Related Matters Newsletter
John F. Baugh Center for Entrepreneurship
Institute for Family Business
For Nancy Upton, the key to success in wrestling with the issues that arise in a family business is simple: set up formal mechanisms to grapple with the issues, and get as much as possible written down.
Upton, Director of the John F. Baugh Center for Entrepreneurship and the Institute for Family Business, both at Baylor University, spoke to the Family Business Center May 12, under the elegant crystal chandeliers and stained glass windows of the Yankee Pedlar Opera House.
Families and businesses, she points out, often have conflicting sets of needs and values. Yet, in a family business, the two areas overlap. Formalizing the corporate culture reduces the tension inherent in that overlap. More…
Seven Habits of Highly Effective Companies
Attention to Sound Financial Practices -and to Sharholder Value – are what Separate the Best from the Rest
by François M. de Visscher
Why do some family firms thrive while others merely survive or even wither away and die? Many reasons, of course. However in my experience, successful family firms are distinguished by their attention to sound financial strategies and practices. To borrow a phrase there are seven financial habits in particular that separate the best from the rest.
1. Successful family firms establish effective financial and governance structures that separate family issues from business issues.
Family councils, family holding companies, shareholders’ assemblies where such forums exist, family members know there is a time and a place to discuss family matters related to the business. The board of directors can then focus on strategic issues and the pursuit of long-term shareholder value. Its time is no longer consumed by family issues (and sometimes quarrels) that should be resolved elsewhere. Likewise, when such structures are in place outside board members can be more easily selected on the basis of “functional fit” – that is, on experience and vision that complements that of the family board members, rather than on just a friendship or social obligation. Outside board members often add value because they come from backgrounds in public companies, where maximizing shareholder value is a primary mission. More…