A Family-run Business: Perception and Reality
You have heard a story of an elephant and four blind persons. When they were told to describe the elephant, each one of them described the elephants based on their touching body parts and then visualizing the elephant.Our experience of family-run business understanding amongst business owners is of similar nature. Though most of them fall into family business category, each one of them describes it quite differently. This wide perception is obvious as most business owners are not fully exposed to different facets and dimensions of family-run businesses; hence their understanding and perception differ.
The obvious question is, what is the correct definition of family-run business? Having served over 100 family-run enterprises over the last ten years, the nearest simple definition amongst various definitions of family-run business is as under
“A company in which one family owns most of the capital and has total control. The family members are also part of the management and make important decisions.” (Gallo and Veen, 1991)
One of the significant observations of us is the way business is being conducted in family-run businesses.We have observed that most businesses are run by working ‘IN the Business,’ wherein the owners spend much time carrying out operational responsibilities, rather than ‘ON the Business’ where the business owners confine to strategic responsibilities, while the employees carry out tactical and operational responsibilities.
To grow, family-run businesses must make a mindset shift and restructure their organization to a more performance-based structure and the right people management strategies.
Having explained the definition of family run business and the way the business is run, our question to you
Are you falling into the family-run business category, and are you ‘IN the Business’ or ‘ON the Business?
We will be happy to receive your comments and offer a FREE online HR diagnostic audit. You can write to us at pinnaclepeoplesolutions1@gmail.com