Leadership
Issues in the Family Run Business
By
Anita Ryan, Family Business Success, LLC
This
article was originally published in the newsletter of “The Minnesota
Family Business Council” and has been updated to reflect current
business concerns and issues. It focuses on the importance of
effective leadership as it relates to the health and vitality of family
run businesses.
Leadership
dynamics are a key to success in all businesses, whether publicly held or
privately owned. However, in no arena are the leadership issues
tougher or murkier than in businesses owned and run by families.
Creating,
communicating and implementing corporate vision are difficult leadership
tasks in any business. The complexity of these tasks is multiplied
exponentially with the overlay of the family value system. While it
may be impossible (and perhaps undesirable) to avoid incorporating
“family values” into business functions, it is helpful to be aware of
pitfalls that can negatively affect business success or family
relationships. These pitfalls can and often do include the
following:
Setting the
vision
Successful
companies embrace customers as the core of their vision. Companies
that fail are often diverted from customer-centered actions and reactions.
In family businesses there is a danger of confusing company and family
visions. For example, it is a positive family vision for parents to
want to provide stable and lucrative employment for their offspring.
However, when this vision is superimposed upon the business, it may tempt
the owner to hire a family member with limited talents for working in a
customer-driven environment. The result can be as serious as
damaging the company’s reputation, reducing profits or straining family
interactions.
Corporate
flexibility
Changes are
taking place at lightening speed in business technology, the use of human
resources, marketing strategies, operations management and systems design.
Maintaining the status quo, even if successful in the past, can be a
dangerous strategy for corporate organizations. Some family business
owners may feel the need to react and change quickly is in direct conflict
with family goals. This is another instance demonstrating the
confusion that may exist between “family” and “business” goals.
The role of
the family is to provide stability. The role of a business is to
provide value to a customer in return for payment. Strong family
business leaders need to understand this dichotomy. Profits
generated by a business can provide the family with financial stability.
On the other hand, profits can only be generated by flexible and
change-oriented thinking behaviors.
Leader
selection
Successful
business leaders are those with some combination of proven natural talent
or a demonstrated capacity to learn and use leadership skills. In
family-owned businesses, there is a propensity for using criteria other
than talent or skill in selecting the company leader. The most
common criteria used by family business are traits such as gender (sons
vs. daughters), birth order (oldest rather than youngest), and birthright
(family member vs. an outsider). Another common path is to choose
the son or daughter with behavior or personality similar to the founder of
the company. When these traits are used as the sole criteria,
leaders are selected without regard to the set of skills needed at this
stage in the corporate development of the family’s company.
In summary,
leader selection, corporate flexibility and vision setting are only three
of many leadership issues facing family-owned businesses. The key to
analyzing problems and identifying successful solutions is to develop a
keen ability for viewing the business as an entity separate and apart from
the family unit.
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