Healthy Family Businesses

Information in this section compiled from “Consulting to Family Business” (Hilburt – Davis – Dyer)

Functioning of the Family

• Individuals can manage themselves and relationships with others
• Family has the ability to resolve conflicts with mutual support and trust
• Boundaries between work and family are appropriate and respected
• Knowledge is used wisely and isn't blocked by unresolved relationship problems
• Communications are open and clear
• Individuals are flexible and able to use advisors wisely
• Family has the ability to make decisions and move forward
• Family is clear about goals and navigates towards the goals
• Family has a good direction and leadership
• Transitions are managed and marked by rituals
• Intergenerational boundaries are appropriate and respected

Management of the Business

• Knowledge is developed and mobilized as collective intelligence
• Organization and its members make use of knowledge to adapt to changing environment and produce and sustainable, competitive advantage for the business
• Decision making is based on knowledge and expertise
• Organizational learning develops new competencies and effective behaviors
• Responsibility is spread throughout the company/family
• Succession is planned early

Development of the Governance and Ownership System

• The mission and goals are clear
• There is a functional board of directors with outsides on it
• There is a sound plan for succession and transfer of ownership over the generations

Effectiveness of the Boundaries between the Family Business Systems

• Business uses family values in strategic Planning
• Boundaries are porous and allow appropriate exchange of information between systems
• Each system used goals and values to steer the course
• Business issues are not acted out in the family and vice versa
• Mutual learning exists between the system (family's learning flows to the business and vice versa) and is put into action
• Individuals understand core competencies of one another and of the company

Unhealthy Family Enterprises

• The family has poor communications skills and is unable to manage conflict
• There is low trust between family members
• The goals and values of the family are unclear
• Family members roles and obligation are unclear
• The business lacks a sense of direction and does no strategic planning
• The business lacks sufficient expertise - the family tries to do it all
• There is a little thought to succession planning
• There is little collaboration between the family and non-family employees
• There is not a functioning board of directors
• There is no one to turn to for advice and help with key problems
• Family issues spill over into business issues (and vice versa)
• Boundaries between work and family are unclear