MGT 4550 Family Business Management
MULTIPLE GENERATIONS - ROLES
IN THE FAMILY BUSINESS
Chapter 3
Family Business Management,
Concepts and Practice
by A. Bakr Ibrahim & Willard H. Ellis
Instructor: Dr. Irene Duhaime
1
Class Schedule - Week 3
 MULTIPLE
GENERATIONS - ROLES IN
THE FAMILY BUSINESS

Reading: Chapter 3 Dual Relationship

Case:
 The
Steinberg Family, FBM, p.57
 Precista Tools,
FBM, p.157

Questions 73, 74, 78, 90, 91 from FBAB

PROJECT TEAMS TO BE ASSIGNED
2
Content

The Social and Business Functions


The Overlap between Functions
The Problem of Carry-over
Forming One’s Own Identity - Daddy’s
Little Girl
The Path of Self-evaluation

continued ….


3
Content







…. continued
Expectations and Exploitations
Zone of Comfort
Nepotism
Confusion
Supervising Family Members
The Art of Disengagement
4
The Social and Business
Functions
 Dual

Relationship
Social Function (Family)
 Decision-making
based on emotional and biological
imperatives

Business Function (Family Business)
 Decision-making
based on objective, rational
economic model
5
The overlap between
functions
 Value
Conflict
 Consists
of different sub-systems of the
family and the business
 Each
sub-system affects and is affected by
the other parts of the system
 Overlaps
cause dysfunction
6
The Overlap between
Functions
Social
Norms
Economic
Model
Objective
Performance
Profit
Emotional
The
Family
Business
The
Family
Biological
Belonging
Owners
Managers
Employees
Figure 3.1 The Overlap Between the Social and Business Functions,
Family Business management, Ibrahim & Ellis
7
The Problem of Carryover
 Create
situations of:
 no-win
 transfer
of family problems to non-family
employees
 disruption
due to family feuds
 difficulty
in distinguishing between roles
in family & roles in the business
8
Forming One’s Own
Identity - Daddy’s Little Girl
 Suppression
of identity for offspring
 Tendency
for gender biases to influence
decision-making
9
The Path of Self-evaluation
 Offspring
often:

crave autonomy

are not prepared for succeeding the founder
10
Expectations and
Exploitations
 Offspring
are often required to meet family
expectations
 Elder
family members may exploit younger
family members

difficult to say ‘no’

working long hours

little compensation
11
Zone of Comfort
 “...establishing
well-defined inter-personal
boundaries is critical in family firms”

to avoid negative impact on family life
12
Nepotism
 “The
advancement of family members on
the basis of their relationship in the social
function rather than on their
qualifications...”
 Causes
some family businesses to lose
talented staff
13
Confusion
 Confusion
over

Rules and Roles

Acceptable practices e.g. in succession or hiring
14
Supervising Family
Members
 Hard
to criticize elder
 Hard
to evaluate close family members
 Family
members must learn the
art of constructive criticism.
 Senior
family members must take the lead to
explain the benefits of being open and
candid.
15
The Art of Disengagement
Box 3.2 The Art of Disengagement

Formulate clear organizational goals, objectives and
strategy.

Design job descriptions.

Establish policy and procedure guide.

Design the organization chart.

Develop the strategic plan.

Prepare a code of conduct.

Establish performance evaluation measures.

Develop a succession plan.
16
Cases
 THE
FOUNDER AND MULTIPLE
GENERATIONS

Cases:
 The
Steinberg Family, FBM, p.57
 Precista Tools,

FBM, p.157
Questions
 73,
74, 78, 90, 91 from FBAB
17
Project Topics
PROJECT TOPICS DUE
THIS WEEK !!!
18
Class Schedule - Week 5
 CONFLICT MANAGEMENT IN
FAMILY
BUSINESS

Reading: Chapter 4

Case: Northern Construction Inc., FBM, P.203

Questions 9, 24, 59, 70, 77, 85, 86, 90 FBAB
19
Question 73
 Is
it a good idea to spend time together
away from the business?
 Can
you ever really have a separation
between family and business?
20
Question 74
 When
you and your sibling are
contemplating joining the family
business, what should you, your sibling
and your parents have in mind
concerning sibling relationships and
roles?
21
Question 83
 Should
advisors be or become personal
friends ?
22
Question 90
 What
are the different types of company
cultures that can exist in a family business
and does it matter for family harmony and
good business ?
 What
can you do to emphasize more, the
culture’s good points and change its
negative ones?
23
Question 91
 How
do you get management and
employees to buy in to culture?
 How
do you also market that culture to
attract employees and customers plus
impress others in the industry?
24