An Overview of 9 Elements of Family Business Success
The 9 Elements begins with Creating and Sharing Personal Vision Statements. Part of the vision for the business needs to consider the role the business should be playing in the lives of the family business employees. The business may not be regarded just as an economic asset, but regarded as a vehicle to do many different things to help bring about the dreams of the family members. The desire to have a child, sibling, in-law or other family member or members join the family business as an employee, at a later date, is an important part of the long term Visions of many Family Business Leaders (FBLs).
The guidelines expressed in Hiring and Firing of Family Member Employees require discipline for the FBL to follow. One of the most important policies for FBLs to have is a policy that requires Family Member Employees (FMEs) to have a job or internship outside the family business for some period of time. Ideally even an internship should be in another business. Self awareness goes beyond awareness by the new family members joining a business. Every new employee must have self awareness before joining the family business to avoid anger and disappointment about their role in the business. The personal SWOT explained in chapter 2 goes a long way to helping each family member take a personal look in the mirror. It helps identify the optimum roles of new family members and gives the FBL a better understanding of how to lead the new FME most effectively.
Compensating Family-Member Employees can be a highly sensitive area. This element shows how to address the common problem of children of entrepreneurs who too often see the business as an unlimited source of money they can tap because they saw the fruits of the business going to their family when they were raised. The complicated balance between FME compensation expectations and their compensation often negatively impacts upon the family business and carries over outside the business. This Third Element shows how to create compensation policies that address such things as whether the FMEs will be paid the market rate in their geographic area for their positions or some percentage over the market rate.
Selecting the Family-Member Successor is needed in a family business to carry out the desires of the FBL and protect the family security and happiness if anything should cause the FBL to become incapacitated or die. This element shows how to choose the best FME to become the future FBL and how to be sure that the chosen party wants to become the Successor. You'll also learn how to get those FMEs not selected as the future FBL to embrace or at least accept the succession decision.
Grooming the Family-Member Successor shows how to create the special Development Plans needed for the FME who is the chosen successor FBL. The Development Plans must include preparations for the transfer of some of the business leadership to the family member or members. Many FBLs are so hands-on that they create a leadership gap. This is one reason why in so many situations, successors do not perform adequately after assuming the leadership role and for the high failure rate of family businesses when succeeding generations take over. This chapter will help you avoid that fate.
This element, Aligning the Culture of the Family Business with the Company Vision, explains how family business should strive for cultures where family member employees accept obligations as well as the expectations of family membership. The obligations include full and enthusiastic buy-in to the written Company Vision, constant role model performance as an employee, absolute discretion concerning matters learned only because the individual was a family member, and total commitment to the survival of the company at any time that it is threatened. This chapter shows tools for getting greater alignment with the desired family culture and what the FBL sees as the future of the business.
Addressing Spousal Business Partners' Multiple Role Challenges will help keep marriages intact while spouses are in business together. Family businesses are challenging for many reasons, including the overlapping relationships and multiple and diverse roles spouses play within and outside of the family business. The complex environments of both spousal relationships and spousal business relationships are hard for most FBLs to navigate. Successfully acting in the role of the strategic business leader of a family company, while keeping the peace between the spouses, is very challenging. This Seventh Element includes methods for handling different but common multi-layered spousal relationships at work and outside work.
Recruiting, Retaining, and Inspiring Non-Family-Member Employees in a Family Business shows how to recognize and creatively overcome management obstacles of non family employees in a family business. This element shows how to develop ways to increase the personal and professional success and happiness these non-family employees seek. Non-family member employees often find themselves frustrated by the procrastination or ineptitude that some family member employees demonstrate in doing their jobs. This element of the Formula shows what needs to be done to overcome this obstacle and keep non family members motivated and operating at the top level of their abilities.
Transitioning Ownership to Family Members addresses such things as whether to transition ownership to family members, to whom and how to gift or sell the family business. FBLs typically view the business as their primary asset for retirement, or semi retirement, which will finance the retirement lifestyle they desire. This creates a major area that must be addressed concerning such things as the price of ownership if ownership is being sold. This element shows you different ways to address the common situation of ongoing compensation to the FBL being required of the company after ownership is transitioned to other family members.