Running a family business is not easy. There are many problems or challenges every family-owned business continually face. With the continually evolving world around us, the generational gap is increasing at a much faster pace than before. Each new succeeding generation is turning out to be more independent, educated and cosmopolitan. Every new member in a family are developing their unique thinking processes and are willing to build their personalities. They want to embrace their own life and make their own decisions. As per family office, this attitude is changing the way the family business concept is viewed.
Over the past twenty-five years, many family businesses have perished due to mismanagement in family business challenges. A family business has become a more commercial entity rather a sacred, emotionally valued sacrament. Principles seem to take a back seat. As per the family office statistics, this is reducing the value and regard of the great legacy in Indian society
To Join or Not to Join?
Joining a family business for this new generation often seems like a great and more secure career opportunity sans the responsibilities. In addition to that, the family business provides a sense of ownership and power. In olden days it used to be a sense of belongingness and togetherness. But unlike multinational corporations, existing family businesses always have an underlying doubt and tension about if survival in the long run.One mistake could cost everyone collectively. From that point of view, family businesses will never provide a secure career option. There is always a complexity regarding whether or not to join it. All these factors need to be carefully considered and openly communicated. Coaching and counselling sessions are necessary for every family member before he or she makes a decision to join the family business.
Achieving Outside Experience and Credibility with Non-Family Employees
One of the major family business challenges for a member is outside credibility. A useful technique, as well as an established rule for many family businesses, is that before joining the new entrants must work and prove their worth. In India, however, there is still patriarchal bias, especially in family businesses. The owners introduce their successors into the company very early. This deprives them of the chance to gain some experience outside of their business. There are three main advantages to working outside before joining the family office business.These include improvement in self-confidence and self-esteem, gaining more comprehensive business experience and contacts outside the family spectrum. This also helps in gaining credibility with non-family employees.
Problems of Family Business: Managing Human Resources Issues
Many obstacles and conflicts arise when a new family member joins the business. These conflicts are often human resources based. These problems mainly include – choosing family members over more able employees, deciding whether to pay them at market or family rate as well as for determining how to judge them. It’s critical to address these issues early on. A family business advisor can solve these conflicts.
How to Cope and Move Towards a Solution
The most constructive approach to this situation is to try and develop methods that recognise and manage contradictions between them constantly clashing family and business values. Once the stress of this situation dies, one can identify and segregate the problem, it helps the senior generation of the business to understand that these are structural problems and not personal ones. The ideal way to deal with these situations is to examine the family members who work in the business with two different perspectives – the ownership and the business enhancement perspective.
Problems of Family Business: Training and Development
What is best for a family member, and what is best for the business does not always coincide. The training and development of family members working as employees should fit in with the needs of the company. In addition, they should not use the firm’s assets for their personal benefit. This can be addressed by employing professional family business advisors who are great coaches.
There are many issues and inconsistencies concerning the payment of family members who work in the business. Therefore, in the case of remuneration, it must happen strictly according to business principles.
Market Values of Jobs for family members
It is crucial to pay family members according to the prevailing market rate of the talent system. There are many ways of determining this market rate. The details of the chosen policy should be with to all the parties involved
Problems of Family Business: Performance Appraisal and Promotion
Constructive feedback from the respective heads of the family business is essential. This should not be diluted due to relationships and nepotism. It promotes the organisation’s goals as well as family bonding and values. One should execute Family business management carefully and professionally to avoid conflicts and harsh, unpleasant situations that could backfire.