's power of ownership. In short, the company's achievements will be directly related to the sustainability of the family (whether they work in it or not).
I think the global environment indicates that every day there is less room for amateurism in the leadership of organizations. This is why I place so much emphasis on developing professional business management. I insist, knowing what the complexity of family participation in companies means, the focus must be on its ability to produce efficiently (and the family will live on it). Therefore, when faced with the questions of who or who should run the companies with family participation, my answer is emphatic: “ I suggest that the company be run by the most efficient professionals. I prefer to be part of a board of directors whose company is in charge of proven and successful professionals. I will live on its results. ”
Notes
*one. Individual Property: consisting of a professional, an artisan or a merchant who operates on their own. 2. Collective Society: made up of two or more people where each agrees to contribute part of the work and capital, keep a percentage of the profits and share the losses or debts. It is characterized by having partners that respond jointly and unlimitedly for the debts of the company. 3. Sociedad Anónima: entity with legal status that can buy, sell, borrow, produce goods and services and sign contracts. Its characteristics are: a) Capital is represented by shares. b) Those who form it, face the obligations contracted, have limited liability. c) They are capital companies; the number of its shareholders is unlimited. d) It is of unlimited existence.e) Its corporate name must be appropriate to the purpose for which it was incorporated.
** After more than ten years of discussions, on March 27, 2008 at the General Assembly of the GEEF (European Group of Family Businesses), the definition of what is a family business was agreed. The General Assembly considered that a company, whatever its size, is a family business if:
1. The majority of the votes are owned by the person or persons in the family who founded or founded the company, or are owned by the person who has or has acquired the share capital of the company; or are the property of their wives, parents, child (ren) or direct heirs of the child (ren).
2. The majority of the votes can be direct or indirect.
3. At least one representative of the family or relative participates in the management or government of the company.
4. Listed companies apply the definition of family business if the person who founded or acquired the company (its share capital), or their relatives or descendants own 25% of the voting rights to which the capital is entitled Social.
Source: www.franciscolehmann.com
