The premise of a family business and the premise of a family are not the same. Because the foundation for acceptance in the family is different from the business, there is a fundamental disconnect between the two systems that many people do not recognize. No business will be successful if the leadership is not competent.
In family business, there is a clearly defined but invisible control mechanism called the family system. This system is often referred to as the family business psychology. In family business, the keys to implementing solutions to business problems are often locked up in the psychology of the family. Business solutions cannot be effective if family business psychology is ignored.
A corporate governance structure is a collection of customs and policies that affect the way a corporation is administered. This type of structure provides an internal discipline on how family and non-family members function within the business. A corporate governance structure helps professionalize the way a family business operates.
Succession in family business is all about the survival of the business as an economic entity. Succession planning should involve the whole family, whose goal should be enabling the business to grow and prosper for the family’s benefit. The current leaders, who may have started the business, must learn to let go of control.
If the business is to thrive, there should be conditions attached to the hiring of family members. Every owner of a family business faces the issue of whether to hire particular family members. It's important to set a fairly high bar before hiring family members, or the business will end up employing less than competent people.
Effective family business communication is one of the fundamental aspects of building a smooth-running platform for success. Oftentimes, combining the dynamics of family and business can create conflicting messages, causing a family to confuse tasks. This can be one of the biggest mistakes families in business can make. Clarity of tasks between family and business is essential.
Managing a family business means that difficult decisions must sometimes be made. If a family business is to survive a rough economic patch, it may be necessary to reduce the number of people the business employs. One way to determine who will stay and who will go is to evaluate each employee's level of flexibility and creative problem solving skills.
