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Family Business: 4 Components of Family Capital

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DOCUMENT DESCRIPTION
Family Capital is a true differentiator between family-owned businesses and companies with a fragmented shareholder base. Family Capital expresses itself as the organization's culture, ethos, and network. While hard measures liking it to performance are elusive, Family capital clearly conveys powerful advantages.

A global Organizational Health Index database indicates that family-owned businesses enjoy a significant advantage in providing career opportunities to employees. This is a gap that grows even wider among Family Businesses in the top quartile of healthy companies. However, even the benefits of a positive family-oriented network can go awry in the mix of personal and professional tensions that may affect Family Businesses.

This framework discusses the 4 core components of Family Capital. While it is the 4 factors that a family organization has by virtue of its ownership, it is also the 4 factors that builds the family organization's Competitive Advantage.

1. Tribe
2. Family Identity
3. Trust
4. Stewardship

Family Capital is the strongest intangible asset of Family Businesses. Having a good understanding of the 4 components of Family Capital allows Family Businesses build a strong Corporate Culture.

Publicado en: Empresariales
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Family Business: 4 Components of Family Capital

  1. 1. This is an exclusive document to the FlevyPro community - http://flevy.com/pro Framework Primer Family Business: 4 Components of Family Capital Presentation created by Tribe Family Identity Stewardship Trust
  2. 2. 2This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Contents Overview Family Capital Components of Family Capital Templates The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/family-business-4-components-of-family-capital-3763
  3. 3. 3This document is an exclusive document available to FlevyPro members - http://flevy.com/pro The 4 components of Family Capital is what drives Family Businesses to survive to their 3rd generation Presentation Overview Having a strong culture is an inimitable, Competitive Advantage of any organization. Family Capital is a true differentiator between family-owned businesses and companies with a fragmented shareholder base. Family Capital expresses itself as the organization’s culture, ethos, and network. While hard measures liking it to performance are elusive, Family capital clearly conveys powerful advantages. McKinsey Organizational Health Index database indicates that family-owned businesses enjoy a significant advantage in providing career opportunities to employees. This is a gap that grows even wider among Family Businesses in the top quartile of healthy companies. However, even the benefits of a positive family-oriented network can go awry in the mix of personal and professional tensions that may affect Family Businesses. This framework discusses the 4 core components of Family Capital. While it is the 4 factors that a family organization has by virtue of its ownership, it is also the 4 factors that builds the family organization’s Competitive Advantage. Family Capital is the strongest intangible asset of Family Businesses. Having a good understanding of the 4 components of Family Capital allows Family Businesses build a strong Corporate Culture. 1 Tribe 3 Trust 2 Family Identity 4 Stewardship The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/family-business-4-components-of-family-capital-3763
  4. 4. 4This document is an exclusive document available to FlevyPro members - http://flevy.com/pro A Family Business is an engine for Change and Innovation, requiring a longer horizon of execution A Family Business is a classic example of “patient capital” and an invaluable counterbalance to the short-termism of many non-Family Businesses. Family Business – How They Differ Family Businesses are unshackled from the quarter-to-quarter pressures of non-family firms. Family firms can invest for the long term. They allow good ideas the time needed to prove themselves. Stronger cultures and values Measure success differently – more than just profit and growth Decision making is faster/more streamlined More entrepreneurial Take a longer term approach to decision making Need to work harder to recruit/retain top talent Take more risks Find it harder to access capital 32% 40% 48% 55% 61% 71% 72% 74%74% 72% 71% 61% 55% 48% 40% 32% Source: The Missing Middle, PwC, 2016 The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/family-business-4-components-of-family-capital-3763
  5. 5. 5This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Contents Overview Family Capital Components of Family Capital Templates The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/family-business-4-components-of-family-capital-3763
  6. 6. 6This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Family Capital is a bundle of unique resources Family Capital – 4 Components of Family Capital The 4 Distinct Components are the 4 factors that a family organization has by virtue of its ownership. Family Capital differentiates family-owned businesses from companies with fragmented shareholder base. It is the organization’s culture, ethos, and network. It conveys powerful advantages. It conveys a sense of belonging, loyalty, and commitment to the development of employees. It fuels a social conscience that extends to philanthropic engagements and fuels a virtuous cycle of Family Capital. The McKinsey’s Family Business Practice research unpacked 4 distinct components of Family Capital. Tribe Family Identity Steward- ship Trust The sense of connectedness, shared culture, and support in the social fabric of a Family Business The degree to which members of families that own businesses identify with them can vary widely The degree of owner’s reliability The strength of family values Source: Fine-tuning Family Business for a New Era, McKinsey, 2016 The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/family-business-4-components-of-family-capital-3763
  7. 7. 7This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Family Capital creates a Competitive Advantage for family firms Family Capital – Competitive Advantage of the 4 Components Family Capital is the strongest tangible asset of Family Business. The 4 Components of Family Capital have its advantages and disadvantages. Taking a good view of both sides allow Family Businesses to maximize its Competitive Advantage. Source: Fine-tuning Family Business for a New Era, McKinsey, 2016 PROS CONSVS Tribe1 Closeness to family Togetherness in organization Less diversity in the organization Culture of “fit in or fly off” Difficult performance management Family Identity 2 Identification with Family Business Family-ownership image Family atmosphere Introversion Lack of innovation and knowledge- sharing culture Trust3 High trust in family Open environments Blind trust Complacency Stewardship4 Solid family values Business’s interest come first Long-term view Authoritative leadership Excessive attachment The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/family-business-4-components-of-family-capital-3763
  8. 8. 8This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Contents Overview Family Capital Components of Family Capital Templates The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/family-business-4-components-of-family-capital-3763
  9. 9. 9This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Tribe is the sense of connectedness, shared culture, and support in the social fabric of a Family Business Tribe – Overview Treating staff as extended family is a core company and family value. PROS Closeness to family Togetherness in organizations CONS Less diversity in the organization Culture of “fit in or fly off” Difficult Performance Management COMPONENT Tribe DESCRIPTION It is expressed through a sense of closeness that nonfamily employees feel toward the owners. It goes beyond the immediate clan or owning family. RESEARCH FINDINGS A degree of togetherness in the organization exists. Owning family would help employees in a personal crisis. The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/family-business-4-components-of-family-capital-3763
  10. 10. 10This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Family identity is the degree to which members of families that own businesses identify with them can vary widely Family Identity – Overview The family identity is an expression of the family’s image and brand. COMPONENT Family Identity DESCRIPTION It extends to how consciously families decide to express their image through the company brand and how much a sense of family promotes the family’s legacy and visibility in the market. RESEARCH FINDINGS Family values are incorporated into the business brands of their families. A sense of family atmosphere upholds the owner’s visibility and legacy. Family identity is felt at all levels of the organization. PROS Identification with Family Business Family-ownership image Family atmosphere CONS Introversion Lack of innovation and knowledge-sharing culture The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/family-business-4-components-of-family-capital-3763
  11. 11. 11This document is an exclusive document available to FlevyPro members - http://flevy.com/pro The Family Capital’s trust element refers to the owners’ reliability Trust – Overview Family foundation can be used to build trust in places where the business operates. COMPONENT Trust DESCRIPTION It is the degree of trust the organization’s members have in the ability of family leaders to improve the company’s performance. It is the ability of family leaders to keep their promises to stakeholders and do what they say they will do generally. RESEARCH FINDINGS High level of trust in family leaders exists. Extends to broader communities where Family Business operation is located. PROS High trust in family Open environments CONS Blind trust Complacency The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/family-business-4-components-of-family-capital-3763
  12. 12. 12This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Stewardship denotes the strength of family values Stewardship – Overview The vision of the founder is the unique source of values for Family Businesses. COMPONENT Stewardship DESCRIPTION It is the idea that family leaders put the organization’s interests above their own. The degree to which family leaders take a long-term perspective. RESEARCH FINDINGS Family leaders serve as good stewards. Family Businesses scored higher for shared vision and meaningful values. Long-term perspective, honor, doing the right thing, fairness, and authenticity are values inherent in Family Businesses PROS Solid family values Business’s interests come first Long-term view CONS Authoritative leadership Excessive attachment The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/family-business-4-components-of-family-capital-3763
  13. 13. 13This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Contents Overview Family Capital Components of Family Capital Templates The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/family-business-4-components-of-family-capital-3763
  14. 14. 14This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Insert headline 4 Components of Family Capital – TEMPLATE Insert bumper. Tribe Family Identity Stewardship Trust Source: Fine-tuning Family Business for a New Era, McKinsey, 2016 • Insert filler text, filler text, filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text, filler text, filler text. The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/family-business-4-components-of-family-capital-3763
  15. 15. 15This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Insert headline 4 Components of Family Capital – TEMPLATE ALTERNATE Insert bumper. Tribe Family Identity Trust Stewardship The sense of connectedness, shared culture, and support in the social fabric of a Family Business The degree to which members of families that own businesses identify with them can vary widely The degree of owner’s reliability The strength of family values 1 2 3 4 Source: Fine-tuning Family Business for a New Era, McKinsey, 2016 The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/family-business-4-components-of-family-capital-3763
  16. 16. 16This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Insert headline 4 Components of Family Capital – TEMPLATE ALTERNATE Insert bumper. Tribe Family Identity Trust Stewardship The sense of connectedness, shared culture, and support in the social fabric of a Family Business The degree to which members of families that own businesses identify with them can vary widely The degree of owner’s reliability The strength of family values 1 2 3 4 Source: Fine-tuning Family Business for a New Era, McKinsey, 2016 • Insert filler text, filler text, filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text, filler text. The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/family-business-4-components-of-family-capital-3763
  17. 17. 17This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Download 100s of similar frameworks from the FlevyPro Library: https://flevy.com/pro/library/frameworks The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/family-business-4-components-of-family-capital-3763
  18. 18. 18This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Need more frameworks? Download our Complete Business Frameworks Reference Guide, a 350+ slide compilation of 50+ frameworks, on Flevy The Complete Business Frameworks Reference Guide is a best selling document on Flevy. It is 350+ slides--covering 50+ common management consulting frameworks and methodologies. A summary is provided for each business framework. The frameworks in this deck span across Corporate Strategy, Sales, Marketing, Operations, Organization, Change Management, and Finance. This reference guide is great for those who need a refresher on common frameworks, as well as be introduced and learn new useful frameworks. You can find this document here: http://flevy.com/browse/business-document/complete- consulting-frameworks-toolkit-644 The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/family-business-4-components-of-family-capital-3763
  19. 19. 19This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Flevy (www.flevy.com) is the marketplace for premium documents. These documents can range from Business Frameworks to Financial Models to PowerPoint Templates. Flevy was founded under the principle that companies waste a lot of time and money recreating the same foundational business documents. Our vision is for Flevy to become a comprehensive knowledge base of business documents. All organizations, from startups to large enterprises, can use Flevy— whether it's to jumpstart projects, to find reference or comparison materials, or just to learn. Contact Us Please contact us with any questions you may have about our company. • General Inquiries support@flevy.com • Media/PR press@flevy.com • Billing billing@flevy.com The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/family-business-4-components-of-family-capital-3763
  20. 20. 1 Flevy (www.flevy.com) is the marketplace for premium documents. These documents can range from Business Frameworks to Financial Models to PowerPoint Templates. Flevy was founded under the principle that companies waste a lot of time and money recreating the same foundational business documents. Our vision is for Flevy to become a comprehensive knowledge base of business documents. All organizations, from startups to large enterprises, can use Flevy— whether it's to jumpstart projects, to find reference or comparison materials, or just to learn. Contact Us Please contact us with any questions you may have about our company. • General Inquiries support@flevy.com • Media/PR press@flevy.com • Billing billing@flevy.com

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