CHALLENGES FACING FAMILY BUSINESS MANAGEMENT Family business is defined in terms of ownership, authority and responsibility.

Majority ownership of a family business is by one or more family members who have the authority and responsibility for its day to day management as well as its mission and strategies. The management team may include some people unrelated to the family business managers. Some of the challenges that managers of such establishments face are: Control: Without the influence of outsiders, however, decision making is less objective, governance can be variable, reporting often is weak, and thinking is unchallenged. There no clear company goals,decision lines,measure of performance or laid down procedures. The owning company may carry business in a wanton manner since there are no clear rules to govern that,and the rules that are there are easily bent. Family-business separation:Family businesses mix business and family which might be quite difficult to handle considering the emotional attachment involved. For example, family business meetings can involve more family talk than business talk. Family problems and decisions are mixed with business problems and decisions. Solutions to problems are rarely pure business or pure family in nature so attempts at complete separation are counterproductive. Human resources:Most family businesses take up family members as employees. Such employees are hard to manage due to their egos since its their family business. They may also not have the required skills for their jobs since there is no strong pool to choose from. There is also lack of motivation among the employees due to the limited career development opportunities,such as promotion. There is high turnover among top non-family employees due to unfair work conditions. Succession:Family business involves passing on of the business from generations to others. The head of the business at any given time may to a large extent. This may happen if he holds the managerial role where his own prowess determines the nature of management. Otherwise,the manner in which he deals with management also matters a lot. The process of succession is also a touchy issue which shold be managed well,else it blows the business apart. Family Wrangles: Infighting among family members may to a large extent curtail on the running of a family business. Being a business based on the institution of family,wrangles among the owners themselves can serve as doom for the company,hence for the management team. This happens mostly if the cause of the wrangles is related to the running of the business. The role of the founder:The founder as the most influential person in the organization sets the tone for management of the business and most decisions are made by him/her,which might not always be the best for the business. This curtails the leadership of the qualified managers,hence rendering their influence useless.If the founders' schools of thought are not relevant in the current business and technology era,it may create professional friction. Fund Accessibility: The ceiling may be too low on the amount of money that can be spent without permission from too many members. Unrealistic or unnecessary clearance procedures may result in missed opportunities for increased profits, such as failing to take advantage of a good price on raw materials or sales inventory. Informality of purpose:In the absence of strategic planning and written mission statements, each member of the management team is allowed to generate her or his own reasons for being in business. Conflicting strategies for success, misallocation of resources and failure to deal with management purposefully then characterize the business. This thus compromises on critical strategy decisions. Mistrust:Within a family-run business, distrust of outsiders seems to be a primary influence. Family members may not trust the management team,especially if they are outsiders,to run the business properly-or as they deem

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fit. They may be on the look out for embezzlement of money and assets,or any other suspicious behaviour portrayed by the managers. This suspicion may demotivate the managers or put up too many inspectory roadblocks on their effective functioning. Balancing:The mix of management, financial, family and psychological factors affecting the business need for expertise to handle for the managers due to the complexity.. Further, the narrowness of consultation from a single perspective, e.g., financial planning, family relations or business growth is likely to generate a false sense of security in the family. Risk Profiles:The attitude towards risk may differ between the management and the family.For example,the management may want to indulge in opportunities which the owners may think is too risky for the business.This friction of risk attitudes may bear its toll in the management who may not realize their calculated goals. This brings out the challenge of balancing what's good for the business and the family's risk profiles. Payment-Distributing profits or paying salaries to family employees is always a delicate issue due to discontentment and sometimes lack of proper,predetermined payment criteria.Some pay feel underpaid or sense others are gaining too much,hence wrangles and lack of confidence in the management structure.

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