Family Managed Business

Family run businesses in many ways have been the backbone of businesses around the world.

Yet only 3 out of 10 of family run businesses are able to retain the Family position and the Business position till their third generation.

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Most of the family managed businesses that we have worked with had the following intrinsic characteristics


Family conflict over the control of the business diverts attention of the managementfrom key business issues

Hiring and promoting family members discourages non-family employees and sometimes prevents the company from filling a position with the best possible candidate

Sometimes attractive opportunities for investment are missed due to diverging priorities in the use of capital or cash flow by different members of the family, leading in some cases to the dissolution of the business

Job tensions among family members are particularly intense, sometimes generating escautf8g problems (“we are fighting all the time”) or the necessary attention is not paid to the problem at all (“I would rather not talk about it, to avoid any further conflict”)

Treatment received by some members of the family, and the corresponding benefits, are perceived as unfair causing discomfort among the family

It is difficult – or at times impossible – for an important member of the family (usually the founder) to find and prepare his/her successor

The second and third generations have problems interacting with each other and with the business

These characteristics have the tendency to cause conflicts that can destroy the business, and sometimes even the family.

Transform your family business

Leave a legacy rather than uncertainty

Business reachs heights that you thought of when you started it

Your people develop the same acumen as you have

Decision making that would be beneficial to the organization, as well as your family

Recognized as a professionally run company

Family business dimensions

Understanding this model of family business has an immediate advantage, the representation in a “map” of all players, their roles and potential sources of conflict.

Family charter

Importance of family charter

The process to reach an agreement in these areas brings to the surface latent conflicts The discussion of some issues openly allows the adoption of an objective approach by all members of the family Laying down and agreeing on rules in advance help avoid and prevent future conflicts Writing the rules in “black and white” eliminates ambiguity and helps new generations form their own expectations of the family business Envisioning future problems allows the family to prepare in advance to face them

Structure

High-level organizational structure

A fundamental step is the creation of a high-level organizational structure with the communication, control and governance mechanisms required to meet the family and business objectives.

Decision Making Structures

Experience has shown us that in the absence of a relatively formal structure to deal with the issues related to each “circle”, problems arise in another dimension of the system.


Methodology

Acumen follows a methodology aimed at establishing clear rules and appropriate structures required for a family business to achieve its fullest potential and minimize the risks of disruptive conflict.

Diagnosis of challenges

Diagnosis of challenges

Objectives

Identifying particular challenges faced by the family business in terms of:

Family

Ownership

Business

Activities

Individual confidential interviews with each member of the family who either: owns shares, is actively involved in management, or exerts a significant influence in the family dynamics

Individual confidential interviews with key employees of the corporate structure

Analysis by Acumen team of the level of agreement/disagreement around the most important issues and their impact on the business and the family

Results

List of agreements and disagreements on all the topics

List of things that are Working for and Working against the business and the family

Setting the Organization Vision

Setting the Organization Vision

Objectives

Creating the Vision for the Family, the Business

Developing the Strategies for achieving the Vision

Activities

Acumen will conduct a 2 to 3 day Strategic Facilitation with the Top Management team in order to finalize the corporate Vision and develop a Strategy to achieve the Vision taking into account the key stakeholders involved.

The Strategic planning would involve risk assessment, market overview, steps to be taken for long term and short term action plans at the corporate, SBU and operational level.

Results

Corporate and Family Vision aligned to each other

Strategic Plan to achieve the Vision

Family Charter

Family Charter

Objectives

Reaching consensus on sensible issues in which there is disagreement

Developing buy-in for contents of the Family Charter and governance structure to follow

Setting in writing clear rules, agreed upon by all family members, establishing the basis for the future interaction of the family with regards to the business

Activities

A series of workshops involving all family members in which the results of the first stage are presented, highlighting areas of agreement and disagreement, as well as best practices from other family businesses

Based on the results of the family consensus workshops, Acumen prepares a written first draft of the Family Charter, containing all discussed aspects of the family business

Feedback is incorporated into a final document, which is formally presented and signed by the family

Results

Agreement on the way to handle the main issues faced by the family business system both in the Family Charter and in the governance structure

Family Charter document agreed upon and signed by all family members

Governance Structure

Definition of Governance Structure

Objectives

Designing the appropriate structures to handle future issues in the three dimensions of the system (ownership, family, business)

Activities

Based on the guidelines set on the Family Charter, Acumen team creates a proposed governance model, including who participates, what are the roles and responsibilities, what is the frequency of meetings, and what are the interaction mechanisms of each proposed structure

The proposed model is presented at a workshop, at which changes are discussed and incorporated into a final model

Results

Governance structure for the family business

Defining Roles

Defining the Role of Family members in the Vision

Objectives

Getting the members of the Family ready to achieve the goals set for the business

Activities

Assessment of the Family members for the positions in the corporate structure finalized in Step 2

Finalizing the mapping with a consensus from the family members

Creating individual development plans for the family members with respective to the current competence and expected competence

Results

Family members mapped to structured on the basis of competence

Individual development plans


Why Acumen?

  • Experience of companies ranging from Real Estate and Manufacturing to Service Sectors
  • Currently 22 consultants on rolls and an external Talent Pool of 20 subject matter experts
  • Clientele across India as well as overseas
  • In-depth understanding of Business that makes Acumen the preferred partner of both conglomerates as well as small & medium enterprises
  • Business model of providing customized solutions to meet customer’s current and future needs
  • Ability to deliver interventions based on values and ideologies
  • Being Instrumental in creating transformation in various organizations

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