The Middle Class Family and The Recession

Middle class families have really found themselves on the wrong side of the economy after the recession hit the western countries and the rest of the world. The socioeconomic statuses of these families have changed for the worst though it seems that it is going to take a while before life comes back to normalcy. A social class is rated in terms of some important variables which include, the level of education, the income capabilities and the occupations they take up in the social world not forgetting the wealth the family has accumulated. Considering this, the economy following the great depression as had a great impact on the families especially in the psychological aspect. The global economic crisis has sparked mixed feelings and psychological problems on the various classes of people more especially the middle class who are either laid off from their duties or are totally unemployed.

Following the recession, there was widespread losing of jobs by most people. At the beginning this was seen as normal and that getting another job could not be as hard. But it turned out to be hard and sustaining the acquired jobs has become so hard. Most companies lost their market and thus getting another job became hard, therefore these families whose livelihood had to change abruptly found themselves in trouble catching up with their fate. It became very difficult to cope with an economy where a family income has been stopped and life becoming more expensive. On the part of the middle class family, they could not easily afford the escalating prices of commodities and life becoming generally expensive with a meager salary and therefore this is posing a survival threat to these families.

During this time of the recession, the living conditions of the middle class families deteriorated due to the increased living conditions. For a family that was used to afford life in a not so strenuous way, things became unbearable. This could have pressure on the parents who really have to see ends meet with their less or no income at all. This probably causes psychological and emotional instability by the family breadwinners who are now in constant fear of the unknown and the future they are so uncertain of. This is a blow on the middle class family who are trying to put up with the changing times.

In the recent times the unemployment issue has remained a problem that is being dealt with by many policy makers. The unemployment percentage remains at 10% and is seen not to change so much even after the recession. The taxes and the housing prices are also skyrocketing each passing day yet there is no salary reviews. To the family whose financial flow is becoming minimal each passing day, adapting to this economy is really mind challenging. This in turn affects the family providers with a challenging state whereby they find it really difficult coping and this can be really disturbing because of the so many fears associated with this state of events.

It has been established that children from these families find it hard concentrating in their studies. They are more fidgety and their level of attention dwindles due to psychological disturbances. Due to unemployment of their parents, these children lack the basic needs that could have helped make their lives more comfortable, in return their grades have dropped. Due to the problems that they are in, and what they see happen at home, these children are seen to exhibit some habits that are not common with their counterparts from richer backgrounds. These children get to a point where they do not get provided with the kind of love, care and attention that they used t receive when the economy was a bit stable. Due to this, their lives have been affected severely because with the hard economic times it is not easy on their part too. Their parents do not give them the attention that used to be there previously and their ties have subsequently loosened. To the children and especially the parents, there has emerged tension towards each other which may cause long-term rivalry towards each other.

Loss of a spouse’s job has been established as a major recipe for domestic violence which in turn affects the family unity. Domestic violence among spouses can really work negatively on a marriage. Even children in such families feel the pain of having to live in unstable families because this affects the whole family. When a spouse looses a job and his or her financial benefit to the family is seen no more, it can bring a lot of tension among the spouses because the burden of supporting the family is left solely on one partner. It is usually the case that the partners get uncomfortable and eventually tired of supporting the family alone. Thoughts of distress call in and even communication becomes a problem. A defense mechanism of being harsh to each other is usually the case and this can lead to many other problems in marriage which will in turn affect not only the parents but the children as well.

Not being in a position to save for a family is dangerous because the future may look bleak. This in resultant contributes to the shattered dreams of a family. These dreams that a family may have had about achieving within a specific time frame will have been lost and therefore dealing a blow to the family. Such happenings may affect the middle class family in a bad way. Just living for the present and not having a long-term saving scheme for the future is really saddening because of the fear of the unknown, shattering of dreams may do a lot of harm to the family. This can make the family unstable and this in turn may affect various family relationships, more especially for the parents who may fear ending up not having even a house left behind, for their children in the long run.

Individuals with high levels of adapting show less stress when faced with unemployment. But those who find it hard adapting to prevailing circumstances end up so greatly grieved and the result for this is stress which leads to depression. Individuals deal with problems differently and when it is the case that adapting so fast is a problem, this can negatively affect the family. Middle class families have in the past few years found it difficult fitting into o the hard economic times. The rate at which this adapting takes place may be slow or fast, depending on individual families. For the families that find adapting hard, it can be really hard on them. They might at the end succumb to issues like broken marriages and separation because taking too long to get used to a given kind of life and moving on. Those who show signs of not adapting will find it hard getting quick solutions to their prevailing circumstances and accepting the situation will be quite difficult and hence psychological problems may befall them at the end of the day.

Because the middle class families are not used to financial constraints, coping with unemployment becomes as hard because it brings in more trouble and stress. This stress can make things worse if quick solutions are not sought families may end up trying to escape from the realities of the day by engaging in unwarranted activities such as drug and substance abuse which ha devastating effects on the individual, the family and the society at large and the resultant effect is the psychological distress to everyone, the state not left out. The escape mechanism whereby drugs are involved has got devastating effects on everybody, this result into the unresponsiveness of family members. These members who resort to this will end up not having the ability to take charge and control these stressors of life and this can even lead to loss of self-control and above all loss of life and even the fear of other family members who constantly fear that the drug abuser can be caught on the wrong side of the law.

Divorce cases are on the rise due to unemployment or /and loss of job. This is due to the tension that surrounds the family. In societies where loss of employment is socially unacceptable, the psychological well-being of the unemployed will be severely affected because of the fear of resentment by partners. This can lead to undesirable treatment of spouses when one looses a job because of the fear of an issue like divorce. During periods of unemployment, spouses tend to have more differences than when it is the case when both partners are working. These differences my lead to psychological dissatisfaction in marriage and the outcome is divorce. In such instances, the families will be not only emotionally affected but also psychologically distressed.

Families that exhibit optimism are likely to get stressed less and on the contrary, those families that are not optimistic are likely to be more stressed. This clearly indicates that with unemployment or loss of job, families look at it differently and this projects how much these families are affected. Lack of positive thinking and being optimistic on finding another job may render the family more harm than thinking positively about things working out somehow. Optimism and pessimists are therefore used in rating the families’ attitude towards joblessness. This can affect the family on the long term because pessimistic thinking may lead to the crumbling down of the family and the future is rendered bleak but if the families members are optimistic, chances are that regardless of the prevailing circumstances, the members will be always looking forward to a brighter future.

Loss of job may lead to disruption and pain. One may have been so much attached t his or her work such that this work seems to be the one that serves individuals with the satisfaction that they get in life apart from being the source of income. Loss of employment and subsequent long term joblessness can ignite feelings of bitterness and pain that can even cause negative physical and mental problems to a person and this can be long term in the end. It is therefore understood that this can directly or indirectly affect other members of the family.

Long term effects of the recession on families is the pain of losing a job and therefore losing a livelihood and adapting to a life that a family is not used to. The middle class family, where most citizens belong and whose contribution to the economy is great becomes less productive and more dependent. When a person is moved from the state of being independent to that of dependent can really affect a person’s psychological stature. In the recent past, more families that were independent before the recession have enrolled to receive aid, such as food stamps. A family shifting places in this way can have troublesome moments even coming to the realities of the day that they have now shifted from middle class level to a lower class.

After losing a job, chances are that individuals will choose to enroll for higher education so as to become competitive enough so as to fit into the job market. But with lack of enough resources to support one go through that education can be so intimidating such that this may result to psychological problems. Already there is lacking of enough resources to help run the families. Such a situation can render members of families hopeless. There also lies in the problem of insecurity in the families because of having lost focus for the future. With an income rated below the minimum dollar a day, this can be a dream that can never be achieved, besides there will be the stress about getting a job even after getting more education.

Most family members have found themselves on the wrong side of their career because with the recession this means that in order to manage, one needs to get any kind of employment that can help the family manage bills. But it is very possible that one seeks a job that he or she is not qualified for. For one, the new job that is not in the individual’s professional field can be very tough. Doing a job is seen to be just for the sake of the money and not doing what one really enjoys doing. In the long-term the individuals may end up performing dismally due to the lack of attachment. As a result of all this, there is no growth in one’s career which is a major blow on the individual’s gathered skill and knowledge. These affected individuals will in the long run feel wasted by the system because they will not have given back to society the accumulated knowledge and skill that they have gathered.

The problem of unemployment seems to be the reason for the escalating cases of terminal illnesses which are thought to be largely caused by stress and depression, such illnesses as hypertension, are affecting most of the middle class families because these families have found themselves on the a situation of straining a lot. They overwork themselves and find themselves not having adequate time to think, reflect and relax. Instead of seeking time to rest and relax a bit, they find it better to d extra work so as to live up to the expectations of the economy. This has made them also spend a lot in trying to manage these ailments some of which have got no cure. In cases where these illnesses have no possibility of being cured, it is really hard on the family members because of the high cost of healthcare and therefore complicating their lives more than they are with the hard economic times. The family as a whole is affected because all members have got a role to play in event that a family member contracts these ailments and this can be distressful more especially when these illnesses threaten a person’s life.

The psychological impact: of the current economy on the middle class and subsequent long-term unemployment on the middle class families have caused financial hardships on the family have been a severe blow on the smooth running of these families. The effects of the recession are felt with a lot of resentment from all over the world. Many people have not yet found their way back to their to their career jobs as many firms are still struggling back to their feet. The family has been the major recipient of the problems that are associated with the recession and therefore the family more especially the middle class has been severely crippled. The family has been deprived of its psychological stance and comfort and thereby causing it to crumble down as the cost of living is on the rise, this is thought to extend for a long time until the economy gets back to its feet, ranging from marital problems to affected family relations, those of spouses and even their children, the families not only the middle class have really found it hard adapting. The psychological well-being of all the people lies in the satisfaction brought about by the security of a job of one’s choice and an income that is heartwarming. In the absence of these two the result is the crumbling of families.

The Reasons Why Family Is Important In Life

Family is the most important and valuable gift that god has given us. It is the first lesson in relationships with others. Family is really an important word. It means to feel secure, to have someone who you can count on, whom you can share your problems with. But it also means to have respect for each other and responsibility.

What family means to me is love and someone that will always be there for you through the good times and the bad. It is about encouragement, understanding, hope, comfort, advice, values, morals, ideals, and faith. These things are all important to me because it makes me feel secure and happy inside regardless of what is going on in my life. This is one of the main reasons why the family is important in our life. Here in this article it is important to emphasize on the importance of family in our everyday life.

Utmost Protection and Security

Family is important because it provides love, support and a framework of values to each of its members. Family members teach each other, serve one another and share life’s joys and sorrows. Families provide a setting for personal growth. Family is the single most important influence in a child’s life. From their first moments of life, children depend on parents and family to protect them and provide for their needs. Parents and family form a child’s first relationships. Family provides all members with security, identity and values, regardless of age. When a member of the family feels insecure or unsafe, he turns to his family for help. He learns about his sense of self and gains a foundation for the rest of his life. This foundation includes the family’s values which provide the basis for his own moral code. Spending time with family shows individuals the value of love, appreciation and open communication.

Following family traditions showcases the importance of family, as well. Family traditions are experiences that families create together on a regular basis, whether these involve holidays, vacations or even attending religious services together. Not only do these experiences create memories for years to come, they also give family members a stronger sense of belonging. Families bond together and make each member feel important.

First step of receiving basic values of life

A family is the first school in which a child receives the basic values of life. He learns good manners in the family. The morals and values learnt in family become our guiding force. They make our character. They lay the foundation of our thinking. I feel fortunate to be born in a family where values are inculcated in early childhood. Family is an important and strongest unit of society. It holds great importance in social life. A society is made up of families. Our family has been known for discipline and values. We give great importance to values and morals in life. Since our early childhood we are taught to respect the elders and love the children. We learnt the lesson of punctuality and honesty from our grandfather. It is due to the good education of our grandparents that we could excel both in sports and education. Since our childhood we have been put into the habit of rising early in the morning. This has a natural effect on our health and physical fitness.

Making a right choice in choosing the right life partner family values influences each walk of our life. It is high time that family values be protected and be treated as a tool to eliminate corruption, hunger, inequality, and crime and hatred in our society.

To shape a child’s future

The family is your blood and they are the people who accept you for who you are, who would do anything to see you smile and who love you no matter what. The family is one and only place where your life begins and love never end. You may have lots of people in your life, but you won’t find a single person who cares the most exactly same as your parents. Some of you may not agree with me, but this is the truth that one day you will realize this by your own. A family is the only place where children study a lot after school. In school, teachers teach children about the subjects which will help them to find a good job in future. But in the home, Family teaches children about habits, discipline which not only help them to find a job but also help them to live a perfect life in future. So the family is very important for kids. When babies come out from mother’s womb, they see their parents first and thereafter they spent most of the time with their family until go to school. During that 3 or 4 years is really important for babies to get to know some basic habits from parents, sisters or brothers. So on that period, they get to know many things from family. None of you going to teach bad habits for your baby, I believe. Parents have to be careful in actions in front of their babies because your baby learns habits and discipline from you only.

This is one of the main reasons why the family is important in our life. This is one of the great advantages of family and none of us ever realize this at any time. You may have lots of friends or relations or office mates. They will definitely be with you in your happy times or any successful achievements. But, your parents or sisters or brothers are the only ones will stay with you in your hard and difficult times. Your parents are the only one who understands you much more than any other people do in the world. Because they are your creators and they are the only ones traveling with you from the beginning. So they understand your feelings and always there for you whenever you need someone abundantly. This is the power of family. There are many people can help you, but the family will help you whenever you are alone.

Helps building an ideal society

A perfect family is a great example of the whole society. Father, Mother, children all of them have to work in order to build a perfect family. If any one of them failed then the whole family collapsed. This happens very much nowadays. The good name of the whole family ruined by a single member of the family. That is really sad but nothing to do for that. But if every family member works hard and builds an optimal family, then they are a good example of that whole society. Family impacts very much in society and society impacts very much in the country. So an ideal country not only builds by the government but also each and every family member. So each family is the principal key to the society. This is why the family is important in our life.

Family values are a set of unwritten rules and codes that creates and helps build our perception, vision towards society and many things that we face in our day to day life. Strong family values can instill greater clarity in decision making regarding our life and leads to a relatively easier and more balanced life. Giving strong values as a parent not only protects a child but also create a civilized conscious citizen and help move society towards a more harmless tomorrow. Strong family values can help check all the moral and ethical corruption in various walks of life which otherwise ultimately contributes to inequality poverty crime and what not.

In today’s hard and fast world the most successful person are those who can take quick decisions about what they want from life. Family value that helps you distinguish what is morally correct and what suits your value system. Today the single largest task in hands of parents is protecting their children from outside influence which are majorly negative in nature. Injecting strong family values in child since childhood is one such measure that can ensure their safety in a time when direct supervision of child has become near impossible…

Strong source of spreading Love and Shelter

A family is like a nest. In it one can share laughter, joy, tears, successes, failures and problems. Everything becomes easier when you have someone to share. It is how we identify with others and how we view ourselves. It’s where most of us learn to trust or be trusted. It’s the longest and often times most valuable lessons on love and sacrifice, responsibility and organization of managing ourselves to meet the needs of others important to us. It is putting others before us. Family is not only about blood ties but about the love bond that exists whether friends colleagues, biological or adopted. It is respect and unconditional love No matter what. A family is the person who makes you smile when you feel sad. Your parents are like God, they always love you. The other thing is that a family is a very strong force that nobody can explain. Your parents are the ones that make you mad, but they always love you in the inside. If we didn’t have family, then who will care for the children? Nobody. A family is a forever thing that will be always on your side. Remember, there is always love, always.

Thanks a lot… Now I understand the importance of the family, but not all family are friendly to each family members. I don’t think all members will support each other since one person get married with the couple and is likely to change… Family should be our first priority, and love them with all our heart, as our choice, but getting good parents and siblings is a choice that is made by God and you can never demand it!

Thanks a lot for having a look at this article. The article is interesting to read and, in my opinion, a good way to remind people that they are people, not animals and realize the mere fact that we live in a society created by people brought up in families, not in caves or jungles.

Top Ten Characteristics Most Often Found in Great Family Businesses

“Good is the enemy of great,” proclaims Jim Collins in his landmark bestselling book “Good to GREAT.” To achieve greatness in business, Collins’ research shows, among other things, that leaders must:
– Face the brutal facts
– Get the right people on the bus, in the right seats
– Become the best in the world at something (The Hedgehog Concept)
– Know what you are deeply passionate about
– Know what drives your company’s economic engine

And how does Collins’ research team measure the transition from good to great? The primary metric used was financial performance as reflected in the stock values of these businesses. The 11 companies selected had to have “experienced 15-year cumulative stock returns that were at or below the general stock market, punctuated by a transition point, then cumulative returns at least three times the market over the next fifteen years.”

These companies are:
Circuit City
Fannie Mae
Philip Morris
Wells Fargo
Pitney Bowes

As you can see from this list, achieving greatness does not guarantee staying great. One company is bankrupt; others have declined, leading to Collins’ latest book: “How the Mighty Fall.” However in both of these books, like so much of business research, the companies studied are publicly traded in large part because these companies generate objective data that are accessible and can be analyzed and compared.

Since most family businesses are privately-held and many keep numbers confidential, it is much more difficult to access quantitative data, making them more difficult to study. We do not possess the body of knowledge about when family businesses may have transitioned from an average or good company to a great company. So, what makes a family business great? In fact, there is no single definition or metric for a good family enterprise or a great family enterprise. Financial performance is just one important indicator of a successful company. For family businesses, we find that greatness goes beyond an ROI (return on investment) or EBITDA (earnings before interest, taxes, depreciation and amortization) number. In fact, over the years of working with family businesses, certain attributes have emerged that can arguably be tied to greatness. The following are 10 distinguishing characteristics most often found in great family businesses.

1. Living Shared Values: Great family enterprises consist of families that understand their values and guiding principles and truly live them in their business decisions and actions. The Mogi family (producers of Kikoman Soy Sauce and now in its 17th generation) created a family constitution in the late 1800s that includes 16 guiding principles. As an example, number 15 describes the trait of humility “…never think highly of yourself.” In great family businesses, values are the bedrock. In fact, John Ward (one of the founders of FBCG) has stated, “values pervade every aspect of family business. Values are the independent variable shaping every dimension of family business management.” Great enterprising families use their values to help guide key decisions regarding strategy, structure, diversification, culture, employee recruitment, governance and very importantly-succession.

2. Strong Financial Performance AND More! Just as Collins points out for public companies, family-owned businesses must also demonstrate continuous strong financial results. In fact, as a collective group, family businesses have shown strong long term financial performance. A McKinsey study shows that over time family-owned businesses financially out-perform other businesses by 7 to 8 percent but a great family company is not ONLY measured by profitability. Many family businesses have helped develop the more encompassing concept of the Triple Bottom Line: economic, environmental and community. Great family enterprises, while economically strong, are also stewards of the environment and often lead in the development of eco-friendly products and practices. In addition, communities around the world benefit significantly from the philanthropy displayed by great family companies.

3. Evolving Governance: As a family and a family business grow and become more complex, the need to govern beyond an owner/operator approach is vital. Those family enterprises with carefully blended key elements of governance have positioned themselves for much greater success. An active board of directors that includes independent outside directors sets the oversight tone in the business. On the family side, a family council can capture the voice of the family and effectively communicate the needs and concerns of the family to the board. This entity can help develop guiding documents, such as a Family Constitution, which includes policies or guidelines (e.g., family member employment policy or
compensation guidelines) that clarify the “rules of the road” where family and business intersect. In addition, an ownership council may be appropriate if the shareholder pool has become fairly large. This oversight structure for ownership provides the correct forum for discussing issues around ownership priorities. Great family enterprises evolve a governance structure which often leads to both greater business performance AND greater family unity.

4. Family Involvement: The degree to which family members actively participate in the family enterprise is also indicative of greatness. Participation can be as a business leader, shareholder, board member, employee or even simply a proud owner. Great family businesses demonstrate a high level of family member involvement be it in the business, on the board, or simply as active and committed owners. Owners of great family businesses do not simply hold a share certificate and expect dividends; they are aware of the responsibilities that come with ownership and feel a certain amount of “psychological ownership” of this asset-it is NOT just another investment holding.

5. Conservative Money Management: Long-lasting family enterprises demonstrate a remarkably low level of debt to operate and grow the business. Once a family business gets past its start-up phase, great family-owned companies are very careful of how leveraged they become. Most plow funds generated from the business back into the business, opting for building the business over excessive distributions.
In addition, great family enterprises are patient with their capital, willing to wait and be more deliberate in achieving a return.

6. Effective Paradox Management: Family enterprises are full of paradoxes or polarities that need to be managed, such as merit-base pay versus family member perks or acceptance of family members versus need to challenge family members. According to Greg Page, President and CEO of giant family firm Cargill: “In this world full of paradoxes, companies that manage paradoxes well out-perform companies that don’t.” Great enterprising families are able to walk along the precipice and effectively balance the dual forces of “Family First” and “Business First”, never sacrificing one for the other.

7. Planning (strategic & succession): Less than a third of family businesses have a written strategic business plan. Studies show that a business with a written strategic business plan outperforms those without one. In a family enterprise, a key component of comprehensive strategic planning is a succession plan for both leadership and ownership. Family businesses that develop a strategic business plan and a succession plan think through these processes, engage others and end up with a more robust direction for the business and family. The planning process helps to incorporate calculated risk taking and balances the senior generation’s need for more wealth preservation with the younger generation’s desire for more wealth creation. In addition, a transparent process that involves as many stakeholders as possible builds trust and consensus around these complex choices that will affect both the business and the family.

8. Diversification & Growth: Great family enterprises build on their core strengths, competitive advantages and relevant opportunities. In some respects, this is managing the paradox of sticking to your knitting while broadening your offering. There is also a strong paradox in a family enterprise of respecting what got us here (work processes, traditions and innovations of the senior generations) while staying current with the marketplace and giving a voice to ideas from the younger folks involved in the system. Diversifying into other offerings often leads to greater career opportunities for the next generation, which can be very important as the family grows. Many family-owned businesses came into being because they created some kind of innovative product or service. Great family-owned businesses continuously look at ways to innovate in many areas: products, processes, services, business models, promotion, distribution and governance.

9. Blending Family and Non-Family: A family enterprise cannot become great alone. It takes an effective combination of family members and non-family members, who often feel like a part of the family, to generate the power needed to move to a higher level. Those family businesses who appreciate this fact, and have chosen the best person for the position, regardless of family connection, usually attain greater heights.

10. Multi-generational Endurance: The survival statistics of family-owned businesses are regularly cited. Only about one third of these companies survive through the second generation; 12-15 percent through the third generation; and then less than 4 percent for following generations. It’s just plain difficult to get into the fourth generation. Therefore, by shear endurance, those family enterprises that have made it to the third generation and beyond have already achieved at least one meaningful measure of greatness.

Today, a combined score of these 10 attributes does not exist. As with so many elements of family business, a greatness score would include a combination of some hard facts, like operating profit, and many softer, tougher-to-measure elements, like family unity and contributions to the community.

Family Business, Non-Family Business, Urban Myths.

After 20 years of working with Senior Executives across the world it’s interesting to see the mistakes when appointing Senior Executives. There can be many reasons why, but one reason is not understanding the differences of working in a Family Business and a Non-Family Business. I’ve recently met several Senior Executives who are unhappy with their employment because of this lack of knowledge and understanding and I’m meeting Business owners who didn’t realise there was a difference. These Business Owners feel that money and title is enough and stick to the Mantra of “Surely experienced ‘C’ level Executives can work in any company?”

Due to the change of economy, I have become more involved with assisting Family Businesses rather than just the corporates in finding ‘C’ level people. To do this successfully I believe that everyone in the process of hiring Senior Executives must understand the differences that separate the two entities. Having worked for an English and Indian Family Business in a past life this has helped me at first hand to see the ups and downs of these Businesses; this with a theoretical base has helped with running my own companies or advising others with theirs.

One recent company I have been involved with was run and founded by a successful New Zealand Entrepreneur. He does not have anybody in his immediate family to hand the reins over to. He has tried (outside the family) executives to fill his ‘C’ level roles and has had three people in three years! What is the problem? Was this a real Family Business? Was the Problem his, or the Executives?

We discussed the reasons for the failures but in terms of assisting the owner I got him to firstly look at where his people came from. All three had been ‘C’ level people in corporates and had done an excellent job in their corporate environment. They all returned to corporate life and continued to do well in their new roles. Why did they fail then in this successful company?

What I needed the owner to do was to identify a “Family Business”. I don’t normally use dictionary definitions but feel that in this instance Wikipedia gives a satisfactory explanation of a Family Business;

“A commercial organization in which decision-making is influenced by multiple generations of a family-related by blood or marriage-who are closely identified with the firm through leadership or ownership. Owner-manager entrepreneurial firms are not considered to be family businesses because they lack the multigenerational dimension and family influence that create the unique dynamics and relationships of family businesses” Wikipedia 2014.

We looked at his company and although he didn’t have anyone in the immediate family to take over the reins he had people who owned the company in minor leadership roles. We both agreed he did in fact have a Family Business.

He thought that buying in top salaried ‘C’ level Executives from corporates would enhance growth and sustain his business. He had not seen any differences between Family and Non-Family Business.

Urban Myths for Family Businesses;

All are unstable Small to Midsize businesses’.
As an Executive I don’t want to baby sit the junior family members so they can take over my job.
A non-family member will never run the company.
Mother and Father Companies, the only people that matter in the company are family members.
Emotional hard to work places due to family disagreements/arguments.
Incompetent family members in positions of authority.
Are these statements true or are they just Urban Myths?

Family businesses are one of the fastest growing sectors of the world economy and now merit serious consideration by Senior Executives looking to advance their careers. This is an amazing turnaround from 25 years ago when nobody wanted to work for a family-owned business. There now seem to be many positives;

Patricia Epperlein from InterSearch reports that;

In the USA, 90% of businesses are family-owned. They contribute towards 40% of that nation’s GNP and pay approximately half of its total wages.

59% of France’s Top-500 industrial companies are family-owned.

It is estimated that 70% to 85% of all businesses worldwide are family-owned.

Tom O’Neil NZ Herald. Jan 2014 states;

Small to medium businesses are the lifeblood of New Zealand industry. Various sources cite family businesses as representing 75 per cent of Kiwi firms, providing up to 80 per cent of employment and 65 per cent of national GDP.

It’s interesting to note that when companies around the world state that they are a “Family Business” they are trying to reinforce positive family values of, Integrity, honesty, trust and loyalty.

Not all Family Businesses’ are SMEs. Companies like;

Tata Group.
In New Zealand the Talley Family (Agribusiness) and the Pandey family (Hotels).
Simon Peacocke of BDO Auckland, an accredited Family Business Advisor works with numerous NZ Family Businesses and feels that they do well because of the following reasons;

Family businesses think very long-term and are very resilient, much more so than non-family businesses.

Second and third generation family business members start their apprenticeship at a very young age. At 5 years old they are hearing their parents talking about the business so they have an incredible depth of knowledge to draw on.

Their relationships with staff and communities also tend to be different – closer, more connected, more loyal.

Staff tend to become part of the family business and to stay on as long-term committed employees.

While corporates like to be seen supporting their communities, family businesses generally don’t promote they are doing this – they just do it.

They don’t throw lots of money at things trying to get rich quick.

They also have a powerful focus on building relationships with staff, customers and suppliers.

So is it worth working for a family company? Is it better to work for a Non-Family Business? Is there any difference when the economy is good or is in a slump?

Nicolas Kachaner 2012 in the Harvard Business Review states,

“Results show that during good economic times, family-run companies don’t earn as much money as companies with a more dispersed ownership structure. But when the economy slumps, family firms far outshine their peers. And when we looked across business cycles from 1997 to 2009, we found that the average long-term financial performance was higher for family businesses than for non-family businesses in every country we examined”.

Senior Executives looking for longevity in the work place should look at the Family Business as this would take them through economies varying peaks and troughs. They will need to be aware that this will always be done in a cost effective way.

Business Consultants believe that they can tell easily if the company is Family or Non-Family Business. You just walk into the Head Office. A Non-family office has a very substantial corporate office with a “Wow Factor”. The Family business being more Frugal has very few “Bells and Whistles”. This Frugality is about the Family Business CEO looking to invest in the long term 20 year plan with the business passing down the generations. The Non-Family CEO is looking to make an instant mark and will try and outperform the person they have taken over from. There are many studies that show that Family Businesses did better in the recent Global recession for the above reason. The Family Business is frugal in the good times and the bad allowing them to weather the storms of economic crisis.

This is one of the factors that had been wrong in my client with three ‘C’ Level people in three years. His ‘C’ level people came in with a quick turnaround plan which they hoped would give a quick fix and outspending the last person in the hope that they would do something instantly. No twenty year plan for them as they had never been afforded this way of working in the past.

Do Family Businesses perform differently in other countries?

Justin Craig, PhD states,

“Interestingly, in many aspects family businesses as a sector do not vary much from country to country. There are obvious cultural differences but a business with family involvement is challenging in every country. It is also more rewarding than the ‘corporates’, let’s not forget that. Of course, there are older businesses in Europe, for example, than in Australia and New Zealand and the United States, and the mind-sets of companies in Europe will differ than in the later developed countries. But day to day the differences are not noticeable. Older businesses have more at stake and lots more to lose but they also have advantages. Family leaders still have to manage three independent and interdependent systems being the family, the business and the ownership group”.

Appointing the right Senior Executives is crucial to any company and is a costly acquisition. There are many reasons why hiring at this level goes wrong but getting it right can make a huge difference to your company.

To answer one of my questions, can a ‘C’ Level person work in any type of Business, Family or Non-Family?

Yes, but only if they are armed with the knowledge of the differences of the two. What they must also be sure of is the type of business that they are going to work in as sometimes this can be a cloudy issue, making it difficult for them to decide which one it is. Look at those mighty corporate companies of Porsche, Tata and Walmart to name a few.

Finding the right ‘C’ Level Executive is a lengthy process and shouldn’t be rushed, if you need to rush you are better to go down the Executive Leasing Route in the short term which will allow you to take a breath and get the right permanent person in place. Work with your inside team or your outside partners to establish a good process, so the firm can articulate the process to the Senior Executives. Everyone appreciates the fact that there is a well thought-out plan in place.

For me, I decided a long time ago not to build a Family Business. I wanted to give my children the best in life, but wanted them to make their own way in life too. My children might disagree but as one is studying to be a Barrister and one is settled in a corporate I will wait and see if I need to step in? I have however, always agreed with Billionaire Investor Warren Buffett who said, “He would give his kids just enough so that they could do anything, but not so much as they did nothing”.

Seven Tips For Creating Win-Wins For Family Owners and Non-Family Executives

As family owned companies grow and prosper from one generation to another, it is not uncommon for them to bring in non-family executives to round out the expertise of family members. When family businesses survive well into the third and fourth generations, there are generally more non-family executives than there are family executives involved in the company. Consequently, there are hundreds of thousands of non-family executives working in family businesses across the country. While the role of this executive is one of the most critical roles in growing family enterprises, it is often considered one of the most confusing and complex.

It has been my good fortune to learn what non-family executives want, directly from the nearly 100 of these business executives that I’ve coached, interviewed, and surveyed over the past decade. Additionally, I have personally served as a non-family executive, and have reported directly to four different non-family chief executive officers. I have also had the opportunity to talk to many family owners as well, and it is my conclusion that in order for families to successfully pass from one generation to the next and for businesses to flourish, there must be a win-win for family owners and for non-family executives.

To create a win-win for family owners and for non-family executives, family owners must:

1. Find the right person for the job
Due diligence is critical when looking for someone with the right fit to be a non-family business associate for your company. Successful non-family associates should have all of the following characteristics:

A. Be competent and have a proven track record of success in your industry or a similar one.
B. Have the ability to stand up to the family when needed, and the judgment to know when it is not, because although a healthy ego is good, arrogance is not.
C. Have empathy for the family owners because the owners’ names are on the door, not the name of the non-family executive.
D. Understand that a family firm is different from a public company with regard to goals, dreams and hopes for both the family and the business.

2. Speak with one voice
If 10 different family members tell a non-family executive to do 10 different things 10 different ways, the executive cannot possibly win and neither can the family. That’s why it is critical for the family to get together and decide who will be their official “voice”. It could be the chairman of the board of directors or the chairman of the family council, but it is imperative that this leader solicit feedback from all relatives involved in the business and for the family to reach consensus, if possible, before directing non-family executives. If the family owners do not have an owners council or a family council, that should be the very first order of business. The saying: “United we stand, divided we fall” has great relevance for families who want their businesses to prosper. There are many books on how to start a council, as well as consultants who can help you.

3. Be able to share your vision for the family and the business
You should be able to clearly articulate your vision for both the family and the business to the potential non-family executive early in the interview process. In order for executives to be able to move your company in the direction you want to go, they need to know your vision for the family. Do you want the business to last from one generation to the next, or do you want to get the business ready to sell? They also need to know your vision for the business. Do you want the business to grow incrementally over time, taking few risks, or are you comfortable growing quickly while taking lots of risks? Again, the key is having an active council comprised of family members so that the family and ownership group can come to a clear understanding around their vision, and then share this with all stakeholders in the system including the non-family executives.

4. Reward non-family executives fairly
While making a healthy profit is the motive for most businesses, it might be equally important for some business owners to make sure that any family member who wants to work in the business can. While that can be an acceptable priority, if the result is the company has to keep a low-functioning relative employed and this affects profitability, this could be experienced as unfair to a non-family execs if their bonus is based on profitability. If having family members employed in the business is important to the owners, the family should make it a goal for the non-family associate, and the bonus should have a mechanism to reflect meeting that goal in addition to profitability. In addition, my research indicates that while non-family executives appreciate financial rewards, they also value non-financial rewards, such as being invited to family functions and being given creative gifts or acknowledgements. One very enterprising family had a proclamation signed by the entire family board to congratulate the non-family chief executive for meeting his goals.

5. Give your non-family associates the opportunity to hear what you want
Many successful non-family associates claim family owners are their greatest resource. By taking the opportunity to truly listen to the family, non-family business managers and leaders have been able to give the family exactly what they wanted. It is up to you to invite the non-family executives to meet with you formally and informally so you can talk to them and get to know them. Formally, the non-family associates should be invited to family council meetings both to speak and to listen. Informally, you could invite the them to dinner the opening night of your assembly meeting or to lunch just prior to a board meeting. The main point is for you to understand them and for them to understand you. As Stephen Covey says, “The deepest need of the human soul is to be understood.”

6. Do not gossip
As tempting as it might be to tell your executives not to be concerned about the “piddling issues” of your “little sister” when you are frustrated with her, you do your sister and your non-family executives a great disservice if you do. If the non-family managers see you downplaying her importance to the business, they might start doing the same thing, or worse yet, they might feel as if they have to take sides. The same goes for talking behind the backs of your fellow non-family executives.

7. Respect your non-family business members
Famous psychologist Dr. Murray Bowen has been credited with saying: “We cannot respect another person enough.” This is particularly true of non-family business members. While the family that owns the business is extremely important, so are the families of the non-family business members. Do not forget that these executives, while involved with your family, have families of their own, and a range of interests and priorities outside the company. You are correct that the executives should earn your respect, but again the burden of finding the right executive is on you. Be sure to follow the criteria above and bring respectable non-family executives into your family business, so that you can respect them, and they can respect you.

Some non-family executives have said that joining a family business feels more like being adopted or marrying in than being hired because they realize they are playing influential roles in the family as well as the business. There is no doubt that non-family executives are crucial to the success of your family business, and a win for your non-family executives is a win for you. In the end, success is always about having great relationships. My experience has taught me that the relationship between family owners and non-family executives is one of the most precious in any thriving family business. To borrow from an old saying: “Take care of your non-family executives, and they’ll take care of you.”

Dr. JoAnne Norton, an associate with the Family Business Consulting Group, specializes in advising large, multi-generational family businesses. She works with families to improve communication, to develop the next generation of leaders, and to coach non-family executives.

A former non-family executive herself, JoAnne understands the unique challenges faced by executives who are not owners but are working in someone else’s family business. For more than a decade, she was the vice president of shareholder relations for Freedom Communications, a family-owned media company, where she worked with the 65 family owners and served on the leadership teams of four different non-family CEOs. Few professionals share JoAnne’s unique experience establishing a shareholder relations department dedicated to family governance, leadership training and coaching.

JoAnne is the author of several articles on how to improve relations between non-family CEOs of family businesses and family owners. She also has written “Bringing Bowen Theory to Family Business,” which will appear in the forthcoming book, Bringing Systems Thinking to Life. A frequent speaker at university family business centers across the country and national industry conferences, JoAnne has presented at the Family Business Network meeting in Cannes, France, and the Graduate School of Banking at the University of Wisconsin, Madison.

As an adjunct professor for seven years at California State University, Fullerton, JoAnne created the family business dynamics course for the College of Business and Economics. She earned a doctorate in organizational leadership from Pepperdine University and did post-graduate work at the Georgetown Family Center. JoAnne grew up in a successful second-generation family business in the Midwest, where she learned the complexities of maintaining harmonious relationships, as well as the importance of maintaining good communication, by observing her father, mother and two uncles.