Dissertation on "Disney Then and Now Management Practices in the Entertainment Industry"

Dissertation 8 pages (2181 words) Sources: 10

[EXCERPT] . . . .

Family Business

Starting and running a business can be both rewarding and stressful. It all starts with an idea. This idea grows and evolves and ideally gains the substance it needs to become a plan that will subsequently be implemented. Before a business plan is formalized and ready to be implemented, however, a number of decisions have to be made regarding location, identification, structure, purpose, goals, objectives, strategies, beneficiaries, finances, and resources (among others) to ensure the most effective preparation and management of any business (SBA, 2011).

Horan (2008) says, "Good ideas are a dime a dozen. The value is in implementation" (p. ix). He writes this as he introduces the work of Susan Urquhart-Brown (2008) titled The Accidental Entrepreneur. In this work, Urquhart-Brown (2008) focuses on the practical aspects of starting and managing a (successful) business as well as the interpersonal aspects of being in positions of leadership and power, particularly those aspects related to being an entrepreneur. There are many types of businesses, but they all start with an entrepreneurial spirit and require a substantial energy and commitment for ensuring the criteria for success of any business (Urquhart-Brown, 2008; Poza, 2010).

The entrepreneurial spirit has to do with the founding idea, and the energy available to make it actionable, of any new venture or enterprise no matter what kind of business it becomes (Sullivan & Sheffrin, 2003). The remaining sections of this essay are focused on the formation and ongoing operation of a family business and the criteria for making any family business successful. The author will first define the parameters and components of a family business. Next, the author will discuss the criteria for success in starting and managing a family business. Finally, the author will perform an evaluation of Karolyi's Camp, a premier training camp for gymnasts of all levels, 7 years and older (Karolyi, 2010).

Defining a family business

When defining a family business, it is about ownership, interest (in company well-being), and management, though, oftentimes family-member employees are present throughout the company and non-family members are also commonly present, and can be involved in management positions (Fishman, 2009; Hess, 2006; Poza, 2010; Aronoff, McClure, & Ward, 2011). A family business is one that is owned by one or more members of a family or members of multiple families (together) or one where one or more members of one or more families have a specific interest in the overall performance of a business (Fishman; Hess; Poza; Aronoff, McClure, & Ward). In simplest terms, however, a business qualifies as family-owned when it is primarily operated (controlled) by a person rather than an entity (i.e. state, corporation, trust, or mutual fund) (Chakrabarty, 2009).

According to Chakrabarty (2009), a business is family-owned if a person holds the majority of decision-making power in a company. According to Segall (2010), "family businesses comprise the backbone of American businesses, with an estimated 80% to 90% of all small businesses falling into that classification" (p.1). Further, Segall (2010) says, "many of them are highly successful" (p. 1).

Success

Family Business Success

It is difficult to create any specific objective criteria for success in a family business because every company is unique and varies in size. Success in one company may be entirely different from success in another company. Family businesses often start because a person or a family of people love each other and love the thought of operating a business and decide to do it together. After all, there is strength in numbers and families are connected in ways that others are not. However, the integration of family (dynamics), which can naturally oscillate between the best and worst of times, with the dynamics of operating a business, which also naturally oscillate in the same rewarding to stressful manner, is never something to take lightly (Fishman, 2009; Hess, 2006; Poza, 2010; Aronoff, McClure, & Ward, 2011).

In his work, Fishman (2009:ix-x) provides a list of 9 elements to ensure success in family businesses as follows:

1. Element 1 is about effectively and compellingly co-creating and sharing personal vision statements

2. Element 2 is about personnel practices dealing with the hiring and firing of family-member employees

3. Element 3 is about personnel practices dealing with compensating family-member employees

4. Element 4 is about making the right decisions in the selection of the family-member successor(s)

5. Element 5 is about utilizing best practices for grooming the selected family-member successor(s)

6. Element 6 is about creating (and sustaining) a culture within the family business that is perfectly aligned with the vision statement

7. Element 7 is about addressing the issues/challenges that arise (professionally and personally) when spouses are business partners

8. Element 8 is about implementing best practices for including and supporting non-family member employees within the family business

9. Element 9 is about designing procedures for the smooth transfer of ownership of the family business between family members

In these 9 elements, Fishman (2009) simplifies (into categories) a wide range of factors that contribute to the ultimate success of a family business. Though it is common for any family business to have its strengths and weaknesses, and generally all businesses are simply looking to create a compelling vision upon which they can built actionable objectives and achieve successful performance/results, all family businesses face unique challenges in the most standard of procedures and practices because of the uniqueness of family dynamics (Fishman, 2009; Hess, 2006; Poza, 2010; Aronoff, McClure, & Ward, 2011).

According to Poza (2010), the criteria for success are focused on the following aspects:

1. Building trust and commitment

2. Leadership, particularly in the realm of designing and implementing strategies for succession

3. Ensuring best possible management practices and corporate governance (including communication)

Two very important components to keep in mind that will establish a good foundation for success are as follows: establish unambiguous boundaries and clearly define roles for everyone and for every possible action and scenario (Fishman, 2009; Hess, 2006; Poza, 2010; Aronoff, McClure, & Ward, 2011). Families inherently struggle with boundaries and roles so it is especially important that these components are considered and taken care of in the design of a family business to ensure the potential for success.

In general, a marker for success in any business environment is a healthy and happy staff. When people feel cared for and feel substantially important to a whole, they perform better (generally). The same is true for both business and family. With family businesses, roles need to be clearly defined and boundaries need to be unambiguous. In other words, work time and family time need to exist separately as well as together depending on the appropriate response to the context. The goal is to keep business tensions out of the home environment and vice versa. This is really difficult for most people and takes considerable practice and commitment.

Another significant marker for success in any company is the quality of communication and transparency (Fishman, 2009; Hess, 2006; Poza, 2010; Aronoff, McClure, & Ward, 2011). It is even more important in family businesses because boundaries and roles can become so blurry. People can bring tensions from the family into work and tensions from work into family and the lines become very hard to discern causing significant problems. Experts encourage family businesses to let the existing relationships work for them (Fishman; Hess; Poza; Aronoff, McClure, & Ward). Success in business has so much to do with navigating the dynamics that exist between people, getting to know each other well and figuring out what combination of strengths and weaknesses most often leads to good performance, and with families this knowledge is already easily available so families should use that to their advantage for the purpose of generating the greatest potential for success. Ideally, families already want to spend time together and succeed together so the family business has such rewarding potential.

Joshi (2009) focuses on the important inclusion of women in family businesses and comments on the important components of corporate governance and corporate social responsibility (CSR). Joshi says, "women regularly are sounding boards for defining moral, ethical, and CSR boundaries, long before it was fashionable -- or regulated" (p.1). Joshi (2009) generates a profound argument for the need for increasing inclusion of women and the important factor of women in the success of family businesses unless business owners are ready to sell off their companies (Joshi).

In line with most expert opinions, corporate social responsibility is extremely important in the family businesses. It is much easier for large corporations that are impersonal to continue to thrive without ensuring the best CSR practices but with family businesses, everything is personal and interaction effects demand greater transparency in order to ensure success.

Experts say that nearly 1/3 of family businesses don't actually survive the transition between the first and second generation because "family businesses tend to act less like businesses and more like families," which they say leads to "poor decision-making, resistance to change and, ultimately, and inability to compete" (Crane, 2007,… READ MORE

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