Characteristics of a Family Business
                     FAMILY BUSINESS
1
Characteristics of a Family Business
• Share capital owned by a family either jointly or individually.
• Involvement  in  decision-making, maintain management or 
ownership.
• Ownership control by direct descendants
2
Advantages
• Long-term orientation and continuity
• Family culture  pride for family
• Less bureaucratic
3
Advantages
• Greater willingness to weather the bad times by ploughing back 
profits.
• Impart training to younger members
4
Disadvantages
• Role of members not clearly defined.
•  The style may be autocratic or patriarchal.
•   Members may not be worthy of their position.
5
Disadvantages
•  Succession battle.
•  Selfish motives to drain the money from the company.
6
Elements in Family Business
1 3
Founder Family 
members
2 4
Next Non 
Generati family 
on members
7
Role of A Founder
•  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
Next Generation
• 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
Entry of Family Members
• 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. 
10
Entry of Family Members
• 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.
11
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
12
Solutions
• 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
13
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