Special Issues
Family (Owned) Businesses comprise over 80% of all registered Australian businesses. They employ around 50% of the total Australian workforce and generate over half of our Gross Domestic Product.
Their pride and their passion drive them to enormous heights, which provides good cause for celebration.
On the downside, many of these businesses are inherently and sometimes dangerously egocentric, where the persona of the business can barely be separated from the persona of its proprietor(s) and where that separation, when it comes, can be as fatal as the splitting of Siamese twins, joined from birth.
Survival Statistics
Less than 1/3 of all family buisnesses pass to a second generation. Of these, less than 1/3 will pass to a third generation. Therefore, at 1/3 of 1/3, we're down to 1 in 10 of all family businesss surviving to a third generation.
Of those businesses that reach the third generation, only 1 in 6 is likley to pass to a fourth generation, or beyond.
Those that get this far have a reasonable chance of carrying on into "dynasty" status. Presunmably, once they've reached a 4th generation, the family has really worked out how to make it all work!
As a result of this very human, statistical phenomonon, it is often said that:
The 1st generation makes it ........ the 2nd generation takes it ......... and the 3rd generation breaks it!"
So, what makes family businesses tick?
Organisational Dynamics
Family Business is a complex mix of Family, Business AND People (the individuals who work in or are otherwise profoundly affected by the family and/or by the business).
When the family, or the business, are operated without due regard for the importance and separate needs and interests of all 3 elements, a fuse is lit that may take just hours, or may take many years to reach its destination, but evnetually there will be an explosion, or an implosion - of hostility, resentment, rejection and probable failure - of either or both of the family and the business.
Similarly, any attempt to fix the problems that fails to recognise the importance and interaction of all 3 elements is seriously missing part of the game and is likely, at best, to provide only temporary relief.
Why is Family Business Different?
Every good modern businesses, partly as a result of having to deal with increasingly skilled workforces, and partly as a meatter of commonsense, already acknowledge the importance of, and respond tothe needs of, their people. So, what makes Family Business different to "ordinary business"?
Every business comprises 3 main elements, resources or dimensions:
- People
- Assets (including systems, technology and intellectual property) and,
- Finance
Family Business adds a 4th dimension:
- Emotion
Emotion includes the passion we've already referred to. It also includes the baggage, both good and bad, that every family member collects on their way through life, simply for being a member of the family.
It is emotion, often fuelled by events and perceptions from the distant past, that drives many of the behaviours of family members. And it is emotion that must be recognised and dealt with as the 4th active element (often the dominant and most incomprehesible element at the time) when families in business get into serious problems or conflicts.
Consequently, Family Business problems and conflicts must be skilfully addressed in all 4 dimension. This is why we invented Solutionism.
Family Business Challenges
Inter and intra-generational rivalry and outright conflict are regrettably common and mishandling the situation can lead to legal fights, destruction of the business and the complete disintegration of the family.
Typical challenges faced by most family businesses are:
- Family issues / relationships.
- Working vs non-working family members.
- Individual issues - work ethic, personal power and individual competencies and capabilities.
- Short term reward vs long term investment.
- Expansionary risk vs retirement security.
- Control, alliances and independence.
- Working with non-family directors and managers.
- Modernising & corporatising the business.
- Dealing with the "old retainers".
- Succession and Leadership Transition issues.
