Family Business
Magazine’s
article, Using and Abusing Family
Business Research from the Autumn 2009 issue, is written by noted academic
and family business researcher Joseph H. Astrachan. He has clearly outlined a
number of key challenges for family businesses, and addresses whether or not
scholarly research has proven solutions to these challenges, warning that
“[a]necdotal evidence should be taken with a grain of salt.” Many of his points
will come across as controversial to some family enterprise advisors or
consultants.
Key
excerpts from his article:
1.
“The central
task of family business management is growing and developing family and
business simultaneously. In so doing one must help family and business build
upon one another while reducing the forces that lead each to erode the other.
The core task of research should be to promote real understanding that leads to
actionable information.”
2.
“‘Best
practices’ research ... [dictates] that practices of successful companies are
purportedly relevant for all family businesses. Most such research is not
conducted in a rigorous manner and does not specify the conditions under which
the ‘best practices’ work. A lack of rigor in research can have profoundly
negative results when applied; among other drawbacks, it gives false comfort
and allows leaders to avoid deeper challenges.”
3.
One of the commonly cited ‘best practices,’
“can be summed up as ‘run your family like a family and run your business like
a business.’ These notions promoted a separation of family and business,
developing inflexible rules and structures, and the idea that non-family
businesses provide a good model for the management of family companies. To
date, there is scant research support
for the separationist view and growing support for an integrative view.”
4.
A frequent recommendation is that “one should have a plan for succession of
management and ownership. Currently, there has been no research that supports
this idea. There is a simple reason for this lack of research support: if
you love working with your family, it does not matter how badly the company
performs; you will still want to work with your family and be an owner of the
business. Conversely, if you cannot stand being around your family, it does not
matter how much the company is making; you will still want ‘out.’
5.
“Another common recommendation is that in
order to develop successors and family employees, to benefit corporate
performance and to ease family relations, family
members should spend three or more years working for others before returning to
the family company. Again, to date, there is no research yet supporting this
commonsense proposal ... I suggest that the important issue here is that
parents and children should continually work on their relationships, whether in
the business or not.”
6.
“Popular
ideas for successor succession hold that 1) strategic planning should come
first, followed by 2) a careful review of the talents, experiences and
abilities needed by the future leader who will implement the plan, then 3) an
examination of the current candidates to create a development plan and 4) when
the needed attributes have been achieved, succession can occur. No research has been conducted on this
notion. A contrary view is that for most family firms the future is too
difficult to predict; therefore, a leader must be someone who can align
stakeholders and motivate people to action.”
7.
“Many
consultants recommend that the senior generation should choose the successor.
Again, no research supports this idea.”
8.
“There is also no research on the use of ‘bridge’ leaders - non-family managers who
will lead the company and train future successors - but there have been
some studies of non-family leaders in general. They suggest that non-family
leaders must view caring for and managing family as a critical role, and that
the hiring process should be carefully designed to ensure they have this
quality.”
9.
“Family
constitutions or protocols - a collection of family ‘laws’ that govern
relations between family and business - are thought to be valuable in ensuring
family harmony and business success. The
research here is mixed. ... It appears that family commitment to the business
is a better indicator of performance and longevity than policies, and that
commitment is built through transparency, education, communication and
involvement.”
10.
“While some
research shows the importance of family meetings, research from the
organization theory school suggests that rigid structures can lead to
catastrophic failure. It is likely a good idea that when implementing such
suggestions, family business leaders make sure the structures have appropriate
flexibility to adapt to changing conditions. Research on complex systems shows
that organizations, be they family or business, must be able to change quickly
in order to survive. The ability to rapidly evolve is, of course, enhanced by
communication, commitment, and deep, strong, healthy family relationships.”
11.
“Boards
of directors are widely seen as important for organizational survival. Research
supports this idea. However, in private family business rigorous studies
linking outsiders to the board to business success have yet to be conducted.
... In private companies the critical factor may be having board members from
whom the CEO will willingly take direction.”
12.
“Family
business leaders should take a skeptical view of suggestions not supported by
research. It is unfortunate that much of the research conducted on family
business over the last 25 or so years is largely inaccessible to the layperson.
Nonetheless, the truly professional family business leader is well advised to
either wade through what is available or seek the counsel of those familiar
with the body of scholarship.”
In another, related
column written for advisors and practitioners on the above points from Astrachan, and published on the FFI blog The
Practitioner, Jane Hilburt-Davis calls on fellow advisors and
practitioners to change their ways of advising families because too often
advisors “make suggestions based on our experiences and not on data.” She calls
for more research, and appeals to other advisors to give researchers feedback
in order to help make research more user-friendly and practical. Ultimately, she
argues, more ongoing, challenging conversations between practitioners and
researchers will develop the field and build stronger family firms.
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