Family Policies

I was speaking with a long-time acquaintance with whom I went to high school. He is a third-generation member of a family business. He mentioned that his family has an ongoing policy, starting when the family’s children become teenagers. If any of them ‘think’ they want to go into the family business, they are expected to attend the annual family-business meeting.

The teenagers sit on the side of the room. They see who are the current and future leaders. They become familiar with the family’s vision for the business. They absorb the family’s values and begin learning what is expected from family members active in the business.

Writing on family-business policies, Craig Aronoff[1] describes them as the guides for decision making and defining relationships between the family and the business. Good policies help families build skills, gain confidence, and increase their ability to face issues together. The policies should emerge from the bedrock of the family’s values, beliefs, philosophies, and principles.

Most family businesses do not survive past their third generation. The policy put in place by my high-school friend’s family has not only helped bring them securely into the third generation, but it looks good to take them into the fourth and beyond; a real-life illustration of the merits of solid family-business policies.

[1] Craig Aronoff, Joseph Astrachan, & John War. Developing Family Business Policies. Family Business Consulting Group.



Day. Night. Tides. Phases of the moon. Ever occurring seasons–spring; summer; fall, winter…

Early adulthood and exploration; establishment and settling down; mid-life transition; maturity; late adult transition; late adulthood…

Single; married; married without children; married with children; children helping out/learning the family business; launching young adults; young adults as managers in the business; take over of next generation leadership; grand-parenting; next professional phase (your next act), retirement…

Solo entrepreneurship; owner-managed firm; family partnership; sibling partnership; cousins’ consortium; family collaboration…

Start-up business; survival; growth; maturity; regeneration or decline…

We can’t avoid life’s cycles, and its easier on us and those around us when we embrace them and swim with the flow of inevitable and inescapable change.



What is a Family Business Anyway — Continued

Some families maintain ownership of the business but have turned management over to a professional team, as has the Walton family that owns about half of  Wal-Mart. Other families such as the Toyodas and Suzukis own very little of the company that bears their name, but continue to run them.

In another type of family firm the family has grown to a place where they see their future in providing equity, education, and mentoring to younger family members for new businesses ventures. The start-up companies are often part of a holding company owned by the family along with the originating business.

One scenario I have questions about is that in which a single-generation team, such as husband and wife or siblings, have ownership and control. Does this qualify as a family business? I am leaning towards answering “no.” If you have thoughts about this I would love to hear them.


What Is a Family Business Anyway?

A reader recently asked, “what is a family business, anyway?” He was recognizing that businesses involving a husband and wife, or 2 brothers, as well as publically traded businesses such as Ford Corporation and privately held third-generation businesses might all be considered family businesses

In a classical family company the family exercises both ownership and control. As the firm grows however, it becomes more difficult to hang on to both majority ownership and management.

Fifteen percent ownership with two or more generations in management positions is largely considered to be the threshold for family business status. But there is no hard and fast rule.


Why Not?

“You see things; and you say “Why?” But I dream things that never were, and I say, “Why not?”–a quote often attributed to John F. Kennedy, who was actually remembering a line from George Bernard Shaw’s play, Back To Methuselah. It came to mind during a recent discussion about Benevolent (B) Corporations.

B Corporations are an established and relatively new type of company that uses the power of business to solve social and environmental problems. B Corporations are required to meet rigorous standards of social and environmental performance, accountability, and transparency.

Why not a “FB Corporation” intended to preserve the positive attributes, competitive advantages, benefits and legacies of family businesses, which in turn richly supports our economic and social fabric?


A Family or a Business or the Combined View?

Some family-business owners look at their business through a lens where they see themselves offering a job to any member of the family. Others see through a lens that focuses primarily on the needs of the business.

The first view may be supportive of family relationships–but I venture to say that it may not provide the healthiest outlook for family members in the end. The second may benefit the business but may kill the family along the way.

A combined view is needed. One that takes in the responsible support of family members and includes a vision for professionalizing the business. The resulting scene shows generations of continuing strong leadership supporting a prosperous business and a prosperous family.

One means of developing this combined view is by way of your family. Begin by fostering a sense of responsibility in your young children. My friend and colleague Jeff Savlov illustrates this idea as teaching the next generation to put the sippy-cup on the counter when done with it.


Women in Family Enterprises

In the Family Business Management class I teach for entrepreneurship majors at Baruch College, City University of New York, the discussion on women in family enterprises, always attracts an elevated level of attention.

The Baruch student body is one of the most diverse in the country. Remarkably, students from a wide range of cultural backgrounds share an appreciation for the inequality of women and men in family firms. The topic invariably draws comments from both women and men saying in essence that they were aware of the challenges for women in the work place, but never realized the unique situations of women in family businesses.

Not all gender-related differences are negative though, and some play to the unique qualities of women. From research[1] on women in family firms:

  • Because of traditional family roles women’s contribution in family firms often remains in the background
  • Women frequently take on positions that support the business such as bookkeeper as well as participate in “feminine roles, such as human resources, sales support, etc.
  • Women take on roles of caring for peace and harmony in the family, nurturer of the next generation leadership, and can help their children to love the family business.
  • Daughters have different relationships with their father than sons do. While the father-son relationship may be steeped in competition, the father-daughter relationship is more cooperative in nature.
  • The psychology and socialization skills of women, their ability to overcome manage contradiction, as well as to trust instinct and intuition, rather than analysis and rationality may suit them well to succeed in an evolving business culture.

[1] Jimenez, Rocio Martinez, Research on Women in Family Firms. Family Business Review, 2009, Vol 22, No. 53


Thoughts on Advantages of Family Businesses

Family businesses have an intangible asset: they are perceived as being successful, providing superior service, having a strong culture and deep industry knowledge–-all of which can provide competitive advantages.

Why else do family enterprises make public the claim of being a family business?

These advantages though must be earned, decision-by-decision, action-by-action and generation-by-generation.

They are the result of choice and not of happenstance. They begin with conversations within the family about what it means to them to be a multi-generational family enterprise.


Mastery, Membership and Meaning as Second-Generation Motivators

When someone hears that I work with family businesses, one of the recurring problems they tell me about is that the children do not want to work in them; and I always find myself considering the origins of the issue.

In her article in the Harvard Business Review “Three Things that Actually Motivate Employees” Rosabeth Moss Kanter, Professor and Director of the Harvard University Advanced Leadership Initiative wrote that mastery, membership, and meaning are the primary work motivators (https://hbr.org/2013/10/three-things-that-actually-motivate-employees/)

Mastery and meaning play significant roles in both non-family businesses and family enterprises. It may be assumed that the third element, membership, is obvious and a given in a family business. Kanter writes, however, that membership requires “allowing the whole person to surface.”

“Allowing the whole person to surface” may be an obscure goal and an uncertain generational challenge for some family business founders whose sheer dominance and drive created the success of the family business in the first place. It is, however, critical to the next generation finding success under their own leadership.