By Ricardo H. Mercado, Professorial Lecturer, John Gokongwei School of Management,
Ateneo de Manila University
In my last article in this magazine, I mentioned about the family system and the business system. My initial engagements with family businesses as a consultant made me also realize that I needed to learn more about family dynamics, relationships, conflict resolution etc. I thought that business experience and the ubiquitous MBA were adequate enough to equip me in becoming an effective family business consultant. A good strategy that has a well crafted mission-vision, a thorough Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis, objectives, strategic plans and excellent implementation techniques was the main component for the family business to move on in a competitive and healthy manner. Family members after being initiated with these I thought “brilliant ideas” asked me how these can be approved and committed to by the family. How these fit in the culture of the family? What if other family members disagreed and insisted their ways of moving the business forward? I was taken aback and my understanding of family business took a turning point. I was as talking about strategies, plans, implementation or action plans and family members were expressing concerns about relationships, conflicts, values and culture. These families just gave me a whole new perspective of family business, its dynamics and how family members behave in a systemic manner.
This metanoia in seeing family businesses in a new perspective made me realize that I needed a better understanding of family dynamics. I needed to acquire skillful intervention techniques in handling sensitive issues of families, ensuring that these will not be aggravated. I found myself enrolling and studying at the Center For Family Ministries (CEFAM) at the Loyola School of Theology in Ateneo de Manila University.
In family businesses the family system cannot be ignored or neglected. This is made up of the family values its culture, the individual family members’ character, behavior, aspirations and commitment. In crafting the Strategic plans of the business, family members must be active participants in formulating these plans including the implementation of these strategies. According to Jim Collins in his book Beyond Entrepreneurship, he cites that a company may have the most inspirational leader, the most profound vision, a brilliant strategy and a thousand great ideas, but if don’t execute well you’ll never be great. Collins hit it on the nail. The family members should be committed to the strategies that can be translated to success only if these were tactically executed excellently.
Now the question is how is this possible? Let me continue by saying that a Family Council must be formed and this become the venue in discussing family concerns, issues or really anything that an individual family member wants to bring up. It provides a forum for family members to express their aspirations, views, and concerns (perhaps for the first time), and allows them to participate in policy-making.In this context, at least philosophically, it becomes a family business rather than Dad’s business”. Family members gain greater understanding of the owner’s (founder) perspective including those of individual family members and a better realization that the business not only provides rewards but also demands responsibility. With the Family Council formed and becomes the venue where family members gather and meet, Family Meetings become the confluence of family members. The purpose of a Family Meeting Program is to establish a structure encouraging family participation in planning, problem-solving, and decision-making. Family businesses face challenge of sharing and resolving different needs and expectations.
Let me share with you the benefits of family meetings2 as I experienced these in different family settings that I have encountered.
First, meetings are a powerful medium for strengthening the family. They are the best way to help family members discover and build on the common ground that unites them. Experience shows that families that spend most of their time on conflict are those that focus on things that divide them. The families that succeed together, on the other hand, are those that focus on “What do we have in common?”
Second, Family businesses reach crossroads when major decisions arise about the future of the business, the owners estate, leadership succession or the role of the family in the business. All of these issues should be the subject of careful planning efforts. And none of them can be resolved in a vacuum.
Third, some families begin meeting to record and save the family history before it is lost forever. Presentations by older members can spark programs on family history and traditions or larger research and writing projects. I find the third purpose important. How the family evolve in where it is today, its beliefs, values and culture will be better appreciated if history is preserved for all family members and even non-family members working in the business.
Fourth, as the family business grows, family meetings play an important role in the transition to professional management. Family meetings can help educate the family about the importance of non-family executives, the value of an outside board, improvements on financial reporting and planning, and other issues that arise as a business undergoes professionalization. The meetings can also help individual family members see their career paths in the context of overall management.
Fifth, family meetings can help air and resolve differences before they become a crisis. A key to successful conflict resolution is for family members to acknowledge conflict early in the family meeting process and to realize that it is normal – not something to hide and avoid.
Sixth, family meetings provide a vehicle for informing members about how the succession process works and how a decision is made.
Family meetings must have agreements that participants will be bound to. Some of the families that I have dealt with agreed on the following overt rules in deciding and implementing discussed actions plans.
_________________________________________________________________________________
1Article written for Entrepreneur magazine by Ricardo Mercado, Professorial Lecturer of John Gokongwei School of Management, Ateneo de Manila University.
He maybe contacted through his email: [email protected] / [email protected]
2Family Meetings by John Ward, PhD & Craig Aronoff, PhD
Ateneo de Manila University
In my last article in this magazine, I mentioned about the family system and the business system. My initial engagements with family businesses as a consultant made me also realize that I needed to learn more about family dynamics, relationships, conflict resolution etc. I thought that business experience and the ubiquitous MBA were adequate enough to equip me in becoming an effective family business consultant. A good strategy that has a well crafted mission-vision, a thorough Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis, objectives, strategic plans and excellent implementation techniques was the main component for the family business to move on in a competitive and healthy manner. Family members after being initiated with these I thought “brilliant ideas” asked me how these can be approved and committed to by the family. How these fit in the culture of the family? What if other family members disagreed and insisted their ways of moving the business forward? I was taken aback and my understanding of family business took a turning point. I was as talking about strategies, plans, implementation or action plans and family members were expressing concerns about relationships, conflicts, values and culture. These families just gave me a whole new perspective of family business, its dynamics and how family members behave in a systemic manner.
This metanoia in seeing family businesses in a new perspective made me realize that I needed a better understanding of family dynamics. I needed to acquire skillful intervention techniques in handling sensitive issues of families, ensuring that these will not be aggravated. I found myself enrolling and studying at the Center For Family Ministries (CEFAM) at the Loyola School of Theology in Ateneo de Manila University.
In family businesses the family system cannot be ignored or neglected. This is made up of the family values its culture, the individual family members’ character, behavior, aspirations and commitment. In crafting the Strategic plans of the business, family members must be active participants in formulating these plans including the implementation of these strategies. According to Jim Collins in his book Beyond Entrepreneurship, he cites that a company may have the most inspirational leader, the most profound vision, a brilliant strategy and a thousand great ideas, but if don’t execute well you’ll never be great. Collins hit it on the nail. The family members should be committed to the strategies that can be translated to success only if these were tactically executed excellently.
Now the question is how is this possible? Let me continue by saying that a Family Council must be formed and this become the venue in discussing family concerns, issues or really anything that an individual family member wants to bring up. It provides a forum for family members to express their aspirations, views, and concerns (perhaps for the first time), and allows them to participate in policy-making.In this context, at least philosophically, it becomes a family business rather than Dad’s business”. Family members gain greater understanding of the owner’s (founder) perspective including those of individual family members and a better realization that the business not only provides rewards but also demands responsibility. With the Family Council formed and becomes the venue where family members gather and meet, Family Meetings become the confluence of family members. The purpose of a Family Meeting Program is to establish a structure encouraging family participation in planning, problem-solving, and decision-making. Family businesses face challenge of sharing and resolving different needs and expectations.
Let me share with you the benefits of family meetings2 as I experienced these in different family settings that I have encountered.
First, meetings are a powerful medium for strengthening the family. They are the best way to help family members discover and build on the common ground that unites them. Experience shows that families that spend most of their time on conflict are those that focus on things that divide them. The families that succeed together, on the other hand, are those that focus on “What do we have in common?”
Second, Family businesses reach crossroads when major decisions arise about the future of the business, the owners estate, leadership succession or the role of the family in the business. All of these issues should be the subject of careful planning efforts. And none of them can be resolved in a vacuum.
Third, some families begin meeting to record and save the family history before it is lost forever. Presentations by older members can spark programs on family history and traditions or larger research and writing projects. I find the third purpose important. How the family evolve in where it is today, its beliefs, values and culture will be better appreciated if history is preserved for all family members and even non-family members working in the business.
Fourth, as the family business grows, family meetings play an important role in the transition to professional management. Family meetings can help educate the family about the importance of non-family executives, the value of an outside board, improvements on financial reporting and planning, and other issues that arise as a business undergoes professionalization. The meetings can also help individual family members see their career paths in the context of overall management.
Fifth, family meetings can help air and resolve differences before they become a crisis. A key to successful conflict resolution is for family members to acknowledge conflict early in the family meeting process and to realize that it is normal – not something to hide and avoid.
Sixth, family meetings provide a vehicle for informing members about how the succession process works and how a decision is made.
Family meetings must have agreements that participants will be bound to. Some of the families that I have dealt with agreed on the following overt rules in deciding and implementing discussed actions plans.
- Based on family consensus
- Communicated to all family members
- Applied consistently
- Mechanism in modifying agreement based on changing conditions
- How can the benefits of an independent command be attained when relatives are fighting for leadership?
- How can the dream of a substantive mission be realized while impatient family owners haggle about the share of profits? and
- How can corporate culture be harmonious when different factions support different family members?
_________________________________________________________________________________
1Article written for Entrepreneur magazine by Ricardo Mercado, Professorial Lecturer of John Gokongwei School of Management, Ateneo de Manila University.
He maybe contacted through his email: [email protected] / [email protected]
2Family Meetings by John Ward, PhD & Craig Aronoff, PhD
RSS Feed
