Hey, guys. I found interesting information about family business succession. Here is the link: http://www.inc.com/guides/choose-your-successor.html The major issue this article adresses to is: How to choose your replacement, if you are a family business owner? The article combines several links answering the following questions: How to develop a succession strategy? How to decide, should you hire your kids or not? How to provide efficient succession transition? etc. You can take a look at them here: http://www.inc.com/inc5000/articles/20080301/evans.html http://www.inc.com/magazine/20090701/should-you-hire-your-kid.html http://www.inc.com/articles/2001/10/23549.html http://www.inc.com/articles/2001/10/23547.html Also there are some useful references in the end of the article. I hope it will be useful and interesting for you. Guys I found in emerald an article that examines factors that influencing family business succession. The authors of the article are: Michael H. Morris, Roy W. Williams, Deon Nel Introduction “Carsrud (1994) has defined a family business as one in which both ownership and policy making are dominated by members of an “emotional kinship group”. Accordingly, family firms violate a tenet of contemporary models of organization, namely, the separation of ownership from management (e.g. Berle and Means, 1932; Daily and Dollinger, 1991). This single characteristic results in a number of operational differences between family businesses and other firms. Chief among these differences is the manner in which family businesses handle succession from one generation to the next. A widely-cited statistic suggests that 30 per cent of these firms survive into the second generation of family ownership, and just 15 per cent survive into the third generation (Kets de Vries, 1993; Ward, 1987). The implication is that these are unusually high proportions, or at least that they should be reduceable. And yet, while much has been written on the need for succession and estate planning and for properly prepared heirs, little empirical evidence has been produced regarding the factors that result in successful transitions. The purpose of the present research is to assess more comprehensively the nature of succession processes in family firms and to identify both antecedents to and performance outcomes from a successful transition. Results are reported of a cross-sectional survey directed at owner-managers of second- and thirdgeneration family businesses. Theoretical and managerial implications are drawn from the findings, and suggestions are made for further research” By Michael H. Morris, Roy W. Williams, Deon Nel You can find in emerald several interesting articles concerning this topic Dimitrios

The conflict in business situation is inevitabled. How does the conflict happen in Family Business? We take a look. -Conflict: Conflict is actual or perceived opposition of needs, values and interests. A conflict can be internal (within oneself) to individuals. Conflict as a concept can help explain many aspects of social life such as social disagreement, conflicts of interests, and fights between individuals, groups, or organizations. In political terms, "conflict" can refer to wars, revolutions or other struggles, which may involve the use of force as in the term armed conflict. Without proper social arrangement or resolution, conflicts in social settings can result in stress or tensions among stakeholders. When an interpersonal conflict does occur, its effect is often broader than two individuals involved, and can affect many associate individuals and relationships, in more or less adverse, and sometimes even way. Conflict as taught for graduate and professional work in conflict resolution (which can be win-win, where both parties get what they want, win-lose where one party gets what they want, or lose-lose where both parties don't get what they want) commonly has the definition: "when two or more parties, with perceived incompatible goals, seek to undermine each other's goal-seeking capability". A clash of interests, values, actions or directions often sparks a conflict. Conflicts refer to the existence of that clash. Psychologically, a conflict exists when the reduction of one motivating stimulus involves an increase in another, so that a new adjustment is demanded. The word is applicable from the instant that the clash occurs. Even when we say that there is a potential conflict we are implying that there is already a conflict of direction even though a clash may not yet have occurred. (Resource http://en.wikipedia.org/wiki/Conflict) -Family Business: Conflict Resolution Strategies With a family business, conflict resolution skills are key to maintaining relationships and a successful business. You cannot let personal relationships enter into the business operations. Family feuds often send customers packing and cause irreparable damage to both your business and family members. Common family business conflicts include: Money Management roles Ownership percentages Business goals (Resource http://www.wahm.com/articles/family-business-conflict-resolution-strategies.html) -Managing conflict in family bussiness Managing conflict in family businesses The potential for conflict in family businesses can be greater than for other businesses - typically due to a clash between commercial and emotional concerns. However, such conflict can be seen as a challenge - or even as a positive driver for change. For example, a dispute between family members on the strategic direction of your business may result in a much-needed rethinking of your business plan and a new agreed vision for the business. Such outcomes, though, are only possible if techniques for avoiding, managing and resolving disputes have already been instituted. Ways to avoid conflict Think about how people in your business communicate with each other. Are emotional issues kept separate from business discussions? Are mechanisms in place to allow all employees - not just family members - to contribute their views? Or does one person tend to dominate? The best way of avoiding conflict is to prevent misunderstandings from happening in the first place. Drawing up a family constitution can help you achieve this. Plan how you'll deal with conflict and disagreements and set this out in the family-business constitution, see our guide on managing conflict. Holding a meeting of the business' management may be appropriate for relatively minor disputes, with decisions made by majority vote. For more serious matters you may want to get an independent outside adviser - many family businesses benefit from having a non-executive director or business adviser - to act as a mediator. (Resource http://www.businesslink.gov.uk/bdotg/action/detail?type=RESOURCES&itemId=1073792653)

Hey guys I read a book called Family business by Ernesto J. Poza, i think is the book that Edd told us to buy at the beginning of the semester Conflict management The author presents several problems that can be addressed in family meetings: “1) Frustration over alienation or lack of inclusion. This sources of conflict is widespread as a result of the emotional distance between family members who are active in management and those who are not and between members of the powerful current generation and those of the significantly less powerful generation. 2) Anger over the unfairness of hiring practices, promotions, family benefits and other opportunities enjoyed by some but not by others 3) Frustration over dividend and lack of liquidity. By the time a family owned company has begun to hire its third generation of family members the financial needs of the various branched and individuals have become incredibly diverse”         By Ernesto J. Poza 2nd edition I think it is really interesting guys you should read it (pg 70-71). For further reading you can find this book at the library Dimitrios Hey all! I have been doing some research into Conflicts in the Family Business and came upon a very interesting book.. Family Wars: Classic conflicts in family business and how to deal with them. by Grant Gordon This book discusses various conflicts that have erupted in well known family business such as the Reliance Group and Gucci, it also discusses what, why, how and when these conflicts occured and how in the end they either solved their conflict or ruined the relationships.. I have read a few pages as I have just ordered it so should take a few days to come.. I think it fits well with this weeks topic. "According to this book, family business stakeholders should revisit the scandals because they serve as extreme examples of what can go wrong in a family enterprise. Exploring the factors contributing to the epic conflicts—which in some cases had their genesis in events that occurred a generation or more earlier—will inspire readers to institute processes for governance and communication that can prevent a feud from festering." (http://www.familybusinessmagazine.com/index.php?/articles/single/toolbox27/) Another book that we might want to look at is Conflict and communication in the family business By Joseph H. Astrachan, Kristi S. McMillan I also came upon a few sites that discuss various methods of reducing or resolving conflict

http://www.businessweek.com/smallbiz/content/nov2006/sb20061129_919406.htm

but the thing is that they all speak of what we have discussed in previous weeks such as; Hold regular family meetings to discuss business issues and settle disagreements. Create a formal, written policy that governs family participation in the business. Performance evaluations Apparently these three points, which were discussed in earlier points are key to reducing conflict within a family firm, however, I feel that although these are major points to discuss, these points would only come up upon succession. I understand the importance of seperating emotions and business, however I still feel that a family business should remain just that and not resort to these solutions without attempting others first. I will post the links to these sites, but I also found a very interesting case study on family conflicts on this link; http://www.mediate.com/articles/noll20.cfm The links to the websites regarding resolution of family problems http://www.allbusiness.com/specialty-businesses/family-owned-businesses/1190-1.html http://businesslink.gov.uk/bdotg/action/detail?type=RESOURCES&itemId=1073792653 Complementing what Shaan has written about a "written policy" that governs family participation in the business, here is a link to an article that describes what should be stated on these Family Written Policies or also called Family Business Constitutions: http://www.businessweek.com/magazine/content/08_64/s0804030877251.htm The article is called A Giude for Family Businesses, by Ernesto Poza . It claims that every Family business needs a constitution which is a document that spells out the company´s vision and offers guidelines that can prevent disastrous conflicts. Now I'm reading "Management and organisational behaviour" by Laurie J. Mullins. And there is an interesting chapter about role relationships in the group and role conflicts. The definition of role conflict is the following: conflict that arises from inadequate or inappropraite role definition and results in a person behaving in a way which may not be consistent with their expected pattern of behaviour. I think that this type of conflict should be very wide-spread in family business. In fact, family members often have a tendency to replace business behaviour patterns by family ones. It difficult to separate two roles - role of business participator and role of family member (we also could see it doing our Roger Levy Family case Roundtable). And the reason for this, in my opinion, is not clearly defined roles. The proper solution of this problem, as I think, is clear definition of the roles written in the official document and well-defined structure of the firm. So, it correspondes to the Shaan's second point describing methods of reducing or resolving conflict. From your group's skit on conflict, which was very good, the thing that struck me most was that all the family members were fighting about their connection or 'piece of the pie', not necessarily for financial gains, but decision-making power and respect. This connects to a journal i found, called "Feuding Families: When Conflict Does a Family Firm Good" by Franz W. Kellermanns and Kimberly A. Eddleston. I think you might have used this in your skits. The author explains that altruism (doing selfless acts for the sake of the FB) has positive effects on the performance of family firms. However, "In an individualistic family altruism is not necessarily reciprocal. Therefore the likelihood that family members take advantage of another family members' altruism, especially the founder's altruism toward other family members, increases (Schulze, Lubatkin, & Dino, 2002a; Schulze et al., 2002b)."  I think this was very apparent in your skit! To connect this to Galina's point above, if the father had spent more time to clearly define the roles of each active family member, they could all practice altruism in a positive way as opposed to being "individualistic". You can check out this journal here: http://findarticles.com/p/articles/mi_hb6648/is_3_28/ai_n29076556/?tag=content;col1

Chocolates and FB Conflict

Read this series below on a great saga of Family Business Conflict that is resulting in the demise of an empire. Enjoy, ed

Jay Pritzker, Who Built Chain Of Hyatt Hotels, Is Dead at 76

Knives Drawn for a $15 Billion Family Pie

Records Expose Schism in Chicago Family

Hyatt clan share out $1.3bn to end row

Lewis Hamilton severs Formula One ties with father Anthony

http://www.slideshare.net/ppatelmacbook/resolving-conflict-in-fam-bus

Guys, by the way, a specialized magazine for family business is available at this link http://www.familybusinessmagazine.com/. it's really cool, because it has huge amount of info concerned conflicts as well, but also almost all our topics. Check it!!!

Resolving conflicts in Family Business

Conflict http://www.extension.iastate.edu/agdm/wholefarm/html/c4-74.html

is a natural phenomenon in any family business. It can shatter a family into pieces. Family and business conflicts arise due to difference in opinions between the different family members. In a family, there is more of emotional values, protective bonding and they do not willingly accept changes.  For a Family Business to succeed, change is inevitable. Conflicts cannot be predicted. A simple conversation between two people can lead to misunderstandings and arguments. The argument can have nothing to do with the topic being discussed, at all. Conflicts in families that are also in  business together are higher then normal families because issues such as money is often based on business. The family and business conflicts need to be handled differently. When you mix the issues over matters, such as leadership and money, then both relationships suffer a lot. It is very important to find out the base of any conflict and the way you handle it. Families that involve themselves in handling the conflict

http://findarticles.com/p/articles/mi_m1154/is_n11_v83/ai_17405464/

are more likely to succeed in their businesses. Families should build up a family plan which describes how you are going to be in family without your business influence. Businesses should deal with leadership and management plans. Some of the ways to tackle family business conflicts are: 1.Frequent family meetings to be held to discuss business related issues and settling disagreements. 2.Active involvement in the meetings, have patience, and listen to what the other person has to say.  Remember, we are born with 2 ears and 1 mouth for a reason. 3.Brainstorming:  Gather the solutions to the problem, accepting the ideas and opinions of each individual. 4.Find the solution that has the highest potential. Unresolved conflicts are harmful and put both the  family and business at risk. Families and businesses that managing conflict effectively have higher chances to survive and achieve their goals

(http://www.familybusinessbattleground.com/2009/11/resolving-conflicts-in-family-business/)

Another type of conflict which hasn't beend addressed in this blog is the compensation family members expect to receive. Paul Karofsky in his article "Equal vs. Fair in Family Businesses" explains that when similar compensation rates are fixed for all family members these often thend to create conflict when family members compare their contributions.

So he, Karofsky,  recommends a formula that seems increasingly acceptable, especially to younger generation family members, "is a base salary at fair market value, plus a bonus based on performance quality, plus or minus a yearend "adjustment" because of ownership. (Curiously, family members are actually paid less, on average, than their non-family equivalents because so many opt to reinvest some of that compensation back into the business.)" Taken from

http://www.businessweek.com/smallbiz/content/jan2005/sb20050126_0194.htm

Hey Guys!!

I found an interesting article (i know everyone says that, but this might be true!)

Here are some key points you can extract from it.... have fun! Managing Human Resources in Family Firms: The Problem of Institutional Overlap

http://www.lgassoc.com/library/articles/108-humresourcesfamily.pdf

Institution Overlap problems which may lead to Conflicts within family businesses:

• Problems of Selection--> relatives feel entitled, threatens effectiveness and survival

• Problems of Compensation and Equity--> implicit affective principles instead of specific value of the work. Compensation ambiguous, a hybrid of family and business criteria. Nepotism may lead to: incompetent employees retained and competent employees let go.

• Problems of appraisal--> difficulties in evaluating performance of close relatives, stressful for founder!

• Problems in Training and Development--> conflict in training, give mebers what they want to do, not necessarily lessons for the business. Investments made for offspring’s development.