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CHAPTER 17 Organizational Behavior in the Family Business
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he opening case highlights one of the Arab world’s most prominent family businesses. It shows the concerns that the father—owner, founder, CEO, chairman, entrepreneur—usually has regarding the continuity of the business. The succession plan is something not often addressed in the Arab culture, although it is a major source of conflict for following generations. Khalaf Al Habtoor knew that he could only overcome any difficulties by setting clear lines of communication and structure that would facilitate the continuity process. These details will be discussed throughout this chapter, where we will consider other profiles of prominent family businesses in the Arab world. In addition, the characteristics of the family business and the secrets of their success will be discussed. Before we continue, take the self-assessment exercise below to see if you are experiencing work/family conflict.
Am i experiencing work/family conflict? In the Self-Assessment Library (available online), take assessment III.B.3 (Am I Experiencing Work /Family Conflict?) and answer the following questions: 1. How did you score? Are you surprised by your score? 2. Do you think the types of conflict you face might change throughout your career? Why/why not? 3. How do you think you could manage/reduce your work/family conflicts?
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What Is a Family Business? Family-owned businesses are an essential and distinct type of organization in the world economy. Many people think of the family business as that small, informal business run by members of a family. However, this impression is wrong— most of the world’s largest organizations started as family businesses and many now only have a few family members in senior positions. A few of the well-established examples include Ford Motors, Motorola, Marriott, Levi Strauss, L’Oreal, BMW, LG, Peugeot, Benetton, Fiat, and Gucci. The family business is crucial to the economic wellbeing of the world, and is considered to be the engine for economic development.1 The family business is a complex dual system that is made up of the family and the business. Family businesses provide the only location where family issues and business issues overlap. Family members are part of a task system as well as the family system. This is where the danger lies: it is inevitable that conflict will arise since each of the systems has its own rules, roles, and requirements. For instance, the family can have emotional bonds since it stresses relationships and rewards loyalty. Entry into a family business is by birth, membership is perman ent, and there are certain responsibilities and expectations. On the other hand, the non-family business system may be governed by contract. Entry is dependent on experience, expertise, and potential. Membership is contingent on perform ance, which, in turn, is rewarded in material terms. Figure 17-1 shows the system of a family business. The numbers determine the dynamics of a family business by identifying five significant roles of family members as defined by family legacy advisors. Person one is a member of all three subsystems, and is often the founder or current leader of the business.
Define a family business and its three stages.
Family business A complex dual system that is made up of the family and the business.
Non-family business A business system that is usually governed by contract.
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