Keep the Family Baggage Out of the Family Business: Avoiding the Seven Deadly Sins That Destroy Family Businesses

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Simon and Schuster, 29.02.2000 г. - 332 страници
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Family businesses epitomize the best of the American Dream: you work hard, you're your own boss, you leave a lasting legacy to your children—or do you? Statistics show that only 30% of family businesses survive to the second generation, and a paltry 10% survive to the third generation. Family businesses are in trouble, and their survival is crucial to us all. Their success ensures our country's success—and their failure can drastically affect our economic health.
In Keep the Family Baggage Out of the Family Business, family business expert Quentin Fleming has identified the Seven Deadly Sins that are invariably responsible for a family business's demise. Keep the Family Baggage Out of the Family Business presents practical and accessible advice geared toward the average family business owner or employee and is an invaluable tool for helping family businesses not only survive but thrive.
 

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Съдържание

PARTI
7
Systems and Baggage
21
The Family System
33
PART II
47
Were One Big Happy Family
60
They May Have Become Adults but Theyll
74
Youre Not Loyal to This Family If You Insist
85
Father Knows Best?
95
Successful Succession
174
PART IV
195
Interlopers Consorts and Other Undesirable
205
Baggage du Jour
221
The American Dream Versus the Family Nightmare
235
Create a Strong Team to Run the Company
265
Develop a Strong Team
279
The Right Consultant Is Critical to Your Success
295

Maybe It Will Go Away If We Ignore It
105
Tell Me About Your Childhood
115
The Baggage Returns in Time for Succession
144
Evolutionary Versus Revolutionary Succession
160
Additional Sources of Expertise
308
Put It in Writing
317
Final Thoughts
326
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Информация за автора (2000)

Chapter One: Why You Need to Read This Book

As a consultant, I am continually being told by people in family businesses that they are unsophisticated and that their lack of expertise on many business matters is hurting them. I disagree. The main thing that is hurting family businesses is the family.

A Quick Overview of Family Businesses

WHAT IS A FAMILY BUSINESS?

This book uses a simple definition of a family business: Any instance in which two or more people from the same family work together in a business that at least one of them owns. It may be a combination of husband and wife, father and son, brothers, dad and his distant cousins, and so on. This definition is used because anytime family members work together they face a unique set of problems.

HOW MANY ARE THERE?

Family businesses are the greatest stealth phenomenon in the U.S. economy. Accordingly, statistics for these businesses are fuzzy. The federal government does not track "family business" as a category in its census data. You can obtain information on the relative size and number of businesses, business ownership by ethnicity, number of home-based businesses, and so forth. But there''s no straightforward count of family businesses.

Some estimates state that there are more than 12 million family businesses in the United States, while others are that family businesses:


  • Make up 75 to 95 percent of all U.S. companies

  • Generate 40 to 60 percent of gross national product

  • Represent more than half of all wages paid

  • Make up one third of Fortune 500 companies and almost two thirds of all companies traded on the New York Stock Exchange



Family businesses are the major force in our economy. Instead of focusing on quarterly earnings estimates, unemployment statistics, or the Dow Jones Industrial Average, the business media should focus on family businesses, since the health of family businesses affects and reflects the health of our economy.

MOST OF THEM DON''T SURVIVE

The probability that a family business will survive long enough to be handed to the next generation is not great. Consider these statistics:


  • Approximately 30 percent will survive to the second generation.
  • Only 10 percent will survive to the third generation.


AND SOME BIG CHANGES ARE IN STORE

In the next five years, approximately one third of family businesses will undergo succession -- that is, control of the business will pass from one family member to another. Most of these businesses will face serious problems during succession, and many of them won''t survive. Even those businesses that survive succession don''t necessarily thrive and may not survive long enough to be handed over to the next generation.

It Ain''t Easy Being a Family Business

There is an almost universal misperception that people in family businesses have it easy: they own their own business, automatically get jobs, and don''t have to worry about losing their jobs in a downsizing.

THE MULTIPLE BURDENS FACING PARENTS IN A FAMILY BUSINESS

The owners of a family business are often the parents. As such, they have to contend with the stresses and strains of running a business and raising children.

An owner has to keep the business viable. The owner''s economic survival is usually dependent upon the business. But since it''s a family business, the family that''s dependent upon the business is not necessarily restricted to the nuclear family. Children, aunts and uncles, cousins, and stepchildren may all be dependent upon this business for a paycheck.

In addition to short-run economic survival, a family business often represents a legacy to be handed down to succeeding generations. This adds pressure to keep the business viable beyond its value as an economic asset, as a valuable part of the family''s heritage.

Employer to family, extended family, and nonfamily members. The owner is an employer and thus must perform many traditional supervisory tasks. What makes this tricky is the diverse cast of characters who are employed, often ranging from immediate family members to complete strangers. How can these supervisory tasks be performed in a way that is fair to all?

Family-business owners must maintain an environment that promotes fairness to all; otherwise there is the danger of giving preferential treatment to family members. Besides decreasing the motivation of nonfamily employees, in our lawsuit-happy world it raises the specter of being hit with a labor grievance.

Being a parent. In addition to running the business, the owners are also supposed to raise their children. When do the parents find the time to be parents when they''re consumed with running the business?

If their children are to grow into healthy adults and enter the family business (or go to work anywhere else, for that matter), they need to learn a series of business skills and character traits that require the active tutelage of their parents.

Being a spouse. Marriage is supposed to be a partnership, and when a family business is involved, it''s not uncommon for the partners to become coworkers. How can you maintain a vibrant and healthy marriage when you''re forced to spend your working hours confronting the countless pressures presented by running the family''s business in addition to the normal pressures of raising your family?

HOW MANY HATS CAN ONE PERSON WEAR?

In most situations you''re deemed to have a mental illness if you have multiple personalities, yet if you work in your family''s business you''re forced to have multiple identities and people expect you to be sane. But how sane can you be when you are forced to embody at least two of four separate and distinct identities, and each of these identities creates conflicting demands?

There are three things to remember when examining Figure 1. First, every family member who is involved with the family business is wearing at least two hats. Everyone wears the hat of a family member, plus whatever other hat or hats his or her business involvement dictates. Second, each role provides a different perspective on the business, all of which are correct. Third, the perspective for each of these identities is usually very different. This multiplicity of roles and perspectives can create confusion, conflict, and tension.

Family member. Family membership is automatic, so whether they want it or not, any family member working in the family business automatically has this identity. But the roles and responsibilities of being a family member do not have anything to do with running a business. In fact, these roles and responsibilities often get in the way of running an effective business.

Owner. A person with an ownership interest looks at the business from the perspective of someone with an asset to protect and to derive profit from. But there are varying types of ownership, and each of these can create a differing set of problems.

A person''s ownership interest might involve active control, or it might be a limited or passive investment with no control over the company''s operations. Owners lacking formal con-trol may create conflict when they try to influence the business by exerting pressure on the family members who do have control of the business.

In addition, if an owner does not work for the family business, his or her perceived economic benefits from ownership might be very much at odds with those of people who draw salaries from the business. One person will be arguing for dividends while the other says that profits need to be reinvested.

Manager. Although in the abstract, appointment to management should be based on merit, many families put family members in management without regard to aptitude, creating tension between competent and incompetent family members (as well as competent employees and incompetent family members). In addition, family members who are managers may have conflicting business priorities that spill over and create tense family interactions.

Family members who manage the business may be in conflict with those owning it, especially when those responsible for running the business do not have sufficient power to take the actions they want.

Employee. So what happens to family members who have been relegated to employee status? How do they react, knowing their family''s name is on the door yet they''ve been relegated to worker bee?

Lacking ownership or management power, these employees often resort to "The Whine Factor" to overcome a lack of formal authority. They will exploit their membership in the family, whining as loudly as possible to try to exert informal control over business activities. Their failure to contain themselves within a limited business role creates conflict.

WHY WORK IN A FAMILY BUSINESS?

To carry on the family tradition. The family takes great pride in its business, and it''s an important element in defining who it is. As such, family members feel it''s their duty to enter the business and keep it running.

It''s a matter of destiny. Each family has its own set of beliefs, and when a family owns a business, this often includes a belief that family members are supposed to work for it. The children are often taught that their destiny is to eventually succeed their pa

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