TOOL 2

Map the Roles in Your Family Business

System dynamics create competition inside a family business. Competing

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interests typically emerge over time, especially as your business expands to
new generations. Family Business
Handbook
Chapter 1
In the 1980s, two professors at Harvard Business School, Renato Tagiuri and
Decode Your Family
John Davis, created what’s known as the “Three-Circle Model,” which shows Business
three overlapping circles—family, business, and ownership—in a Venn Pages 18–21
diagram. People can occupy multiple sections of the Venn diagram. For
example, a family member can also be an owner and an employee of the company, wearing three different
hats at any given time.

This simple depiction highlights the likely interests and roles of the people in a complex family business
system. Across the three circles, there are seven roles that have distinct, often conflicting, and largely
predictable interests.

Use the following tables and Tool 1: Family Business Genogram to map out the interests in your
system. As families and businesses expand, people’s interests emerge in typical patterns. When you
consider how each person’s role in the family business system influences their interests, you’ll better
understand the impact on their behavior and decisions —and you can avoid the fundamental attribution
error (read more on page 28 of the Family Business Handbook).

Be careful to make a distinction between someone’s role in the family and family business and their
interests. Their role in the family business (whether they’re an owner who is also an employee, an owner
who is not an employee, a family member who is neither an owner nor employee, etc.) will influence what
their interests (what matters most to them) may be.

Common interests can be both financial and nonfinancial, including:

 Grow the financial value of collectively owned assets

 Provide money to owners through dividends, distributions, or other methods

 Keep decision-making control within the family business rather than ceding it to outside equity
or debt holders

 Provide career opportunities for family members as employees and/or leaders of the business
or other areas of the enterprise (for example, philanthropy)

 Ensure that the business remains committed to, or avoids, specific business sectors or
geographic regions

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Harvard Business Review Family Business Handbook Toolkit Page 1 of 3
 MAP THE ROLES IN YOUR FAMILY BUSINESS

 Minimize conflict over business or other enterprise decisions

 Serve as a vehicle to improve the community by providing secure employment, operating in an

environmentally sustainable way, etc.

Sample: The Seven Possible Roles in a Family Business

ROLE EXAMPLE OF THE ROLE EXAMPLES OF PRIMARY INTERESTS

1. Family owners who are Creators of the business Invest to grow the value of their
employees company, perform meaningful work,
steward the company

2. Nonfamily employees A nonfamily chief financial officer (CFO) Progress career, protect their job, be
fairly compensated

3. Nonfamily owners An outside investor in the company Increase the economic value of the
company and the financial
distributions from the company

4. Family members who are
not employed and are not
owners
Spouse of an owner Protect their nuclear family, especially
their spouse and children, from harm;
have employment and financial
opportunities for their spouse and
children

5. Family members who are A daughter who recently joined the Build a career, aspire to be an owner
employed by the business family business at an entry-level job of a thriving firm
but not (yet) owners

6. Family owners who are not Stay-at-home parent who is an owner Steward the company well, increase
employed at the company the value of the company and the
financial distributions from the
company

7. Nonfamily employees who A CFO who has been granted equity but Build their career, protect their job, be
are also owners is not related to the family fairly compensated, and grow the
value of their equity

© 2021 BanyanGlobal Family Business Advisors. All rights reserved.

Harvard Business Review Family Business Handbook Toolkit Page 2 of 3
 MAP THE ROLES IN YOUR FAMILY BUSINESS

Family Business Roles and Interests Template

ROLE PEOPLE IN YOUR SYSTEM IN THIS ROLE YOUR HYPOTHESES OF THEIR
(FROM YOUR GENOGRAM AND PRIMARY INTERESTS
BUSINESS ORG CHART), INCLUDING
YOURSELF

1. Family owners who are

employees

2. Nonfamily employees

3. Nonfamily owners

4. Family members who are

not employed and are not
owners

5. Family members who are

employed by the business
but not (yet) owners

6. Family owners who are

not employed at the
company

7. Nonfamily employees
who are also owners

Think about a recent difficult decision in your family business (for example, whether to fire a family
executive, buy a family member out of the business, create a board, or transfer ownership to the next
generation). Does your newfound knowledge of the connection between people’s roles and their primary
interests help you appreciate where people stand, given where they sit?

Note their common interests and conflicting interests. By looking at each person’s interests, you will gain
useful insights about why things are happening at your family business. The reasons will be varied, of
course, but not so perplexing. Talk to the people in your system about their interests. It’s okay to have
different interests, but it’s important to understand what they are.

© 2021 BanyanGlobal Family Business Advisors. All rights reserved.

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