Section 2 Chapter and Lecture Notes 11
Chapter 2 The Family Dynamics Challenge
Learning Objectives
1. To promote understanding of the absolute need for trust among family members in
the pursuit of win win approaches to succession and continuity.
2. To promote greater understanding of the complex family dynamics that influence
Chapter 2 Essence
The presence of the family is the essential difference between a family business and
other forms of enterprise, whether ownership shares are privately held or publicly traded
understanding or describing the business. Nevertheless, family members who do not
participate in the management of the business often have significant influence on the
deliberations, decisions, and long-term processes of the family-owned or family-
controlled corporation. And when their perspective and contributions are not considered,
not deemed legitimate, or underweighted, they may experience a sense of inequity. This
to understand the complex interaction between individual members of the family unit. In
the family systems literature, the family represents group-level phenomena, this being a
higher-order level than the individual. A higher-order system, from this perspective,
offers the opportunity of bringing about change at that system level and leveraging
changes at lower-level subsystems that is, change in the family, whether brought about
12 Section 2 Chapter and Lecture Notes
by therapeutic intervention or some other means, is more likely to bring about sustainable
change in the individual members of the family.
The family systems perspective argues that the same interdependence that accrues
The family systems perspective also argues compellingly for the tremendous
ily of origin. The premise is that we all carry much
baggage from our two or three preceding generations, and that patterns and processes set
in motion then still matter. Therefore, the analysis of earlier generations is essential to
understanding what ail
systems in summary states that:
1. A family is a system.
2. Family systems transfer rules, patterns, messages, or expectations about the behavior
of its members.
family histories represent a great study tool for family members in a family business. A
genogram, a cousin of the traditional family tree, informs us not just of family names,
relationships, ages, and lineal descendants, but it also captures critical events (e.g., a
divorce), the quality of relationships (highly conflictual or extremely close, for instance),
and important messages transmitted across generations (e.g., education and hard work
are both important . It can alert us to patterns of illness (e.g., heart attacks and
alcoholism) and to the role that a second marriage and the younger heirs could play in
estate and succession planning in the family.
On the text web site students in the process
of completing a genogram, an analysis of family messages, and a family history. Whether
the project is assigned in class or not, I encourage students to invest time and energy on a
Section 2 Chapter and Lecture Notes 13
Family unity is a strong predictor of the successful use of best managerial and family
practices by multigenerational family-controlled companies; the same practices that have
Discussion Questions
1. What is the importance of family emotional intelligence to a family in business?
The concept of emotional intelligence refers to the capacity for recognizing our own
feelings and those of others and the ability to manage our emotions and our
2. What does the family-business interaction factor claim to be the value that
families add to a family business?
Family unity and the family-business interaction factor, as measured in the Discovery
Action Research Study, were correlated with effective management practices,
including planning activity, performance feedback, succession planning disclosure,
advisory boards, and family meetings. These findings indicate that investing in the
via guidelines for employment of family members,
14 Section 2 Chapter and Lecture Notes
3. What benefits do family meetings bring to families in business?
Beating the odds of having to deal with the zero-sum dynamics in the family
environment discussed earlier in this chapter is perhaps the most compelling reason
for holding frequent family meetings and creating a family council. Family councils
are to shareholding families what boards are to family-controlled businesses. They
represent a reliable forum for the education of family members particularly those
not active in the management of the business about the state of the business, its
financial performance, its strategy, and the competitive dynamics it faces. Family
guide the desired relationship between the family and the business in the future.
Relevant Case Resources
The Binghams and the Louisville Courier-Journal Companies case highlights the
unique complexities that family members in business face and the dire consequences of
not finding a way to understand and resolve the problems that beset them. It is a great
case with which to tease out the lessons of how family dynamics influence the family