Question: Do you agree with the posted below? why? please discuss 3 reason why family businesses have a high failure rate when founders hand over to
Do you agree with the posted below? why? please discuss 3 reason why family businesses have a high failure rate when founders hand over to the next generation
Family businesses tend to be stable organizations. Although this is a good thing in many instances, stability can also make it difficult to change. A new, younger family member coming into the business will find tradition and structure. Changing that is not simple. The key to changing a family business lies in defining tradition in terms of the companys core values, not in specific ways of doing things. Family closeness can lead to sibling rivalry or problems when both the parent and the child want control. By the third or fourth generation, with many cousins possibly sharing ownership, governance can become very complicated. There may be times when the interests of a family member conflict with the interests of the business. One family member may want to expand the business, but other family members may not share this persons desire. The needs of the business are not in sync with the needs of the family. Family ties have a downside. Family members will frequently be expected to work harder, make more of a commitment, and get paid less than other employees in the business. Family business owners may automatically promote someone from the family or give family members a job even if they do not have adequate skills for the job. A nonfamily employee may be better qualified. This can cause dissension and resentment among other employees. Relationships between parents and children or among siblings have a tendency to deteriorate due to communication problems. This dysfunctional behavior can result in judgments, criticism and lack of support.
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