Juggling the expectations of business, family and shareholders
Freedom has its price. In former times families had „clear“ ideas of family affiliations, forms of marriage and regulations of corporate succession but today the shareholder family is free to form their individual “family network”. It is not sufficient to hope that the family will get along just like that. If the family business wants to survive for several generations, it is necessary to create a canon for orientation and action within the family. Therefore, the first task of a shareholder family is to define a precise family strategy.
The future strategy for wealth management and the enterprise has mainly been completed and settled in a kind of indirect “family strategy”. But this is only a collection of existing values and implicit expectations. As entrepreneurial families do not really think about this loose set of informal values and expectations in a profound way, it cannot be passed on or made available to the next shareholder generation. Only when these guidelines find their way into a family constitution (charter, code, statute) and are fixed in written form, the shareholder family creates a kind of morally binding set of rules that records the “family will” for its members.
Response to core questions on corporate survival:
- How to regulate the commitment of family members in the business?
- How to organise the transfer, sale and purchase of shares?
- How to regulate the dividend payout ratio and the asset management?
- How to organise the way we treat each other, how to organise our public visibility?
- How to support the solidarity among the family / how to deal with conflicts?
Establish a competence for (self-) management of the family regarding corporate questions:
- To what extent am I willing to „subordinate“ my behaviour to the set of family rules (e.g. a family constitution)?
- How to deal with members who break the rules (family compliance)?
The Witten Model for Family Strategy:
The Witten process-oriented model for the development of family strategies is a framework for the orientation of shareholder families. The aim is to develop a management system that helps shareholder families to avoid internal conflicts or rather to solve them in an efficient way. This sort of family management supports the family on the one hand to stay capable of acting and to discuss crucial topics with each other, and on the other hand to create a joint commitment and a joint comprehension of corporate values. Furthermore, a family management helps to implement structures that react on imbalances within the family.
A detailed explanation of the Witten Model for Family Strategy with its 12 phases is available here in the corresponding article from the magazine “Private Wealth” (German only).
- Contact: Prof. Dr. Tom A. Rüsen und Prof. Dr. Arist von Schlippe
- Projects: A Family Project for Generations
- Events: Forum for Family Businesses, UW/H Qualification
- Literature (German only):
– Article: Wittener Modell zu Familienmanagement und Familienstrategie
– Private Wealth: Der Weg zur Familienstrategie
– Private Wealth: Familienmanagement
– Unternehmermagazin: Unternehmensstrategien über Generationen