The management of family-members in the family-business

Family-owned businesses represent the oldest type of business entity and they are recognized as important players in the global economy. A family-owned business is any business in which two or more family members are involved and the majority of ownership remains within the family.  Family businesses focus on the long term, commit to quality (closely-related to the family name), and care for their employees.
However, family-businesses also face a unique set of management challenges deriving from the overlap of family and business issues. Family-businesses may include combinations of family-members in various business roles, including husbands and wives, parents and children, extended families, and multiple generations playing the roles of stockholders, board members, working partners, advisors, and employees. Conflicts often arise due to the overlap of these roles. The ways in which family-members communicate within the family is not appropriate in business life.  
Family-businesses often face pressure to hire relatives or close friends who may lack the talent or skill to make a useful contribution to the business. Such people can cost the company money or reduce the motivation of other employees by exhibiting a poor attitude.
A strict policy of only hiring people with legitimate qualifications to fill existing openings can help a business avoid such problems. This policy must be applied without exception.  
Other important issues relating to family-businesses involve:
Paying salaries to and dividing the profits among the family members who participate in the firm and
Succession (determining who will take over leadership and/or ownership of the company when the current generation retires or dies)
Family-business leaders can take a number of steps in order to avoid becoming caught up in these issues and their negative consequences (i.e. have a clear statement of goals, an organized plan to accomplish the goals, a defined hierarchy for decision-making, an established plan for succession, strong lines of open communication, etc.). Family-members involved in the business must understand that their rights and responsibilities are different at home and at work. While family relationships and goals are important at home, the success of the business comes first at work.
Strategic planning is vital to family-businesses because in many cases families have a majority of their assets tied up in the business. The ideal plan will allow the company to balance family and business needs to everyone's advantage. Note that about 30% of family-owned businesses survive beyond the founder’s generation and just 12% make it to a third.


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