Family-Owned Business of Greenway Industries - Essay Example

Introduction: A family owned business is operated or managed by one or more family members. It is a complex system in which ownership and control liewith the family members. Family members will be involved in the business function and few of them will be the directors. Greenway Industries is formed by merger of two different family-owned businesses. Arthur Lim’s family and Bob Olive’s family joined together and formed Greenway Industries. Both families have equal number of shares in Greenway after the merger. Arthur Lim’s firm was specialized in software engineering whereas Bob Olive started as small engineering firm and later started manufacturing of computer accessories. Greenway Industries has employed members of both the families and began to grow and made huge profits. Later some issues took place in the firm due to existing reporting process. One of the female members (Kate) in the family believed that male dominated operation will reduce her privileges. The Greenway industry problem: The firm has 45 female employees, most of whom work in lower-level clerical positions or on the assembly line. Practically none are in middle or senior or professional positions. Donna’s board membership stands out as an isolated example of female authority. Kate is the daughter of Bob’s and Donna, married to Peter who is the chief finance officer. Kate is not a board member and works in the company’s accounts section on a casual basis when her work at home allows. Kate worked in a big law firm that had enlightened policies in relation to its female workers. She believes that a wholehearted approach to the preparation of the Agency report is called for and her values would make some kind of tokenistic report unacceptable. Kate has begun an informal campaign—mostly through some gentle pressure on her husband Peter and her mother—to have the firm take the reporting process seriously. Robert Lim sees Kate’s move as an attempt to find a spot on the board for her. Kate denies this but believes that her daughters have a genuine interest in joining the firm when they are older. This creates pressure for the board of directors from Donna because of Kate. Literature Review: A family owned business involves one or more family in ownership and control of the business. It is the oldest form of business organization. It is “A small or medium-sized business that is controlled and operated by members of a family. It may be organized as a sole proprietorship, partnership, corporation, or limited liability company.” (Business definition for: Family business. 2009). Family owned business ensures more commitment for keeping family name and more concern for employees as majority are from within the family. But family problems will affect the business very much. Sometimes lack of clear-cut polices for family members will affect the work flow. It also creates management challenges and other serious work-related issues. Family organization will not have clear succession planning. Many family organizations will not have a clear plan of handing over power to the next generation ultimately leading to conflicts and separation. Senior family members preserve the status quo and often creates problem in change and development. In the family owned business, the founder of the business will always look the ways for expansion and business development, but that same spirit will not be there in next generation and they spend their fathers’ money for mere enjoyment. The grand children of the founder of the business will be in bad financial situation due to their fathers’ lack of interest in business development and over-spending. This can be found in majority of the family business. Family Issues: Main issues of the family owned business are lack of written agreements, lack of succession planning and ignoring of responsibilities. Lack of formal structure and reporting process can create indiscipline and problems in the organization. A well designed agreement and policies stating their rights, duties, and obligation must be created for each family member who is involved in business in any form. A written agreement should also be made for making provisions in case disputes or issues. Provisions should include rules for managing, controlling, restrictions on transfer of shares, succession plans, dissolution of firm etc. Business organization formed by merger of business owned by two families will have the possibility of arising problems from each of the family. Poor management and leadership often contribute problems to the organization. In family business, conflicts will often arise in the business due to greed, rivalry, or due to personal concerns. Family business often includes a combination of family members such as husbands and wives, children, brothers, sisters and so on. They will also play different roles such as board member, senior manager, junior staffs, and shareholders and so on. There is chance of conflicts arising to acquire more power in the business. Communication between members in the official set up will also create some issues within the family. It is essential to make communication freely and open with the help of proper planning and with assistance of outsiders, if required. Greenway Industry has a problem that can happen in any type of family owned business. Many family organizations can have troubles in determining communication or reporting channels. Family members’ qualification and their desire to attain high post immediately in the family business will often create problems in the organization. Similar problems have arisen in Greenway Industry. Family business often faces pressure from relatives to accept their learned concept or acquired knowledge of family members against the interest of the majority. Strict policy in reporting system and proper management will help to avoid undue pressures from the relatives. Appropriate training, supervising, assigning roles to the right individual reduces the majority of the Greenway’s problems. In the family owned d business, it will be often difficult to punish, deploy or transfer employees. This kind of act will often reflect in family relation and can ultimately lead to more complicated problem in the business. In addition, pressure from the relatives who are not having the required skills may affect the functioning of the organization. Motivation activities and building team spirit will ensure more success to the firm. Role of Communication and reporting: Proper communication channel must be developed and business meeting must be conducted by including all family members. This is essential for making opinions and implementing the plans essential for the future. Proper communication provides a way for solving majority of conflicts. “The keys to growing a family business and maintaining healthy family relationships are trust, strong family values and open communications.” (Learn how to grow your family business and maintain healthy family relationships. 2009). Communication can be made on several issues such as rules in business, stock ownership, training and development programs, pay structure, performance appraisal and evaluation. Some of the important matters such as creating good image to the company, identifying new opportunities, identifying talents of family members are all important in success of business. Proper communication between the family members is essential to take advantage of opportunities. In addition, decision for providing financial support to the older non-working people in the family can also be made. Family meeting for official purposes will have several advantages such as minor members in the family will have better understanding of the business opportunities within the family and they will have desire to improve their skills and knowledge. Job rotation can be made in the possible ways and more opportunities must be given to the new generation. Business plans and technical know-how should be understood not only by the senior members of the family. It is essential to implement all skills and knowledge to the new generation for long term success of the business. The success of the business for the long term is not in the hands of the founder of business, but it actually depends on the founder’s children and grandchildren. So it is the duty of the founder to communicate properly and to make understand the importance of business improvement. That is, succession planning must be made in advance for making decisions regarding who will manage the business in the next generation. Succession planning can be done effectively by providing members with adequate training, proper selection, and by education. Family business which needs survive for more generation requires early planning and implementation of better business strategies. Business plan consists of long term and short term objectives. Effective communication is essential to make business strategies based on the objectives and the plans. This also helps in identifying the strength and weakness of the organization easily. Reporting strictly in the official way will often create problems in the family business. Strict adherence to the formal reporting procedure will only create problem to the family business. Combination of formal and informal communication can be adopted in such cases. Critical analysis and interpretations: Managing a family business is one of the challenges in the new era of doing a business. The report identifies the main forces and constraints that might affect the practice of dominating the female employees in the business. The forces and constraints are examined at the individual level, organizational level as well as the institutional level of business. The evolution of the problem may be largely determined by the interaction of the market imperative with their cultural traditions which might differentiate among the vision of both the families. Emotions value a lot in family business because the managerial employees are used to mobilize their emotional capacities on their job as these capabilities are sorted by the potential employers during the recruitment and selection process. Emotional involvement in conflicts within the members creating anxiety, tenseness, frustration and hostility enhances problems in the smooth functioning of the family business. Thus, emotion management will become a part and parcel of the cultural capital. As per the case study, Kate is the problem creator in the family business. Kate is not at all satisfied with the ongoing criteria of doing the business and she is not in a position to tolerate the present condition. So the family business of hers suggested to Peter and Ken to take up the various tasks to be implemented and to take care of her problems and to come up with a solution. Every business is structured formally but as far as family business is concerned it can be informal also. Well planned effective structures are all about sharing the load of the business. When the members of the family business know what their tasks are and how to get through them, then the business will be smoother and will be able to get on with the things favorably. So tasks of the business should be properly evaluated and formulated with regard to the employees’ performance, skills, and capabilities. For example, if an employee is being given a responsibility for an unwilling task and he complains, then the effective manager should be able to explain how to tackle the problem. He should have a clear record of the business and its agreements, what jobs are assigned to the various members for implementation. Some of the key responsibilities include managing the existing members’ relationship through regular and proper communication. Timely reports will help to meet the needs and expectations of the family business. Donna being the Board member is tempting other members to take care of her daughter’s problem and is exerting pressures on the board members which will affect the business. Now Kate’s daughters are minors and she is tempting the board to give a position for her daughters when they will be able to enter into the family business. This is the future process but she wants to get it now. After all, the decisions have to be taken by her daughters whether they are interested to engage in a family business. Every business has got its own strategies and adopt them effectively and efficiently in order to attain and achieve the ultimate objectives of the business. Kate had worked for a different firm and she was a full time worker of that firm and would have done and contributed her best to the firm and these would have helped her to come up with a good name and fame in that organization. Completely changing the present scenario will shatter the working environment of the family business. Slight changes are preferable. By looking with a strategic management perspective the organization has to contribute for improving the management practices and its performance to the family organization. An employee adopts different styles of behavior in different situations. The style and expectations of the business are determined by the history and tradition of the business as well as by the organizational goals and objectives that reflect the style and expectations of the present scenario of the family business. Changes in the situation also become new styles. In every deal of inter-personal relations between the members, a particular style is adopted. One of the most difficult changes to make is a complete change in the style of an employee and yet the business invests millions of dollars for training and development programs that concentrate on changing the style of its managers. Proper training and development programs should be formulated. It should be based on the needs and objectives and the employees must ensure that they arrange for requisite training methods with the expertise and competence needed to meet the objectives of the business. It helps in giving a practical boost to the overall sense of direction and satisfies the actual organizational and employee needs by designing the methodology to satisfy those needs. It helps in strengthening the organizational processes and enhancing productivity and effectiveness. Well-planned training sessions boost the morale of the employees. Employee performance may be assessed through performance appraisals, assessment and development programs through personal discussions. A separate analysis is necessary to identify the needs of the organization as well as the individuals. One of the main issue or the challenges for the family business is to retain and attract the professional managers. Some members have a tendency to form opinions about the employees without reading them properly. If the opinions are biased then they lead to perceptual distortion. Further, managers can be misled by the people who deliberately miss track the other employees. When such a possibility of perceptual distortion exists then the managers should be very careful in evaluating their perceptual judgments. Thus it may be useful for passing knowledge but its applications and usage to develop the skills and to engender behavioral changes may not be useful. Communication barriers are the key problem of the case. Every task should be properly communicated among the members of the business and should ensure a better understanding of the tasks which should be applied. Majority of the misunderstandings in the business will be overcome with proper communication process. It is considered that the processes like decision making and motivational activities which are related to inter-personal process, if not dealt properly, can contribute to the business problems. This shows that communication barriers are the vital problem and this becomes the root cause for all the major problems in the business. Some of the barriers in the communication system are lack of planning, unqualified assumptions, poor listening and premature evaluation, overload of information, distrust, threat and fear of independence. Hence communication plays an important role in the inter-personal process for the effectiveness of the employees as well as the organization. Conclusion: A well prompted case study report helps to demonstrate the complex or multi dimensional nature of the situation or a problem involving a number of factors or circumstances in a realistic way of a business. A proper reporting process enhances development of knowledge and skills to deal with a multitude of situations and helps the members to develop a wider outlook of the situations and issues that they are likely to face in the working situation of the business. The key tasks here is to create an environment which helps in developing a bond with the members by overseeing the group processes, receiving and giving feedback, monitoring the jobs and managing dissent. There is no need for the members to make concerted efforts to secure the recognitions and positions they deserve from their business. The importance lies in assisting the members in recalling the learning principles and consolidating it. Their lingering doubts should be cleared and they should be helped to manage a smooth re-entry into their respective family business. Bibliography Business definition for: Family business. 2009. BNET: The Go To Place for Management. http://dictionary.bnet.com/definition/family+business.html Learn how to grow your family business and maintain healthy family relationships. 2009. Family Relation Experts. http://www.family-business-experts.com/ Read More