Wage Increases and Tax Cuts
Recently the Dow Jones index faced a drastic fall. This fall was partly because of the fears of inflation that were sparked by increasing employee wages. This is because employee wages have been stagnant in America for close to a decade now. The drastic short-term rise was attributed by many to be the result of […]
Should Corporates Implement Affirmative Action as a Means of Ensuring Social Justice?
What is Affirmative Action and does it Help or Hinder the Goals of Social Justice? The United States has a policy of what is known as Affirmative Action on campuses across the country to actualize Social Justice and to empower historically disadvantaged and disaffected communities. Affirmative Action is a term which indicates how members of […]
DSS Architecture, Networking and Security Issues
Organizations are decision-driven. The success or failure of each decision impacts a company’s strategy directly or indirectly. If organizational decision making is aligned with the right kind of artificial intelligence system, chances are that the performance of the organization will improve to a great extent. The alignment of human intellect with computerized decision support systems […]
Role of HR Consulting in Mergers and Acquisitions
Corporate transactions, including mergers, acquisitions, divestitures, joint ventures, and other methods of organizational restructuring and transformations, are strategically important in enhancing competitiveness, economies of scale and growth of an organization. Nevertheless, the human resources or ‘people’ factor of an organization holds the key to success in all such corporate transactions. But, this factor is the […]
Business Analytics – Meaning, Importance and its Scope
Introduction The word analytics has come into the foreground in last decade or so. The proliferation of the internet and information technology has made analytics very relevant in the current age. Analytics is a field which combines data, information technology, statistical analysis, quantitative methods and computer-based models into one. This all are combined to provide […]
Family owned businesses have been the norm from the time of the industrial revolution and in fact, they were the mainstay of the business world in the early decades of the 20th century.
With the advent of technology and the services sector, the rise of the professionally managed organizations was evident.
In this context, many family owned businesses seem to be failing before the second generation takes over.
The reasons for this are many and they include making the second and the subsequent generations obligated to take over the running of the company, making all family members part of the business, and operating in silos instead of being generalists who can have a broad perspective.
On the other hand, the lack of a clear succession plan once the family patriarch or matriarch dies or retires is also a reason for failure.
Finally, infighting among the family members over who would lead which segment once the founder or the head of the family dies or retires is another important reason for failure.
Family owned businesses could avoid these traps by ensuring that they do not pressurize the younger generation to enter the family business when they are not inclined to do so.
This can be resolved by ensuring that only those family members with the aptitude and the skills as well as the attitude and temperament are asked to join the business.
This can be resolved by ensuring that non-family members are promoted based on merit and not only on familial ties.
Apart from these factors, the lack of a clear succession plan and the disunity among family members is often a reason why many family businesses fail to survive into the subsequent generations. This can be seen in the way several corporate houses in recent years have either split or have been sold off because of these reasons.
Hence, these traps can be avoided and the family owned businesses could survive into the subsequent generations by following some of the practices that management experts have prescribed.
Finally, in these times when there is a rapid turnover of ideas and concepts, it becomes imperative for family businesses to retain their competitive edge in the face of the onslaught of competition.
Hence, they need all the energy and the foresight they can to avoid some of the reasons for failure.
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Business Continuity Management Planning around the World
February 12, 2025
