Module Manual: Managing Family Business Academic Year: PGP 2012 2013

Module Name Sector Managing Family BusinessAll sectors

Job Profile Manager in any family owned business

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1. Introduction to the Module and Module Objective

Family controlled businesses, both private and publicly-traded, are characterized by unique challenges that threaten their continuity and distinct core competencies. The challenges are primarily the result of issues presented by the interaction of family, management and ownership particularly where the family wishes to perpetuate its influence and/or control from generation to generation. Family firms seem to be as agile in one generation as they are fragile across generations. While more than a third of the Fortune 500 firms are family-controlled, the vast majority of family-controlled companies are smaller and experience difficulties in moving from one person general management to an institutionalized competence that results in competitive fitness across generations. The course will explore and analyze family business continuity challenges and best management, family and governance practices for the effective leadership of family-owned businesses. Family businesses are unique in many ways. There is a strong interaction between the family system and the business systems, leading to some very interesting dynamics. The integration of the business aspect as well as the psychological aspect makes this course unique in having a better understanding of your role in the family business as either an employee or as a family business member. Over 80 percent of all businesses worldwide are family firmsfrom well-known companies like Reliance, LN Mittal Group, Microsoft, Toyota, IBM, S.C. Johnson, Kohler Company and Ford Motor Company to the corner pizza parlour and the local lawn-care business. Less than one-third of these businesses survive into the second generation. In addition to the generic business issues faced by all companies, family firms face unique challenges because of the interrelationships between family members, family owners, non-family owners, and family and non-family employees. This course will explore issues of culture, organizational structure, leadership, strategy, financial management, organizational behaviour and governance and their differences in family enterprises and investor-owned, public companies. On completion of the module, the students will be in a position to : 1. Understand basic challenges of the overall governance system of family businesses and identify critical issues affecting management style of family owned businesses and how to take care of the same in real life situation. 2. Evaluate the tools and techniques of strengthening and sustaining family owned enterprises by synchronizing the outfits and elements of family owned enterprises. 3. Understand the process of leading and driving family owned businesses towards leadership position and how to develop sustainable competitive advantage over long term.

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2. Introduction to the Tutors

2.1 Area Chair Name : Mr. Abhijit Mukhopadhyay Phone Number: 981810431 Email ID : abhijit.mukhopadhyay@iilm.edu
Cabin Location: 56 (2nd Floor, Gurgaon) Website URL: http://iilm.edu/faculty/profiles/Abhijit-Mukhopadhyay.html

2.2 Module Leader Name : Ms. Rakhi Singh Email ID : rakhi.singh@iilm.edu 2.3 Team Members Ms. Rakhi Singh (http://iilm.edu/faculty/profiles/Rakhi-Singh.html) Ms. Rachna Madan(http://iilm.edu/faculty/profiles/Rachna-Madan.html) Ms. Nidhi Piplani (http://iilm.edu/faculty/profiles/Nidhi-Piplani.html)

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3. Module Pre-Requisites
A general understanding of basic management practices (in the arena of manufacturing, sales & marketing, finance & accounting, organization behaviour, human resources, strategy, economics, information technology etc.) should enable the participants for better absorption of the ideas and concepts covered in this course.

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4. Module Overview

Session No. 1

Topic

The Family Business Family Dynamics: An Overview Parental Authority Rules of the Family Stages of Development What makes the family business unique How Family Business is different from other forms of Business Limitations Power center Conflict Management Working Style Engaging and Understanding the Business Family Family/Business Values and Culture The Family in Context The Consultation Process Sources And Uses Of Personal Power Within Family Business System Understanding The Perspectives and Interests Of Different Stakeholders Understanding The Perspectives and Interests Of Different Stakeholders Multidisciplinary Approaches Managing Change Family Communication and Conflict Management What is a Healthy Family? Communication and Change Models Conflict, Resistance and Resolution Managing Change Managing Conflict Governance of the Family Enterprise Vision Value & culture Management Style Family Constitution Integration

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Managing Professionals in Family Business The perspective of nonfamily managers. Motivating and retaining nonfamily managers. A nonfamily manager as a bridging president or CEO. Financial considerations, issues and delegation in family business. Building customer relationships. Managing the performance of relatives at work Achieving high performance for family employees The role of non-family managers and advisors in managing the performance of family employees How to compensate family employees fairly Dealing with family employees unsatisfactory performance Matching family employees with the right roles is key Challenging the norm of equality in families and family businesses Organization Structure& investment pattern in family business Different types of structures used in family business Capital investment pattern Shareholding pattern Transition in Family Business Different circumstances Different phases How to handle the situation Developing sustainable competitive advantage and developing a portfolio for long term sustenance The lifecycle of the firm, the family, and the need for parallel strategic planning. How to build up a customer-oriented company through strategic planning Portfolio to be suitable and appropriate Applying the concept of BCG Applying the concept of GE 9cell matrix

10

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11 & 12 13

Guest Lecture Leadership Skill Development for the Family Enterprise Need for leadership skill development How to go about the process Grooming a leader vs skill development of members Succession in Family Business and Leadership Imperative for the Family and Business Initiating the process Handing over the mantle The right time to pass the torch What kind of role the CEO can play as architect of governance and succession Process of transfer of power; the unique roles of the CEO Process of building a management team for long term continuity and sustenance Strategic Management of Family Business Using strategic planning to grow and develop the family business. How to create value with unique business models. Developing strategic intent for the family business Business Entrance for First time entrepreneurs Preparation of entrepreneurs including: Initiating the process Career Planning and Advancement Development; Mentoring; Training Planning for Legacy and Stewardship Great family and business leaders Identifying the different leadership roles in your family and business Does shared leadership make sense? Developing leaders in the family and in the business What do great family and business leaders really do When to seek non-family leadership What is the right leadership model for your family enterprise

14

15

16

17

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18

Mechanics for Sustaining Family Business Various tools and mechanics families can use to strengthen the family and the business. Family Governance Family Office Family Assembly Family Council Business Organization Employment in the Family Firm The Future of Family Business Change, adaptation, and Innovation for family business. Organization development approaches to change. The future: Can family business compete and thrive? Professional management in the entrepreneurial firm. Globalization and family businesses: The opportunities and threats of globalization for family businesses: facts and myths How family businesses are navigating todays competitive landscape Strategies for family firms to compete in a global economy How successful family businesses are responding to globalization Lessons from successful family companies those that have gone global and those that remained local How families that control global companies preserve their family values Presentation and Assessment Presentation and Assessment

19

20

21 22

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5. Module Readings 5.1 Main Texts Poza, Ernesto, J., Family Business, Thomson South Western, 2010 Edition

5.2 References Piramal Gita (1996) Business Maharajas Bharat-Ram Vinay (1999) From the Brink of Bankruptcy: The DCM Story (Penguin Viking) Das Gurucharan (1999) Family Business: A symposium on the role of the family in Indian Business October 1999. Piramal Gita (1999), A Crisis of Leadership, Family Business Symposium Ramachandran K (2006 & 2007), Case Studies on Family Business, Indian School of Business Dutt Sudipt(1999), Boys to Men, Family Business Symposium, pp 31 36. Bharat Ram Vinay(1999) The Colours of Decision Making, Family Business Symposium, Op. cit., pp 17 25. Business Gyan (2007), 50 Years of Indian Entrepreneurship, The Author, Bangalore, pp. 69 71. Business World (2007) Lessons from the Banyan Tree Beyond the Family Feud, The Author, Mumbai, 17 December, pp 28 32. Tripati Dwijendra (1999), Change and Continuity pp. 26 30 Effective Executive (2007) The ICFAI University Press, Hyderabad. ICFAI (2002), Indias Family Owned Businesses, Hyderabad. ICFAI (2007), Effective Executive, Vol. IX, No. 5. Jane Hilburt Davis, www.familybusinessconsulting.com

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 Miller Danny & Labreton Miller Isabel (2005), Managing for the Long Run Lesson in Competitive Advantage from Great Family Businesses, HBS Press, Boston. Ninan T N (1999), Chequered Past and Uncertain Future Family Business Symposium, pp. 50 56. Carlock, R.S., & Ward, J.L. (2001), Strategic Planning for the Family Business: Parallel Planning to Unify the Family and Business , Palgrave, New York. Gersick, K.E., Davis, J.A., McCollom-Hampton, M., &Lansberg, I. (1997), Generation to Generation: Life Cycles of the Family Business , Harvard Business Press, USA. Hoy, F. & Sharma, P. (2009). Entrepreneurial Family Firms. Pearson Prentice Hall. Miller, D. & Le-Breton Miller, I. (2005). Managing for the long run: Lessons in Competitive Advantage from Great Family Businesses. Harvard Business School Press. Ward, J.L. (1987), Keeping the Family Business Healthy: How to Plan for Continuing Growth, Profitability and Family Leadership , Jossey-Bass Publishers, San Francisco. 5.3 Journals Family Business Magazine 5.4 Websites www.familybusinessmagazine.com http://www.fambiz.com/ http://www.familybusinessmagazine.com/ http://www.myownbusiness.org/ www.family-business-experts.com

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6. Session Plan
6.1-Session 1 Title - The Family Business: What makes it Unique Students will get a brief over view of the course, method of its delivery, project, assessment, assignment, organization and conduct of classes. Managing student expectations &goals will also be discussed and clarified

Family Dynamics: An Overview Parental Authority and the Rules of the Family

Stages of Development a. Individual b. Family c. Basic three circle concept d. Life-Cycle of Family and Business How Family Business is different from other forms of Business

Limitations Power center Conflict Management Working Style

Learning Outcome To understand the relationship of Family History and Family patterns To understand the dynamics in ones Family and how it affects the self and other members Required Readings Family Business, Poza, Ernesto, J., Thomson South Western, 2010 Edition Chapter 1

6.2-Session 2 Title -Engaging and Understanding the Business Family Family/Business Values and Culture The Family in Context The Consultation Process Sources And Uses Of Personal Power Within Family Business System

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6.3-Session 3 Title -Understanding the Perspectives and Interests of Different Stakeholders Understanding The Perspectives and Interests Of Different Stakeholders Multidisciplinary Approaches Managing Change Learning Outcome(sessions 2 &3) Provides exposure on the intricate issues and finer aspects of family business management Appreciate the management style in family businesses and how to take the culture, values and ethics into consideration while managing a family owned enterprise Understand challenges of working in a family enterprise. Appreciate general expectations of successors. How to develop independence and interdependence system of working in a family business Required Readings Family Business, Poza, Ernesto, J., Thomson South Western, 2010 Edition Chapter 4, 9, 12

6.4-Session 4 Title -Family Communication and Conflict Management What is a Healthy Family? Decision making process Communication and behavioural traits Conflict, Resistance and Resolution Managing Change Managing Conflict

Learning Outcome Students will understand family communication, decision making process and other mechanisms that can keep the family enterprise aligned, promote effective decision making, and make conflict productive. Required Readings Family Business, Poza, Ernesto, J., Thomson South Western, 2010 Edition Page 13 of 28

Chapter 11 6.6-Session 5 Title -Governance of the Family Enterprise Vision Value & culture Management Style Family Constitution Integration Learning Outcome Through this session, students can understand basic elements of the overall governance system of family businesses. They will be in a position to identify responsibilities of effective owners and mechanisms for preparing family members to be effective owners. Role Play Through the process of an activity based role play students can appreciate the nittygritties of family business governance system Required Readings Family Business, Poza, Ernesto, J., Thomson South Western, 2010 Edition Chapter 4 & 10 Article on Values in family owned business, http://www.mb.com.ph/articles/219392/values-familyowned-business 6.6-Session 6 Title -Managing Professionals in Family Business The perspective of nonfamily managers. Motivating and retaining nonfamily managers. A nonfamily manager as a bridging president or CEO. Financial considerations, issues and delegation in family business. Building customer relationships.

Learning Outcome Through this session, students will be exposed to routes to professionalization of family owned enterprises, and the process of managing the same.

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Required Readings Family Business, Poza, Ernesto, J., Thomson South Western, 2010 Chapter 3,4,7& 12 6.7-Session 7 Title -Managing the performance of relatives at work Achieving high performance for family employees The role of non-family managers and advisors in managing the performance of family employees How to compensate family employees fairly Dealing with family employees unsatisfactory performance Matching family employees with the right roles is key Challenging the norm of equality in families and family businesses Edition

Learning Outcome Through this session, students will get to know the critical issues involved in managing performance of relatives at work and how to tackle those issues.

6.8-Session 8 Title -Organization Structure & investment pattern used in family business Different types of structures Capital investment pattern Shareholding pattern

Learning Outcome Through this session, students will be exposed to different types of organizational structures used in family business and the relevant shareholding patterns. Required Reading The Relationship between Family Orientation, Organisation Context, Organisation Structure and Firm Performance http://www.entrepreneurship-sme.eu/pdfez/N200406.pdf

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6.9-Session 9 Title -Transition in Family Business Different circumstances Different phases in life cycle How to handle the situation

Learning Outcome Through this session, students will be exposed to different types of circumstances in which family business faces a transition; and method & means of handling the same. Required Readings Family Business, Poza, Ernesto, J., Thomson South Western, 2010 Chapter 12 6.10-Session 10 Title -Developing sustainable competitive advantage and developing a portfolio for long term sustenance The lifecycle of the firm, the family, and the need for parallel strategic planning. How to build up a customer-oriented company through strategic planning Portfolio to be suitable and appropriate Applying the concept of BCG and Applying the concept of GE 9cell matrix Learning Outcome Through the session, Students can understand - How to develop and manage portfolio over the long term in order to grow the business
- How to use the portfolio and business models so as to develop sustainable competitive advantage

Edition

Required Readings Family Business, Poza, Ernesto, J., Thomson South Western, 2010 Edition Chapter 7 & 12 6.11-6.12 Session 11-12 Guest Lecture Page 16 of 28

6.13-Session 13 Title -Leadership Skill Development for the Family Enterprise Need for leadership skill development How to go about the process Grooming a leader vs skill development of members

Learning Outcome Through this session, Students can understand positive influencing approaches in family enterprise: the nature of power, politics, networking, and negotiation. Required Readings Family Business, Poza, Ernesto, J., Thomson South Western, 2010 Chapter 7, 8 & 11 6.14-Session 14 Title -Succession in Family Business and Leadership Imperative for the Family and Business Initiating the process Handing over the mantle The right time to pass the torch What kind of role the CEO can play as architect of governance and succession Process of transfer of power; the unique roles of the CEO Process of building a management team for long term continuity and sustenance Learning Outcome Students will understand succession in Asian Family Corporations or Planning for the Future. They will also get to know the way Business Families confront the transition phase of the business, road blocks in the process of succession planning. The students will also learn What kind of role the CEO can play as architect of governance and
succession,- Process of transfer of power; the unique roles of the CEO spouse.

Edition

Activity Exercise and discussion on what can be done now to prepare for succession and continuity in family business

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Required Readings Family Business, Poza, Ernesto, J., Thomson South Western, 2010 Chapter 5 & 6 6.15-Session 15 Title -Strategic Management of Family Business How Strategic planning can be used to grow and develop the family business. How to create value with unique business models. How to design strategic intent for family business Edition

Learning Outcome Through this session, Students can understand

- How Strategic planning can be used to grow and develop the family business - How to create value with unique business models. - The lifecycle of the firm, the family, and the need for strategic planning. - How to build up a customer-oriented company through strategic planning

Required Readings Family Business, Poza, Ernesto, J., Thomson South Western, 2010 Chapter 6 6.16-Session 16 Title -Business Entrance for First time entrepreneurs Preparation of entrepreneurs including: Initiating the process Career Planning and Advancement Development; Mentoring; Training Planning for Legacy and Stewardship Learning Outcome Through this session, Students can understand - How a member is inducted, groomed and developed for leadership position - Rewards and challenges for latter-generation family members. - Ingredients for responsible leadership; Family relations. Edition

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Required Readings Family Business, Poza, Ernesto, J., Thomson South Western, 2010, Chapters 5, 6

6.17 -Session 17 Title -Great family and business leaders Identifying the different leadership roles in your family and business Does shared leadership make sense? Developing leaders in the family and in the business What do great family and business leaders really do When to seek non-family leadership What is the right leadership model for your family enterprise

Activity Students will be asked in advance to search on internet about great family and business leaders and the same will be discussed in the class. 6.18-Session 18 Title -Mechanics for Sustaining Family Business Various tools and mechanics families can use to strengthen the family and the business Family Governance Family Office Family Assembly Family Council Business Organization Employment in the Family Firm Learning Outcome Through this session, students will be exposed to the tools and techniques of strengthening and sustaining family owned enterprises by synchronizing the outfits and elements of family owned enterprises Required Readings Family Business, Poza, Ernesto, J., Thomson South Western, 2010, Poza, Chapters 10 and 11

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6.19-Session 19 Title -The Future of Family Business

Change, adaptation, and Innovation for family business. Organization development approaches to change. The future: Can family business compete and thrive?

Professional management in the entrepreneurial firm.

Learning Outcome Through this session, students can understand the process of leading and driving family owned enterprises towards leadership position and how to develop sustainable competitive advantage over long term. Required Readings Family Business, Poza, Ernesto, J., Thomson South Western, 2010 Chapter 7 & 12 6.20-Session 20 Title -Globalization and family businesses: The opportunities and threats of globalization for family businesses: facts and myths How family businesses are navigating todays competitive landscape Strategies for family firms to compete in a global economy How successful family businesses are responding to globalization Lessons from successful family companies those that have gone global and those that remained local How families that control global companies preserve their family values Learning Outcome Through this session, students can understand the process of rapid globalization and its impact on the family business; how to compete in the changing market environment Activity: Students will be told in advance to read and open discussion will take place in the class 6.21-Session 21 Edition

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Presentation and Assessment 6.22-Session 22 Presentation and Assessment

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7.0 ASSESSMENT PLAN

Assessment Method 1 2 3 Project Report Presentation Viva

Weightage 40% 30% 30%

7.1 Project and Presentation Your major course project is to develop is a written feasibility plan. It is called a feasibility plan because it is estimated or a proposed plan. Once you prepare the plan, you will analyze the same to determine whether the plan is feasible. When you decide that the plan is feasible, it will likely need further development. Your plan should be based upon relevant course content. The content of feasibility plans may not be as important as the process used in creating the plans. The goal in the process should be creating openness and inclusion among family members that will produce collective trust. You will also give a presentation outlining your feasibility plan. At the conclusion of your presentation, you will provide your assessment of whether the plan is feasible and, if it is feasible, the steps you must take to fully develop and implement the plan. You may choose one of the following feasibility plans for your written course project and presentation. Career development Succession Family business continuity Ownership/governance Business strategy

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New business

Career Development Plan One purpose of this plan is to explore the possibility of joining the family business and developing a career within the business. Issues addressed in the paper should include your history in the business; your characteristics, talents, and strengths; feedback and assessments from others; your personal assessment of strengths, weaknesses, and possibilities; mentors inside and outside the business; your career and personal development plan; and other content that you think would be relevant to developing this plan. Succession Plan This purpose of this project is to work with relevant family and business members to develop a tentative plan for succeeding the CEO in the family business. You should obtain the input of family members, mentors, and key managers in developing the plan. The plan should include a frank assessment of your strengths and weaknesses; a career development path that includes positions that you will hold in the business; additional experiences and education you will obtain; positions within the family councils that you will hold; skills and characteristics you will develop, and the means you will use to measure achievement; a description of the role of family members, mentors, and key managers in your development; a proposal for the eventual transfer of power; the changing role of senior family managers over the course of the succession; and other information that you deem important to the succession plan. Family Business Continuity The purpose of this plan is to begin the process of developing continuity in your family business. Business continuity includes parallel planning processes in the family and in the business. The outcome of a successful continuity planning would be a document similar to the one that appears in Appendix - E in Carlock and Ward. However, the purpose of this paper is exploring with your family the feasibility of developing a continuity plan. You should discuss with family members how you would go about developing such a plan with other Page 23 of 28

family members. You could begin to gather information that could become a part of a family vision, statement of family commitment, business values, family values, governance structure, board of directors, family council, family mission, etc. Family Business Ownership/Governance Plan This plan is designed to determine the feasibility of maintaining ownership of the family business. Your analysis should determine whether commitment to the family business exists or can be developed. Your plan should also discuss development that must occur to enable family members to be effective owners and stewards, the ownership structure, nature of family and business governance related to ownership, and other issues that your family views as being important to ownership. Business Strategy Plan This plan is an initial effort in developing or updating a strategy for your family business. A thorough analysis of business strategy will require considerable input and analysis. further discussion among managers about the direction of the business going forward. New Business Plan The purpose of this plan is to develop a feasibility plan for a new venture for your family business. If you choose this option, you must obtain a guideline for developing a feasibility plan and a sample feasibility plan report from your instructor and work with your family in developing the feasibility plan. Your report should summarize the information you have gathered, your assessment of the opportunity, your assessment of the strengths and weaknesses of the feasibility of the plan, and your decision of whether you should pursue the plan. Paper Guidelines The paper written for the project should be of 3000-4000 words and double-spaced. The analysis should be thorough and objective. The paper could provide the foundation for

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Project Presentation The presentation of the major project should be 10 minutes. The presentation should be of high professional quality and will be evaluated based on 1) effective delivery (eye contact, movement, gestures, expressiveness, etc.); 2) professional visuals; 3) organization of the presentation including opening, organization of main points, and conclusion; 4) adequate support for main points, and 5) logical analyses. Your delivery should be extemporaneous; you should not read your paper, but speak from notes. Your presentation should follow this format. Opening 1. Start with something designed to gain our attention. You could provide a quotation from the course, the interview, or another source; a cartoon or humorous statement; a rhetorical question, etc. 2. State your purpose. What do you want us to gain from your presentation? 3. Establish your credibility. Provide a summary of your sources including readings, any background that you have in family business, and other sources from the course (or elsewhere) that you will use in your presentation. 4. Provide a preview of your presentation. Use numbers and labels to indicate the themes/issues that you will cover in your presentation. Body For each theme/issue/point you discuss, 1. Provide the number and label for the theme/issue/point. 2. Define what you mean by the theme/issue/point 3. Provide support material which could include stories, examples, illustrations, quotations from interviews (could be on the PowerPoint slides), or supporting evidence that relates to the theme/issue/point. 4. Using concepts or readings from the course, discuss the theme/issue/point. When you refer to course content, refer to the source (author) of the content. If nothing in the course addressed the theme/issue/point, note that it was not covered in the course.

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Conclusion 1. Summarize your purpose (what you wanted us to gain from the presentation), the themes/issues/points that you covered in your presentation, and what you want us to remember. 2. Provide a concluding statement designed to bring closure to your presentation. Following your presentation, the class will have the opportunity to ask questions or make comments. In answering questions, your goal should be to clarify or reinforce points made during your presentation. Presentation will be followed by individual viva.

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Assessment Map
This table shows main assessment methods which are used across module and its stages: Methods of Assessment Module A1 A2 A3 A4 A5

MFB Notes:

A1: Individual test/ Assignment A3: Open Book Examination A5: Group Presentation

A2: Group Assignment/ Project A4: Close Book Examination

Teaching Map
This table shows main delivery methods which are used across module and its stages: Methods of Delivery Module T1 T2 T3 T4 T5 T6

MFB

Notes: T1: Lectures T3: Live Projects & Presentations T5: Guest Lectures/ Industrial Visits T2: Seminar/ Tutorials T4: Case Discussion T6: Lab Session

Curriculum Map

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This table shows the main learning outcomes which are developed and/or assessed in this module: Methods of Delivery Module L1 L2 L3 L4 L5 L6 L7 L8 L9

MFB

Notes: L1: An understanding of organizations, their external context and their management. L2: An awareness of current issues in business & management which is informed by research & practice in the field. L3: An understanding of appropriate techniques sufficient to allow investigation into relevant business & management issues. L4: The ability to acquire & analyze data and information. L5: The ability to apply relevant knowledge to practical situation. L6: The ability to work & lead effectively in a team based environment. L7: An improvement in both oral & written communication skills. L8: Be cognizant of the impact of their individual & corporate actions on society and recognize ethical business practices. L9: Be sensitive to the social economic and environmental responsibilities of business

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