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Family business governance and professionalization - Coggle Diagram
Family business governance and professionalization
Professionalization
Organizational changes
Regarding allocation of resources, job descriptions perfomance
Explicit written and communicated (GOALS, strategic plans, procedures)
Professional
Formal education or training
Entry requirements
Formal code of ethics
Decisions are
Based on policies
Made on behalf of stakeholders
Free of self interest, objective and emotion free
Transparency and accountability
Sense of calling
Why to do in FB?
Change the norms and values of business operations
Prepare for leadership succession
Lack of management talent within the family
HOW?
External (hired)
When the family has no ability to manage
The family outline the goals it would like to achieve
More revolutionary and faster
Internal
Training family members
Training non family members
High trust within the family
Professionalization
Multiple dimensions of professionalization
Family characteristics
Business characteristics
The environment
Managerial approach
Perfomance outcomes
Effects for various stakeholders
Dominant view
Ability to take a universal, impersonal nonemotional approach
Problem
: it does not take into account the relevant role of social and cultural contextual particularities in family business
The top management in FB has to be sensitive to the values and norms of the owner but also to their goals and meaning of being business
Cultural competence requirement
: management in FB must to be
embedded
in the social and culture contexts in which is enacted
Problems: family vs. professional managers' training and values **
Learn skills and training
Family trained
: little or no experience, informal
Professional
: formal and generic skills applicable to all organizations
Values and socialization
Family trained
: importance of the family values and role
Professional
: impersonal style
Decision making and power
Professional
: Authority, rational and logical decision making,
Family trained
: driven by vision, intuitive
Benefits
Increased diversity of perspectives and experiences
Better term with banks
Comporting with institutional forces (easier to interact)
Non personalized "evaluation"
Family governance
Stewardship theory
Agency theory
Family governance defined
II)
Family business governance architecture
Business
Top managament (succession plan)
Ownership
Board of directors (strategic plans)
Exercise control over TMT
Provision of advice to the TMT
Maintenance of family relationship and networking
Family
Family council (generates family protocol)
Focus on wealth preservation, succession planning and professionalization
I)
Motivations
Reluctance to reduce ownership
Reliance on personal funds
Incentives for persimony and effiency
Accountability
Nonfamily employees considered as outsiders
Veil of secrecy over the conduct of family members
Authority structures
Low bureaucratic constraints
Authority creates SEW
Personalized and centralized authority
"Outside" directors (board directors part)
Introduce new managerial perspectives and new strategic directions
Arbiters
Control the progress of the family business
Facilitate of strategic and organizational change
Family council
Facilitator
Composed of family members
Define the conception of the relationships between family
Select the member who will join the family firm
Protect and develop family wealth
Educate young family members
Family "constitution": set of guidelines and rules clear and shared about relationships between the family and the business
Moral pressure, helps to create historical memory