Friday, May 11, 2007

How to analyze Family Business Systems.

Family Business Situation should be analyzed in three fronts: Family, Business, and Ownership. The Family lense would analyze the problems with the family and it would include everybody that is family. The Business lense would analyze the problems of the business and it would include family members that is working in the business. The Ownership lense would analyze the problems with the ownership of the company and it would include only the family members that are shareholders. This is a three circle system (Family, Business and Ownership). Some parts of the circles would superimpose (i.e. family members that are both managers and owners of the company). This model was developed by a Harvard Business School Professor, John A. Davis.

  • Family:
    • Maintain family unity
    • Fair different than Equal
    • Self-sacrifice
    • Not entitled
    • Educating about the business
    • Trust & Identity
    • Buy into the responsibility to the business stewards

  • Business:
    • Long term growth and profitability
    • Clarity on the business roles
    • Reinvestment / Improving
    • Need independent voice(s) to mediate between family & business
    • Leader finds solutions best for everyone/majority
    • Voluntary
    • Competitive Hiring Practices
    • De couple ownership/employee status

  • Ownership:
    • Maintain family control
    • Owners need to know their rights, soles and responsibilities
    • Satisfied w/ownership
    • Transparency / Flow of info
    • Keep committed owners
    • Voluntary
  • Notes:
    • Managing Expectations
    • Trade-off
    • LT process
    • Anticipate & make rules before problems
    • Clear priorities of business and family

Tools / Vehicles

  • Family:
    • Family council / assembly (discuss priorities/clear rules/transparency)
    • Self understanding
    • Walk away
    • Educating the Family/Business/Ownership
    • Learning the history and lifestages of people to anticipate
    • Appreciation / Appreciative Systems
    • Do not take the members for granted
    • Patience
    • Contingency plans
  • Business:
    • Business governance
    • Rules
    • Advisors
    • Non family managers incorporated
    • Walk away
    • Reviews
    • Competitive hiring
    • Formal/informal feedback for Family employee
    • Family members given real (important) jobs
    • Contingency plans
  • Ownership:
    • Shareholder’s agreement
    • Succession Planning / Contingency plans
    • Buy/Sell agreement
    • Walk away
    • Mechanism for dispute resolution
    • A&B Shares Control & Flexibility


  • Ownership is power
  • Employees not there for the $ but for experience/environment
  • Appreciation, appreciation, appreciation
  • Humble
  • Respect other non-family members / positions
  • Communication (Remember that managers are not part of the family reunions)
  • Feedback

1 comment:

salman khan said...

Thanks for sharing information..
Telecommunication Systems