Healthy Family Businesses

How do you know if your family business is healthy?  Review this checklist to see how you measure up.

Functioning of the Family

  • Individuals can manage themselves and relationships with others
  • Family has the ability to resolve conflicts with mutual support and trust
  • Boundaries between work and family are appropriate and respected
  • Knowledge is used wisely and isn’t blocked by unresolved relationship problems
  • Communications are open and clear
  • Individuals are flexible and able to use advisors wisely
  • Family has the ability to make decisions and move forward
  • Family is clear about goals and navigates towards the goals
  • Family has a good direction and leadership
  • Transitions are managed and marked by rituals
  • Intergenerational boundaries are appropriate and respected

Management of the Business

  • Knowledge is developed and mobilized as collective intelligence
  • Organization and its members make use of knowledge to adapt to changing environment and produce and sustainable, competitive advantage for the business
  • Decision making is based on knowledge and expertise
  • Organizational learning develops new competencies and effective behaviors
  • Responsibility is spread throughout the company/family
  • Succession is planned early

Development of the Governance and Ownership System

  • The mission and goals are clear
  • There is a functional board of directors with outsides on it
  • There is a sound plan for succession and transfer of ownership over the generations

Effectiveness of the Boundaries between the Family Business Systems

  • Business uses family values in strategic Planning
  • Boundaries are porous and allow appropriate exchange of information between systems
  • Each system used goals and values to steer the course
  • Business issues are not acted out in the family and vice versa
  • Mutual learning exists between the system (family’s learning flows to the business and vice versa) and is put into action
  • Individuals understand core competencies of one another and of the company

Unhealthy Family Enterprises

  • The family has poor communications skills and is unable to manage conflict
  • There is low trust between family members
  • The goals and values of the family are unclear
  • Family members roles and obligation are unclear
  • The business lacks a sense of direction and does no strategic planning
  • The business lacks sufficient expertise – the family tries to do it all
  • There is a little thought to succession planning
  • There is little collaboration between the family and non-family employees
  • There is not a functioning board of directors
  • There is no one to turn to for advice and help with key problems
  • Family issues spill over into business issues (and vice versa)
  • Boundaries between work and family are unclear

Information in this section compiled from “Consulting to Family Business” (Hilburt – Davis – Dyer)