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Family Business Best Practice
We've been working with families in business for decades. In our experience, there are some 'best practices' that characterise successful family businesses.
A family business that is committed to best practice will:
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Adopt a risk-taking, innovative and proactive approach.
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Build customer, employee and shareholder relationships.
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Commit to long term continuity.
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Engage the family to develop a shared vision.
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Strategic planning.
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Use an active and independent Board of Directors.
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Hold family meetings.
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Be alert to market changes.
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Benchmark themselves against the best performing organisations (family or otherwise).
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Constantly communicate formally and informally with family and stakeholders.
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Exploit opportunities and tolerate failure.
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Adopt informal formality (have systems which add formality, but leverage off the family informality to achieve strong integration and balance).
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Be highly decentralised, give employees the authority to act, and have common objectives rather than confining rules, and liberate the team to stimulate creativity.
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Have job descriptions specified, roles and responsibilities defined, recruitment policies outlined, compensation policies clearly decided and maintain organised training and development.
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Have Flexible decision-making processes, less formal monitoring and control, few levels of hierarchy, absence of bureaucracy, and authority residing at the lower levels.
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Define values clearly. These constitute the greatest strength a family can bring to business ownership, as they lay the foundation for the corporate culture of the business, and maintain integrity, openness, responsiveness and generosity.
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Have long term perspective, adopt differentiation in the market place, offer premium value products and build long term relationships with customers and stakeholders.
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Have a well conceived vision consisting of what we stand for now, and what we want to stand for in 10-30 years time.
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Have a clear mission statement spelling out an action plan for the achievement of a long range vision in a given time-frame, and uses that as a blue print for developing the corporate strategy of the business.
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Commit enduringly and passionately to the mission.
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Have an effective Board of Directors that is the right size for the business, a balanced composition, a mix and range of skills and experience, separate roles for the Chairman and CEO, and have a style that functions more as a working group.
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Have some independent directors who bring outside experience, the ability to view things without emotion, act as honest brokers for the rest of the family, have respect with family members, have frank discussions with family members without the risk of burning family bridges, and assist in enhancing the perception by outsiders of the business.
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Have a Family Council, which is to the family what the Board of Directors is to the business. It promotes communication, provides a forum for the resolution of family conflicts supports education of next generation family members, and develops family participation policies.
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Through family meetings, communicate well amongst the family members, and build stronger family values, a plan for the future, create transparency, avert conflict, and provide support for the family where appropriate.
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