In this issue
Each business family has its own culture, strengths, idiosyncrasies, points of contention and shared history. That’s why each family must do its own work to develop policies and processes — a structure built on the foundation of someone else’s family values probably won’t work for your family.
Even so, there are certain essential principles that generally apply to multigenerational business families who aspire to be conscientious stewards of their entrepreneurial legacy.
If you’re just beginning to investigate how to manage issues at the nexus of family and business, you may have encountered some terminology that’s unfamiliar to you. We provide some definitions and explanations here.
This glossary is adapted from a longer version that is distributed to attendees at Family Business Magazine’s Transitions conferences. The version presented here also includes some additional definitions.
Forty-one years ago, Renato Tagiuri and I were looking for a framework to categorize the issues, interests and concerns voiced by Tagiuri’s executive students, most of whom led family companies. It was 1978, and I was a first-year doctoral student. Tagiuri was a faculty member in a Harvard Business School executive program and had invited me to be his research assistant.
Until a little more than a century ago, the term “family business” was redundant, because every family was also an economic unit. Children were taught their parents’ trade and were expected to make it their career. The family business would often last for generations, but the family would not expect it to grow.
Generation of family ownership: Third. We lease, develop and manage medical office buildings and have developed over 330,000 feet of office space. Our business was started by my wife’s family in the early ’60s.
Company revenue: Under $100 million.
The Business: Milton L. Rock, Ph.D. (1921-2018) joined Edward N. Hay in 1949 to establish a compensation and human resources consulting firm and became the Hay Group’s managing partner. Milt’s son, Robert H. Rock, joined the firm and worked alongside him. At the time of its sale in 1984, the Hay Group had 2,000 consultants and 90 offices in about 25 countries.
The Zildjian family knows a lot about longevity. In less than four years, the family and their company will celebrate 400 years in the music business. The family, whose company is a fixture on every list of the world’s oldest family businesses, has plenty of experience with succession, disruption and celebrating legacies.
Since the beginning of commerce, families have pooled their capital and ideas to create value through economic exchange. Yet curiously, the field of family enterprise research and advising is only between 50 and 60 years old, depending on which point is counted as the beginning.