FAMILY DYNAMICS / GOVERNANCE
This article is the third one in the” 20-Year Look Back” series by Tom Garrity, founder and managing partner of Compass Point Consulting, as he shares insights and reflections on two decades of supporting family business owners. Catch up on posts one and two if you missed them.
For decades, the widely accepted Venn diagram depicting the Family Business model had just two parts: one circle representing business and another representing family with an overlap in the middle. However, this model did not accurately account for the multiple interests present in a family-owned business. Something was missing.
In 1978 the 2-circle illustration of family business evolved when Harvard business professor Renato Tagiuri and then-graduate student John Davis added a third circle – Ownership – to better account for the distinct groups that existed in a family business.
With the addition of Ownership, the 3-circle model more accurately captured the seven facets of ownership:
Sound complicated? Well, it can be. Not only from a management perspective but from a family dynamic as well. The ownership realm is where a lack of understanding and/or proper management can allow tensions to build that weaken family bonds.
There are a few things to consider when assessing the groups within your organization:
After 20 years of working with family businesses, I have discovered an absolute truth about ownership that many family owners are missing. Ownership is both physical and emotional.
Physical ownership equates to shares of the business, something to be bought or sold. That’s the definition of ownership that most people think of. What people overlook is the emotional aspect of ownership. The personal accountability that each group in the 3-circle model has in understanding their role in the business. Owners model the organizational health of the business. If there is confusion, back-biting, politics, etc., look no further than the ownership group.
Only when this understanding and active accountability around Ownership exists can the family and business thrive harmoniously.
BLOG | LEADERSHIP
When I first started Compass Point 20 years ago, leadership was an ancillary topic. My work focused on the systems, financials, hiring the right people, and being a confidant to the owner. At the time I didn’t see it as leadership coaching, but rather as building a relationship with a client who trusted me enough to let me see the inner workings of their mind and business. I helped the person as I helped the business. Times – and leadership – have changed.Read More
BLOG | OWNER FINANCIAL GAP
Family business owners are passionate about what they do. They’re working to carry on a business that family built – by their parents, grandparents, sometimes even great-grandparents and beyond. These owners are so busy providing for their employees, communities, and the next generation that they often ignore their own financial future. Boiling it down to its true essence, business is a means to building wealth. And what are we supposed to do with that wealth?Read More
BLOG | LEADERSHIP
Product. Team. Customers. Processes. Sales. Revenue. Profit. Cash. These are the elements to any good, viable business. But a family business needs more than just those elements to build a sustainable family business. With many dynamics at play, the business owner needs to understand which "hat" to wear, when to wear it, and when to switch. Do you know how to manage it all?Read More
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