Managing the Family Business-Leadership Roles

In my last article, I explained the current knowledge about the role of leadership in family-owned business structures across the globe and the impact of leadership on the performance of the business. To illustrate the capable leadership for a high-performance family business I presented Nelson Sirotsky, Chairman of RBS who has recently passed the torch after running his family’s media operations as CEO for a long time.

If you decide to use the model of one leader for your family-owned business like RBS has implemented, or form a team of managers it is still necessary to create, structure, and delegate all essential leadership positions. Why? Because whenever I witness poor-designed, poorly organized, and slap-dash leader positions in action I don’t notice the unified and decisiveness that a family-owned business requires for long-term success. What is the best way to design the structure, structure, and assign each of the roles in leadership you require? This is the topic this article will address. Ovik Mkrtchyan 

It is important to recognize that in order for an organization or group to succeed it must be well-managed, controlled, and well-governed.

Leading, Managing, And Governing

Governance gives a sense of mission or purpose to the entire group. It also gives the group sense of stability. Without stability, we can’t make long-term plans. Family-owned businesses have an unbeatable advantage over other types of business mostly due to their long-term objectives plans, commitments, and plans. If you don’t have stability, you’ll have lost your inherent advantage. If you don’t have a good governance system and a sufficient level of stability. The family business system has to be controlled and managed properly to ensure success. Ovik Mkrtchyan 

A good governance system for any group ensures the possibility of plans being created and problems resolved and leaders chosen and disagreements are resolved in a way that maintains the mission and unification within the team. The discipline and trust increase. Good governance is the result of having guidelines as well as agreements, policies, and plans, along with forums (like family councils, boards, or annual conferences of owners) to formulate plans and agreements, rules, and policies to deal with crucial issues and solve disagreements.

Effectiveness

A person who is very intelligent, with legitimacy, lots of authority, and great intentions can be a good leader for a family, business, or owners group. However, unitary leaders, just like everyone else can only work for a limited number of hours per day, and they are able to focus on a limited number of individual issues before they begin to lose effectiveness. In one-leader systems managing effectively almost always requires that key stakeholders come together in some or all of the following groups:

A shareholder’s council as well as the annual gathering of owners in order to address the needs of the governance owners.

The board of directors will provide the necessary governance to the owners and the business.

A family council that can help ensure the family’s governance.

Each of these groups needs its own leaders who are good for a smooth operation.

This means that a family-owned business leadership team may consist of at least four people: an individual leader for each governance forum, and the ultimate leader. The leader of the business could differ from the chairperson of the board. The owner’s leader is usually an individual or group of top owners. Most often, the family council leader is not the actual family leader. The family leader is often also the business leader, however not always. If there is a strong unitary head of the family business system there are often deputy leaders who manage various aspects of the system in close cooperation with the chief. This was the situation for RBS. RBS system.

Leading

In addition to establishing, assisting, and taking part in the governance process Leaders must also be able to lead their teams, which is distinct from managing their tasks. Leadership is about determining what direction the group must take the group (developing an inspiring vision for the future) and then strategizing ways to achieve it and convincing people to make changes to reach that goal. It is achieved by inspiring by persuading and encouraging people to work together to achieve important goals and through forming coalitions that help bring about the needed changes.

The act of leading is a personal job where the leader interacts with his followers and convinces them by making use of persuasive ideas and a strong appeal to character. People adhere to the leader because of their loyalty, as they are a part of the leader, as they are a part of the cause of the leader, and occasionally because of the combination of all three. The followers need compelling reasons to stay with any leader in long-term goals or challenging missions. Because family businesses are focused on the long-term the family business’s owner or leaders should be a person of conviction not only skilled in preparing plans and managing their activities. The saying goes that you can lead people into battle, you don’t guide them to combat.

Effective leaders

Effective leaders can exhibit an enthralling style, such as Nelson or they may prefer a more calm approach. No matter what style people who have the highest effectiveness I’ve observed in family-owned business systems are clear “servant leaders” or more specifically, “servant partners.” These leaders usually have strong concepts and beliefs about how their business should be managed as well as what their co-owners must invest in in addition to how family members ought to behave. They also have personal egos, desires, and sensitivities. But they are determined to be the best they can be for their supporters. They believe in working with other people and treating their partners in a fairway. They behave as agents of the greater good. In addition, they have the ability to make difficult decisions to safeguard the values and goals of the group.

Managing

Management, in contrast to leading, is about enabling an organization to run effectively and efficiently. Management is accomplished by making budgets and plans and organizing, analyzing issues by establishing and utilizing management systems, carefully assigning resources, and giving feedback on performance. The management process is in addition to leadership.

Much of the family and business success is based on good execution. Ensuring that jobs are complete on time, and within budget. We bless with good people in charge of families and businesses. As with all CEOs am teaching in the classroom at Harvard, Nelson Sirotsky spent much in his role as the CEO for RBS overseeing (that is, improving the effectiveness and efficiency of) specific aspects of the company. He involves in a lot of organizing, planning, and problem-solving.

Business Leaders

The majority of the family business leaders I have met are excellent managers. There is an opportunity to improve certain methods of management. However, the leaders work with the program to oversee things. Actually, they do too much to the point of putting too much on management. Their organizations tend to over-manage, not well-led, and poorly governed. It’s common for CEOs, and especially relatives who raise in the company of their parents. And have a good understanding of it to focus on the efficiency of their operations. But too much focus on this generally implies that they pay too little thought to the governance and leadership requirements of the company. We put much of our time into the Owner-President Management course at Harvard to correct this issue.

 Families with businesses

Families with businesses face similar issues with management. A lot of business families are capable of managing their finances by setting goals that are more specific and directing spending better. They generally need to give more time to the growth of their children’s generation. Business families, as with most families, are generally ineffective at providing feedback on performance for their family members. All of these are management issues.

However, I believe that the main reason families have problems is because of their inability to govern and lack of leadership. In the governance, aspect families aren’t aware of the family’s mission or its core values. Or they aren’t able to establish adequate policies and guidelines to guide the behavior of their members. Perhaps they’ve not created an avenue and procedure for discussing important issues. And resolve disagreements between family members with fairness. In the leadership area, they lack an understanding of the future or haven’t recognized the need to evolve in order to change to changing conditions; or they lack motivation. It requires a lot of inspiration to take on the toughest issues.

Management

Governance Management, leadership, and governance Management, leadership, and governance: families, businesses, and ownership groups require all three of these. If you are able to observe a successful leader of a family-owned business structure. Such as Sirotsky during the time of a month, you’ll observe the leader engaged in all three actions. The time dedicated to each activity or group is contingent on the leader’s style and situation. Certain leaders are more inclined to lead while letting others take charge while others spend the majority of their time controlling the system. Parents are also responsible for these three things within the family that he is the leader of. A great chairman of the Board and family council member performs a sufficient amount of all three. In this manner and other ways the management of a company family, ownership, and the business are the same.