Essay On The Strengths Of A Family

Before you get the idea that family businesses benefit only the family members involved, think again. Successful family businesses are a win/win. They benefit both the local and global economies, and in a big way. However, how can it also be true that fewer than 10% survive to the third generation and less than 10% of owners are financially independent from their businesses when they retire?

Family firms come with their own set of unique advantages and challenges. In order to be successful, the advantages must be capitalized upon and the challenges overcome.

Advantages of Family Firms include:

  • Stability: Family position typically determines who leads the business and as a result there is usually longevity in leadership, which results in overall stability within the organization. Leaders usually stay in the position for many years, until a life event such as illness, retirement, or death results in change. 

  • Commitment: Since the needs of the family are at stake, there is a greater sense of commitment and accountability. This level of commitment is almost impossible to generate in non-family firms. This long term commitment leads to additional benefits, such as a better understanding of the industry, organization and job, stronger customer relationships and more effective sales and marketing.

    Hoshi Ryokan, a Japanese inn keeping business founded in 718, is said to be one of the oldest family businesses in world. Family members have operated the business for 46 that’s right, 46 generations. That level of family commitment has led to an understanding of the business that outsiders, or those relatively new to the business, simply wouldn’t be able to replicate. Ford Motor Company managed to stay afloat during very difficult economic times, when other companies, such as Chrysler and GM, were begging for bailouts. Why? I’m sure when all is said and done there are several reasons, but I don’t think it’s any coincidence that Ford’s family name was literally on the line.

  • Flexibility: You won’t hear, “Sorry, but that’s not in my job description” in a family business. Family members are willing to wear several different hats and to take on tasks outside of their formal jobs in order to ensure the success of the company.

    Estee Lauder, who led one of the world’s most famous family businesses and was the only woman on Time magazine’s list of the century’s business geniuses in 1998, said of her company’s success, “I have never worked a day in my life without selling. If I believe in something I sell it, and I sell it hard.” Lauder did everything from cooking up pots of face cream to personally giving free demonstrations, from designing the packaging of her products to training the saleswomen who would sell them.

  • Long-term Outlook: Non‐family firms think about hitting goals this quarter, while family firms think years, and sometimes decades, ahead. This “patience” and long- term perspective allows for good strategy and decision-making. In describing his reasons why he didn’t want to take his company public, Michael Otto, second- generation CEO of Hamburg, Germany’s $18.5 billion retailer Otto Group, said, “We don’t have to come up with a good story every quarter for the investors and the press.”

  • Decreased Cost: Unlike typical workers, family members working at family firms are willing to contribute their own finances to ensure the long‐term success of the organization. This could mean contributing capital, or taking a pay cut. This advantage comes in particularly handy during challenging times, such as during economic downturns, where it’s necessary to tighten the belt or personally suffer in order for the business to survive.

Disadvantages of Family Firms include:

Lack of interest among family members: Sometimes, family members aren’t truly interested in joining the family business, but do so anyway because it’s expected of them. The result is apathetic, unengaged employees. In the public sector, employees that fit into this category would simply be fired. It’s not so simple at the family firm.

  • Family Conflict: Conflict is bound to happen at any firm, but add in long histories, family relationships, and the kind of contempt that comes with familiarity, and the ante has just been upped. Deep-seated, long-lasting bitter fights and quarrels can affect every single person within the firm and can draw divisive lines. Because family members are involved, conflict can be more difficult to solve and can result in difficult endings. In 2005, a famous dispute between the sons of Reliance Industries founder Dhirubhai Ambani, Mukesh and Anil, divided India’s largest petrochemical manufacturer. When all was said and done Mukesh retained control of the petrochemical business, while Anil became chairman of Reliance Capital, Reliance Communications, and Reliance Energy.

  • Unstructured Governance: Governance issues such as internal hierarchies and rules, as well as the ability to follow and adhere to external corporate laws, tend to be taken less seriously at family businesses, because of the level of trust inherent at family firms. Unfortunately, this can be gravely detrimental. Take the example of Samsung Group, whose chairman, Lee Kun-Hee, was forced to resign in 2008 after being indicted for tax evasion and criminal breach of trust charges. While his three- year sentence was suspended, a fine of $109 million was still imposed. In this situation, a little governance would have gone a long way.

  • Nepotism: Some family businesses are reluctant to let outsiders into the top tier, and the result is that people are given jobs for which they lack the skills, education, or experience. This, obviously, has a far-reaching effect on the success of the company. In particular, it’s very difficult to retain good talent at lower levels if their performance, and their ability to succeed in the long run, is consistently being affected by incompetence at higher levels. More family firms are recognizing this issue and are taking care to strategically place outsiders in certain positions when necessary.

  • Succession Planning: Many family firms lack succession plans, either because the leader doesn’t have the desire to admit that he or she will, one day, need to step down, or because there is too much trust in the family to work this out when it becomes necessary. In fact, because of close relationships and long histories, it is of utmost importance in family firms that a strong succession plan is in place.

  • Risks associated with not having a strong succession plan include poor leadership, family quarrels and often financial or legal trouble for the company. Founder of Hyundai Motor, Chung Ju-Yung, named his son, Chung Mong-Koo, his successor in 1999. Just a year later, Chung Mong-Koo defied his father’s orders to step down.

    In 2007, Chung Mong-Koo was convicted of embezzling funds from the company in order to buy corporate favors from the Korean government. As you can see, a well-run family business is capable of having a positive impact not only on the family involved, but also on the local and global economies. Family businesses are capable of promoting entrepreneurism, generating wealth and security for families and for providing employment opportunities for those in the community.

    Unfortunately, the things that make family firms so wonderful are the family involvement, the highly personal relationships, the inherent loyalty and commitment, the flexible structure, but they also make them challenging to sustain for the long term. The goal, then, is to recognize and understand both the strengths and the weaknesses of family businesses, in order to better manufacture long-term success.

Key Considerations:

  1. Build a long-term vision for the family business that is compelling and gives purpose to why you are doing this.
  2. Consider the type of family business structure you want to build and test out whether it can last three generations.
  3. Understand what family conflicts are brewing, that need to be resolved with some professional mediation and coaching In a future article, I’ll introduce you to the DNA Model. I’ll show you how to ensure you have all the strands necessary to develop a successful business and how to weave those strands together to ensure your business is strong, enduring, and successful.

This is an extract from Reg Athwals book: Unleash Your Family Business DNA.

More information on Reg's toolkits and business solutions can be found at http://www.rawltd.com and http://www.rtsgp.com.

More from Vistage:

 

The Strength Of Family And Friends

Throughout a person’s life, there are constant problems, struggles and stress that have always disturbed and changed a somewhat normal, peaceful life. When things are going well, one event could possibly change the whole course of a nice day, week, month or even year. The only thing that stands between people and a complete breakdown from these situations is the family and friend relationships that are established. Being constantly comforted, cared and amused by family and friends is one reason that my confidence and character has been built (Rubio 1). Jackie Karp, the writer of the poem “Family, The Center of My World”, writes about her loved ones, “You are the meaning of strength at its highest peak. You have courage when the rest of us are weak” (Karp 1). In the toughest situations, family and friends encourage others that need help getting back on their feet.
In life, people learn new concepts in school, work and at home. Sometimes, learning new things or just trying to understand something can take an emotional and physical toll. Continuously failing to complete a task puts great stress to find a way to do it correctly. Nicholas Sparks, the author and protagonist in the memoir Three Weeks with My Brother, had gone through many problems; one being a difficult situation to teach his son to read and write despite his son having some sort of disability that could not be determined. Nicholas writes, “And in the end, I would teach him to talk, one slow, painstaking word at a time” (Sparks 440). Through months and years of teaching his son Ryan, Nicholas Sparks along with his brother and wife helped Ryan learn to read and write normally despite having many tests saying that he had learning problems. The whole family banded together to get through the tough situation of having a kid that was at first unresponsive to anything they said or did to him. Nicholas later talks to his older brother about his kid who is now a smart straight-A student that is doing great in his classes. Without Nicholas or Ryan’s family helping them, it would not have been possible to have the success they received.
I know in my life that I have been stressed out by studies, homework and projects. Although it may seem like I do not appreciate my family and friends, I acknowledge that they truly help me with my work by encouragement and actual lessons in regards to the assignments I have to do (Rubio 2). I would not be as successful or determined in school and life without the support of my close-knit group of people I love.
Even in very life-threatening situations, the people around you can help comfort you in times of these hardships. In Three Weeks with My Brother, Nicholas’s sister Dana is diagnosed with cancer. As the cancer progresses, Dana’s ability to do daily tasks diminishes greatly. She is not able to take care of her two children as she did before. “As my sister’s tumor progressed and she lost energy to do everything she’d once done, members of Bob’s family...

Loading: Checking Spelling

0%

Read more

Society of Friends: History of the Society of Friends and contemporaneous observation

1771 words - 7 pages Society of FriendsHistory of the Society of Friends The Society of Friends (more commonly known as the Quakers ) was founded in the 1650's by George Fox, an English "nonconformist religious reformer." Born 107 years after Martin Luther sparked the

The Strength of Dilsey in The Sound and the Fury

794 words - 3 pages The Strength of Dilsey in The Sound and the Fury In The Sound and the Fury, the fated Compson family is a portrayal of both the declining old South and the new South that rose demonically out of its ruins. Through the Compsons, Faulkner personifies at once the mournful self-pity of a fallen gentry, and in Jason, the embittered rage and resentment of those who come after the fall. Throughout the novel, Dilsey is the one quiet...

The Influence of Friends and Propaganda on a Teenager

1623 words - 6 pages “Not a joke, a game. I can make you guys believe anything. I can make you dance around like puppets” (Card 14). In society there exists the leaders and the followers. Friendship and propaganda are two vehicles of manipulation demonstrating the relationship between these leaders and followers. Propaganda’s purpose in society is to encourage a certain point of view, usually of a biased nature and sometimes even providing false information, to the...

Proportions and Strength of Concrete

2543 words - 10 pages Contents 1. Introduction .....3-4 2. Proportions and Strength 4-5 3. Admixtures .......5 4. Aggregate . ...6 5. Cement ...7 6. Curing 7 7. Workability 8 8. Tests…………………………………………………………………………………9-11 9. Conclusion…………………………………………………………………………...12 10. References…………………………………………………………………….........13 1. Introduction The Romans used concrete at least 500 years before the time of Christ, and they were probably not the only ones or...

Internet Use and Social Capital: The Strength of Virtual Ties

2412 words - 10 pages The introduction of the Internet has represented a wave of global change amongst society. It has changed a large scale of aspects; socially, economically and culturally. It has caused society to change how they carry out day to day activities and how they communicate. Many academics would suggest that the world has essentially become a much smaller place as forms of global communication have evolved and is now quicker and easier than ever. The...

The Incomparable Strength and Bravery of Women in Frankenstein

812 words - 3 pages Throughout Mary Shelley’s Frankenstein there are many female minor characters. Some view these minor characters as passive and subordinate, the epitome of a delicate woman, that reflect the gender roles during the author’s era. This simplifying view of the intricately complex female characters does not accurately represent the powerful and firm importance of their underlying, yet commanding, voice. One of these characters is Justine Moritz who,...

Strength and Racism in “The Secret Life of Bees”

782 words - 3 pages Martin Luther King once said, “I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin, but by the content of their character.” Sue Monk Kidd’s novel The Secret Life of Bees fully embodies his idea of equality, by introducing the story of a fourteen-year-old white girl named Lily Owens, who lives during the time of the Civil Rights Movement in South Carolina. Lily’s...

The Strength of the Nation.

1022 words - 4 pages "The righteous will flourish like a palm tree,they will grow like a cedar of Lebanon."(Psalm 92:12)It is mentioned seventy times in the Bible; King Solomon used its cedars to build his glorious temples, and the Romans built their only temple for Jupiter on its land. Moreover, it was from its coasts that the Phoenicians spread the world's first alphabet. The word 'Lebanon' symbolized beauty, strength, and pride. What was it...

The Qualities of Real Friends

941 words - 4 pages The Qualities of Real Friends To have friends is an essential part of life and comfort. When you were little you had friends in school that you could play with. You shared your toys with them and laughed with them while the teacher was speaking. When you were in middle school, you probably adopted a clique of friends to see after class and hang out with after school. Later on in high school, you most likely narrowed your choice to...

The Strength Of A Woman

1088 words - 4 pages Henrik Ibsen's controversial play A Doll's House asserts that women are able to think for themselves and have the ability to change their lives. The main character, Nora, faces decisions during the play that eventually make her a strong character. Throughout the...

The Art of Invisible Strength

872 words - 3 pages The Art of Invisible Strength Amy Tan's The Joy Luck Club is a truly rich novel. The concept of "invisible strength" caught my interest in particular, so I have chosen to analyze the relationship between Lindo, her daughter Waverly and Waverly's boyfriend Rich. My questions are how Lindo achieved this strength, why she did it and how it effected herself, Waverly and Rich. It is fundamental to the analysis to investigate Lindo's past in...

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *