The management of family organizations intertwines and overlaps family and business flows. The entrepreneur encounters numerous problems, the main one being to reconcile the family and business aspects.
According to the Three Circles Model, by Davis and Tagiuri, in a family business there are three main groups: the Family, the Company and the Property. The interests of these three spheres overlap, diverge and often contradict each other.
On the other hand, the business sphere must avoid emotions in decision-making, must be outwardly focused and need to promote change. Ultimately, the two main spheres of the family business have different objectives and goals.
From this premise, it can be deduced that an entrepreneur is often faced with complicated situations, since the fundamental pillars of the family organization come into conflict. It is common for a businessman to find himself faced with questions that he does not know, cannot or does not want to answer, and in this way the businessman tries to stop the outbreak of a war. But, really, the fact of not dealing with differences in time and trying to avoid them is what generates the real wars in a family business.
Here are some of the toughest questions any family business owner asks.
What is more important, my family or my company?
The answer to this question brings a multitude of dilemmas to an entrepreneur. In general, the family will be given more importance when individual benefits, family tradition, family protection, etc. are preferred. On the other hand, the most important step in the hierarchy will be occupied by the company, when the entrepreneur prefers benefits for the whole family, wants the continuity of the company and is in favor of change in the organization.
Obviously, both choices are intertwined and it is possible to classify them as contradictory; if the family sphere is preferred, it will be desired that the company continue in the future, that they will want to obtain benefits for all family members,…
I'll be retiring shortly. Will I choose a member of my family to run the business, or will I choose a specialized external professional?
In these cases it is very important to know the capacities, skills, aptitudes, etc. of family members in an objective way. It is also necessary to define what is the desired level of professionalization and act based on this.
Obviously, if there are prepared people in the family sphere, it will be preferable for these people to manage the company. In the event that the family does not have trained people, it is recommended to seek an external professional.
I am currently the business leader: Can I leave the company and retire…? I do not trust my successors, I will have to continue in the company…
One of the biggest problems in the family business arises at the time of succession, specifically when the event is not usually completely withdrawn from the company.
In the world of family organizations the “Rebecca Syndrome” is known. This refers to the fact that second and third generation business leaders are often unable to shake off the ghost of the founder.
In this area, the only proven premise is that the event will only leave the company when it fully trusts its successors. To achieve complete trust, a succession plan is necessary, in which the successor and successor work together. Likewise, it is important that the incident leaves management, but can continue to participate as a director or as an honorary member of the council.
I am thinking about inheritance management and my most valuable asset is the family business. How will I distribute it among my heirs: in equal parts, depending on the management capacity of each one, by personal favoritism…?
This is a very complicated decision, since the future management of the company will depend on it. In this case, the 3 main spheres of the family business contradict each other. The employer can act as a parent, as an owner or as a manager, obtaining different conclusions depending on their behavior. The most important thing in this decision is to establish a coherent, objective and neutral distribution, so that the duration of the organization and the family is guaranteed.
Two of my sons work in the company. Due to their different capacities, one is a warehouse waiter, and the other is a Quality Director. If I pay them for their status as children they should both earn the same, but if I establish a remuneration policy at market prices they will not charge the same. What I do? Do I pay them like children or like workers?
It is essential to establish what the remuneration policy of the company will be, especially towards family members. The most advisable thing is that the relatives receive according to their work, their responsibilities, their functions,… Another issue is the distribution of dividends.
I am going to leave my company and I have two children. Is it just a manager son, or do I prefer co-management?
Management is the position held by the director of the company, which includes multiple functions and responsibilities. The direction and control of a joint venture can be very appropriate as long as it starts from common premises and objectives. If the different managers form a good team, many advantages can be obtained ("Two heads are better than one, and several heads are much better,…"). On the other hand, if the objectives are very different, co-management can lead to the failure of the company.
