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Group LFB 05
Amol Kotkar 0036/49 Samip Supe 0351/49 Surbhi Kant 0352/49 Suyog Abnave 0356/49 © 2002 IBM Corporation
High liquidity Slowing growth rate Competition squeezing margins Customers going overseas Need of extensive capital expenditure to stay competitive Question on Table • • • Accumulated cash for acquisition or for dividends? Bob in favour of acquisition for further growth of business Siblings’ concerned about their low liquidity & favour cashing out 2 .Bob Reardon’s Family Business Reardon Supply Acquisition or Dividends??? • • • • • • • $100-mn-a-year manufacturer Owned equally by Reardon Siblings No Debt.
National Family Business Survey Result – Each additional family member in business is associated with at least $2000 increase in annual revenue 3 .sign of poorly run business.Threats to Commitment in Family Business Characteristics: • • • • Secrecy Lack of information Emotional Intelligence – Low Little knowledge of business among at least few Reasons: • • • • Founding Culture – Autocratic Leadership Belief in benefits of privacy Sense of inequity Stereotypical assumption – significant family member involvement .
A commitment to continuity (even in the face of a financially crippling strike) 2. 3. 4.Stories of two very Different Family Cultures • The Binghams and the Louisville Courier-Journal Companies • • • Sold the company after years of bickering The sale of the company did not bring the family together as hoped Absent was : 1. A commitment to family-business continuity A family “trust catalyst” A board with independent outsiders Family meetings • The Blethens and the Seattle Times Company • Continue to own and operate several newspapers in the fifth generation Present is: 1. Individual responsibility to the group 3. A sense of stewardship 4. Frequent family meetings • 4 . Family unity 5. 2.
Zero Sum Dynamics and Family Culture • Characteristics: • Absence of growth (and increased wealth and career opportunities) in the family business is fertile ground for zero-sum dynamics Exchanges in which one party’s perceived gain is the other party’s perceived loss • • Triggers: • Any perceived difference like: Male – Female Active in management – inactive Older – Younger Richer – Poorer 5 .
The Family Systems Perspective Theory of Human Behavior • • • • Issues • • • Family is a building block of emotional life Uses Systems thinking to understand the complex interaction between individuals in family Family – Group level phenomenon – Higher Order System Individuals – Lower level subsystems Blame game among the individuals at times of trouble Sharing responsibility for difficulty and its remediation is more effective Argues compellingly for the tremendous influence of an individual’s family of origin Patterns and processes set in motion from two or three preceding generations still matter The analysis of earlier generations is essential to understanding what ails or distresses a family in the present • Interdependence • Source of social / physical / intellectual / emotional rewards in the family leading to unmet expectations and personal distress Gives rise to conflicting needs. desires. and priorities as the family grows and ages • • • 6 .
being “triangled” as a result of the emotional outpouring in the relationship between the other two family members Cutoffs are unresolved emotional attachments to parents that lead family members to distance themselves from their family of origin. messages or expectations about the behaviour of its members Learning behaviors and establishing new patterns is possible Individuals refer to the old patterns and behaviors learned from their family of origin • • 7 . sometimes only to “repeat the sins of their past” A family is a system Family System transfer rules. even under conditions of stress Triangulation is the predictable emotional pattern among three people.Bowen’s Family Systems Theory Summary • • • • Insights • Differentiation of the individual through thought and reflection. patterns. can promote an individual functioning above historic patterns. with the third. the outsider.
5. 3. 5. 2. 7. 6. 4. Uses • To better understand the implications of family on issues like: Business Succession Estate Plans A cousin of Family tree that tells us: Family names Relationships Ages Lineal descedants Critical events Quality of Relationships Important messages transmitted across generations 1. Ownership Transfer Likely Alliances Likely sources of Conflict 8 .Genograms and its Significance What is Genogram? • 1. 2. 4. 3.
Genograms and its Significance 9 .
a tremendous asset to all family members • 10 . so that better decisions can be made and teamwork and family unity can thrive Importance of Emotional Intelligence gives rise to the use of Emotional Competence Inventories • Emotional Competence Inventories • • Daniel Goleman & Richard Boyatzis – 63 item assessment Emotional competence inventories with their 360-degree feedback process can be particularly helpful to nextgeneration members of a family in business Measures emotional competencies as perceived by others in family and in family business.Family Emotional Intelligence • • Capacity to recognize our own feelings and those of others and the ability to manage our emotions and relationships with others Seeks to increase the ability to handle feelings with skill and harmony even in the face of differences between family members.