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Professionalizing_The_Family_Business
| Professionalizing The Family Business
Professionalizing the Family Business
Family business expert discusses the difficult and emotionally
destructive problems confronted
In the 30 years I have been working as a family business
consultant, the most difficult and emotionally destructive
problems I confront in the "business" element of a family
business occur during the transitional phase where the client
company is moving from a founder / owner- managed business
environment to a professionally managed business environment. It
should be noted that "professional" management does not equate
to "better" management, but more to a change in management
"style." It is mainly a contrast between "content" (professional
matter expertise) and "process" (interpersonal relationships and
interventions).
Evolutionary Process Professionalization is an evolutionary
process that effects every family business. Successful family
businesses actively and aggressively manage this transition
process. When the transition process is ignored or not carefully
managed, it can result in chaos within the business or severe
conflict within the family. Or both! The first step in gaining a
better or fundamental understanding of the professionalization
process is to examine the stereotypic perceptions between the
founder/ owner and the professional manager. While these
differences in individual characteristics are generally clear
and predictable, they also translate into the culture of the
organization and the types of people hired and the way things
are done!
In other words, professionalization can not just be accomplished
by hiring a high priced executive from outside the organization.
The basic philosophy, values, goals / objectives, basic work
routines and the expectations of customers, vendors and other
business relationships need to be re-evaluated as well.
In fact, without addressing all of these relevant issues, hiring
an experienced and successful executive from outside the
business, as a strategy to professionalize the business, will
almost always end as failed strategy, a very expensive failed
strategy.
Because of the complexities, the professionalization process is
best accomplished over a protracted period of time, It should be
an evolution and not a revolution. Unfortunately for many family
businesses, the professionalization process must occur rapidly
because it is an "event" triggered by the death or
incapacitation of the founder / owner.
Element of Succession Planning
The professionalization of the business should be considered as
one of the most crucial elements of a successful succession
plan. The sooner the professionalization process is recognized
as a strategic objective for the family business, the better the
odds are for successful generational transition for the family
business.
For example, my personal experience indicates that family
business founders / owners are generally much better than
professional managers in dealing with the problems associated
with risk and growth because they are the stakeholder - it is
their money being spent.
The founder/owner also tends to be more intuitive about business
decisions because he/ she personally knows the vendors and
customers and more humanistic because they tend to personally
know the individual employees as well as the personal situations
of the employees.
As the business organization grows and matures, the
founder/owner typically becomes less visible and less involved
in the day to day workings of the business. The usual trend is
toward involving more "professional managers" (these can be
family members or non family employees) who generally tend to be
more bureaucratic and less personal in the management style. As
a result, individual members or factions of the management. team
functionally polarize between "personal" and "rational"
approaches to solving even the most simple management issues.
For the family business owner, these differences can become a
crisis issue involving basic family goals and business
objectives: Are we a "business first" family or a "family first"
business?
Outside Advice Sought
It is generally at this point when the founder/owner seeks the
objective advice of an "outsider" because the founder/owner is
unable to get resolution of this dilemma from within the family
and within the business organization.
Without resolution, management consensus will not he attained,
and, as a result, the business will produce a lot of expensive
"commotion" but very little "locomotion" towards the happiness
of the family and the growth and prosperity of the business.
About the author:
Don A. Schwerzler is the Managing Director of the Family
Business Institute - a special resource for family-owned and
closely held businesses(http://www.family-business-experts.com).
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