This document discusses the characteristics and key elements of family businesses. It outlines that a family business is owned by a family through shared or individual capital ownership and family involvement in decision-making and management. The document then lists some advantages like long-term orientation and continuity from family pride, as well as some disadvantages such as undefined family member roles and potential succession battles. It provides an overview of the roles of founders, next generations, and non-family members in a family business structure. Finally, it discusses issues that can arise with non-family employees and provides some solutions like equal treatment, performance-based targets, and inclusion in succession planning.

1. 1
FAMILY BUSINESS

2. Characteristics of a Family Business
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• Share capital owned by a family either jointly or individually.
• Involvement in decision-making, maintain management or
ownership.
• Ownership control by direct descendants

3. 3
Advantages
• Long-term orientation and continuity
• Family culture pride for family
• Less bureaucratic

4. 4
Advantages
• Greater willingness to weather the bad times by ploughing back
profits.
• Impart training to younger members

5. Disadvantages
5
• Role of members not clearly defined.
• The style may be autocratic or patriarchal.
• Members may not be worthy of their position.

6. Disadvantages
6
• Succession battle.
• Selfish motives to drain the money from the company.

7. 1
2
3
4
Founder Family
members
Non family
members
Next
Generation
7
Elements in Family Business

8. • Head of the family
• Determines the nature and direction of the family enterprise
• Starting the business and Builds the organization
• Provide guidance and direction to employees and family members
• Planning for succession
8
Role of A Founder

9. • Demanding and challenging than that of start-up
• Address the faults and imperfections.
• They will be unable to start from scratch
• Already established systems and so difficult to justify changes and justify
failures
• Fear of failure may panic into making sub- optimal decisions.
9
Next Generation

10. Entry of Family Members
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• Ground rules regarding entry
• Members be encouraged to join the family Business
• Encourage the younger generation to develop skills and educations
• Different family members different levels of involvement.

11. Entry of Family Members
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• Develop internship program for family members to judge if they are
out from family business.
• consider the role and rights of those family members who are not at
all involved in the family business.

12. 12
Issues with non family employees
• Difference in pay
• Promotions and salary hikes
• Maintain good chemistry with owning family
• Senior positions easy path
• Difficult to retain in top management

13. • Discuss career paths in the company and clearly state if top positions are not
open for them.
• Offer compensation and benefits that are at par with others in the industry.
• Involve non-family managers in top-level decision making
• Set targets and use performance measures to build motivation.
• Emphasize the contribution of non-family managers in company meetings.
• Treat family members like employees at work.
• Involve non-family managers in succession planning
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Solutions

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Visharad Complex, B/h. Old High Court, Navrangpura, Ahmedabad - 380009.
Ph.: +91-79-27540463 – 64 E-mail: info@jbsacademy.com | www.logiveda.com