Keeping business all in the family
Family businesses face a number of challenges, including wether they remain informal entities and who will eventually take over the reins.
Three Mississippi State University management professors laid out details on these and other issues in a seminar on family business Tuesday at the Greater Starkville Development Partnership.
“...Most organizations in the world are family businesses,” said Dr. Jim Chrisman, an Adkerson Notable Scholar at MSU and the director of the university’s Center of Family Enterprise Research. He added that family businesses are the oldest form of business in the world.
“Family firms have many strengths and weaknesses and the interesting thing about them ... both their strengths and their weaknesses come down to the people that are involved in them and the relationships among those individuals,” he said.
In his presentation, Chrisman said that succession is a “process that involves people with different perceptions and goals” and is important for a firm’s success.
“Therefore, the political and planning aspects of succession are as important as picking the right person to lead the firm,” he said in the presentation.
Chrisman says COFER is number one in the world in family business
research over the past decade “so we’re kind of proud of that.”
Dr. Allison Pearson – the W.L. Giles Distinguished Professor of Management, an Adkerson Notable Scholar and John Grisham Master Teacher – outlined the issue of professionalizing a family business.
“Professionalizing” means making a business more formal and more official in terms of policies, procedures, legal documentation, job titles and similar matters, she said. “When do we move it into that corporate model, if at all?,” she asked in explaining her topic.
“... Sometimes we see families that don’t want to make the decisions because it’s going to ruffle feathers. ... But if we don’t, sometimes the business won’t survive beyond that point ...,” she said.
In her presentation, Pearson said some characteristics of start-up family businesses include that they are founder-directed, are small, informal and entrepreneurial.
She also noted some of the challenges, which include growing, surviving and generating revenue.
Expansion-stage family businesses are those where product or service demand is solid and growing, production and employment are in growth mode, revenues and expenses are on the rise and additional family members are joining the businesses, she sad in her presentation.
The challenges businesses face in the expansion stage include more employees to manage, more issues to face within the family and a single, dominant founder is no longer in charge, Pearson said during the presentation.
Dr. Tim Barnett is the Richard and Mary Puckett Notable Scholar and a COFER fellow. He provided details on leadership and business ethics.
“Nothing about leadership in and of itself says anything about ethics, or morality or right behavior. ... It’s a neutral concept,” Barnett said.
A person working within the construct of ethically responsible leadership is “somebody that doesn’t see a conflict between business goals and business ethics. ... I don’t really think they’re in conflict for most of us, most of the time. ... Being that type of leader typically is associated with success,” Barnett said.
But he added that “being a nice person and an ethical person and an ethical leader in and of itself does not ensure business success.”
“There are a lot of very nice people that go broke. You’ve got to have a good product, you’ve got to provide good value to your customers, you’ve got to be a competent manager... ,” Barnett said.
Barnett says he’s been reading a book entitled “Too Big to Fail” to understand the market collapse in recent years.
“You know what it all boils down to? People not doing the right thing. People knowing better and doing the wrong thing anyway (and) ... doing stuff that their Mama told them not to,” he said, adding that he was not trying to oversimplify, but rather this was the essence of what happening.
The program was sponsored through the Technology Resource Institute at MSU and the GSDP. The seminar was part of the GSDP’s Blue Ribbon Business Resources Series.