Strategic business decision making is related to consensus decision making in family business. Families that use a strategic business decision making process are committed to discussing issues until there is full agreement to move forward and implement a decision. If a family is committed to working together for the long term, it is best to embrace this model.
In my last post, which you can read here, I gave the background of the Yost family, with whom I worked as a consultant. The Yosts own a group of successful car dealerships. Brothers Alan and Charlie make up the third generation of this family business, and both worked in the business. Alan is determined to find the easy way through everything, and he never excelled in the business. Charlie, on the other hand, transformed the dealership into an award-winning business with great profitability through 20 years of hard work.
When Charlie reached the breaking point and decided that Alan had to leave the business, it created a contentious situation that threatened to tear the family apart. The brothers had a buy/sell agreement that stated that Charlie would have paid Alan just under $10 million for his share of the business. Alan wanted more than the buy/sell would give him. He hired an adversarial lawyer who worked on a contingency and promised Alan he could “get a lot more.“
I worked as an advisor with the Yosts to help them make their way through this buy/sell agreement. In my meetings with the Yosts, I discovered that one of the most important core values of the family was their commitment to function from a place of integrity. This principle was demonstrated by the actions of the brothers’ grandfather, business founder Fred Yost.
Integrity: Firm adherence to a code of especially moral values, incorruptibility.
Alan had a wonderful, loving relationship with his grandfather. During Fred’s latter years, he and Alan had lunch once a week. In those lunch meetings, Fred told Alan the stories that only a founder of a business can tell. Those stories all contained a […]
When family business conflict affects a family, the result can be catastrophic. In order to prevent family business conflict from destroying family relationships, it can be beneficial to engage a family business consultant to help the family work through the difficult process of coming to an agreeable resolution to disagreements.
Family business leadership and values-based leadership is the next window of development in the family business arena. It's important to make sure everyone involved in the family business understands the business mission and values. When a company takes the time to define its core values, a positive shift in the company culture can occur.
Family business structure and the concept of adapting and evolving applies to family-owned business. When creating solutions for a family business, the first step is to analyze the functions that need to take place to make the business work. Family business structure and efficiency can ultimately lead to higher profitability.
The power of the Golden Share is immense. All family businesses should be using International Best Practices for Family Business. A family-owned business is, first and foremost, a business. If a family wants its business to be successful, if must be run the way any successful business is run. Keeping the focus on the business is what makes things possible.
It can be easy to create a family business mess - even when International Best Practices for Family Business are followed. Being aware of business mistakes to avoid is optimal for delineating clear responsibility for positions and accountability for outcomes. It's important to anticipate possible outcomes of family business decisions before a family business mess is created.
Family business taxes are not always fun to deal with, and when tax issues become intertwined with family business decisions, it can become even less fun. If families in business are to avoid the "heartburn", they must carefully examine the family monetary policy and what it is that holds their family together.
There are two types of family business nepotism - the bad kind and the good kind. The good kind allows business owners to take advantage of relationships with respected employees and colleagues to help find and hire employees with a similar work ethic and values. This kind of nepotism can actually help a business.
Nepotism is the practice of showing favoritism toward one’s family members or friends in economic or employment terms, for example, granting jobs to friends and relatives, without regard to merit. Such practices can and do have damaging effects on businesses. They can erode the support of other employees, reduce the quality and creativity of management and diminish the importance of competence and high-level performance.
In many smaller family-owned businesses, nepotism is viewed in positive terms, often because it is a cheap source of labor, and is considered a synonym for “succession.” This rationale is a mistake. Competence must be the criteria for employment, followed by years of consistent, high level performance that can lead to succession.
Nepotism is neither good nor bad, in and of itself. It only takes on a positive or negative charge in the context of how one has raised one’s children. I believe that the task of being a parent is simply this, “To raise responsible adults who have high self esteem and can function independently in this world.“
This process involves instilling those values that will lead to competent employees — honesty, integrity, dependability, respect for others, being industrious and doing one’s best in every endeavor.
Failure to teach these principles opens the door to children feeling entitled — believing that they are the privileged and should be given everything. This deficiency becomes a ripe incubator for problems to emerge when the child works in the family business. Children who come to the business with an attitude of entitlement will think they are exempt from the rules that apply to “ordinary people.“ They often don’t understand that they must earn their place in the company through hard work and consistently-demonstrated competence. A seemingly small thing like coming to work on time is an example.
Experience […]
