4 Rules of Conduct for Family Businesses

Challenges of working in a family-owned business can be tough to manage. In this article, we will give you tips to managing conflict in fami...

Challenges of working in a family-owned business can be tough to manage. In this article, we will give you tips to managing conflict in family business.

Family Companies (EF) are a very significant factor in a nation's economy. In States, they represent more than 80% of the total of the companies of the country. They provide approximately 70% of employment and are likely to generate 60% of GDP.

4 Rules of Conduct for Family Businesses
The remarkable thing is that being so determinant for the economy of a country, the EFs do not stand out for their sustainability. More than half of them (about 60%) do not exceed 10 years of life, 30% reach the second generation, and only 10% survive until the third.

Why is this happening? Basically, it happens because there are four styles to run the family business:

Focusing on the business.

When issues related to the family are abandoned based on an interest in the business, PEs are of doubtful sustainability. Why? The conflicts that are usually generated in the family are left unattended and, in the long run, cause the dark relational frame that holds the family together to weaken, which in turn promotes the clinging to the family business, resulting in more Serious problems of governance.

Focus on the family.

If the family is prioritized to the detriment of the business, a regressive enterprise is generated. This happens because the different positions in the company end up being granted to relatives without taking into account their moral and professional capacity to exercise it (nepotism). In this way, the company becomes a kind of foundation to help family members more than a business environment that generates wealth and opportunities.

Little interest in both areas.

We call these types of companies decadent because, without the effort, work and ability of those who lead it, the company is doomed to failure. Many times this happens after the enterprise has been very successful and gives the false impression of being able to withstand any kind of incompetence of its leaders.

High interest in both areas.

The companies that manage to develop both the family and the business and that do it observing certain laws, procedures, and adaptation of successful practices, are those that we consider Visionary. They are approximately 10% of the total and are usually the ones that manage to survive the various successions.

These companies, in order not to affect family relationships or business, deal with the health of interpersonal relationships and establish policies for the enterprise based on as many consensual agreements as possible.

In the world of family businesses, there are issues that are difficult to deal with as they affect the sensitivity of those involved. Usually, it is always difficult to pose someone on real terms which is not doing their job well or give you an opinion that can affect their self-esteem in some sense, and this is much worse when it comes to a family member.

However, respect and sincerity in the conversations without taking ownership of the truth but maintaining different criteria between family and company is essential to maintain family relationships healthily when a business is shared.

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