It is important
to evaluate and understand the structure of the family business and how was it
developed. How is the relationship shared between various owners, what is the
history of the business, how it evolved over period. It is critical to
understand what keeps various elements of the business together; whether it is
shared values or goals or shared business wealth.
We should never remove the focus from the role of power and politics in an
organization in ensuring effective decision making. We should learn how power can
divert critical resources to accomplish specific goals. Now there can be
variety of source of power. Depending on the context, the source of power can
be
- Knowledge gained by an individual over a period of time
- Skills and the respect gathered
- Social network that the individual has built
In family business the
source of power can be authority exercised by the family member which often
comes from seniority. Power
is contingent upon a number of factors such as relative scarcity, criticality and uncertainty
removal ability of person or sub units of organization. Politics is the tool
that helps in exercising power to meet the objectives. At the places, where
power is not clearly segregated, politics is a nuance. This is probably the
reason why power is common in family business, while politics is common in
non-family business.
Another strategy that is clearly very important is selecting the right people. The difficulties
lie in change management process and how new policies would be adopted to
align with the new strategy. The need is always to create a culture where everyone
can call each other by name and there is mutual respect for everyone. The board plays the most
crucial role in realizing this strategy. The owners should believe that
professionalism demands that even outsiders can become owners of the company
and be a part of the board. In contrast to the encroachment threat, non-family
executives should welcomed by the open culture of the firm.
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