Families are complex, emotional systems, so what may seem like straightforward business decisions are deeply affected by the history of the family relationships. That is why taking decisions in a family business can be such a slow and complicated process.
There are various reasons as why decisions are never taken or hugely delayed in family businesses.
- The first one is when family business owners have a difference in vision or objectives, either for the business or themselves individually.
- The second reason as to why decisions are never taken in family business revolves around unresolved family tensions that spill onto the family business itself.
- The third reason is what is called “Artificial Harmony” which can be due to the fact that family business owners prefer to avoid conflict and hence decide to not voice their opposition to the vision of the business or the general direction of the business.
- The fourth reason is the opposite of the third reason. Some family businesses have too much of a casual approach, leading to family business owners and leaders feeling comfortable arguing or saying things they would never say to a person who was not related to them.
Many family businesses find it very difficult to take timely decisions as they lack the basic forum where family business leaders can meet, discuss things and ultimately decide. So to effectively work as a family team, it is important that family business leaders hold business meetings .Most family business leaders underestimate the importance of regular family business meetings. Such business meetings provides a vehicle for making important family business decisions.
The culture and the situation of a particular family business has a big impact on type of decision-making process adopted. Thus, the decision making process is based on many factors, including values, the personalities of the leaders and the generations in power. Typically, a first-generation family business tends to make decisions much differently than a 2nd or 3rd generation family business, where it is likely that ownership is spread more broadly among people who didn’t grow up together in the same household. Below is an overview of the different decision making processes that are typically used in family businesses.
- Autocratic Decision Making: Autocratic decision making by one person, such as the father, is the fastest and easiest way to make decisions. However, lack of ownership of the decision by the parties involved is a major disadvantage. People tend to support and feel ownership of decisions they have had a voice in making
- Democratic Decision Making: “Let’s take a vote,” is the hallmark of the democratic approach to decision making. The majority wins and the minority loses.
- Consensus decision making: Consensus building relies on the belief that opponents will gravitate to your solution when they are provided with the right information
- Collaborative Decision Making: Collaboration is a process. With collaboration all parties join together to constructively explore their differences in search of solutions that go beyond their separate visions.
Family business need to keep improving their decision-making over time. In the present business environment where heightened turbulence is the order of the day, family businesses that keep postponing decisions are likely to find it very difficult to survive.
(All factual and statistical information presented in this blog has been obtained from an extract of a blog from silvanbusinessinsights.com ) Follow us on our Facebook page and Family Business Office website at www.familybusiness.org.mt
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