Family, business goals can be complementary, says expert

AT FIRST, family goals seem at odds with those of the business. But for experts in the dynamics of a family business, both sides can complement and support the other.

Pilar Tolentino, who heads the business family relationship department of the Ateneo Family Business Development Center, said the goals of both sides are different and that there is a danger of making business decisions based on family criteria or using business criteria in dealing with family relationships, leading to resentment, doubt and mistrust among family members.

Quoting a report by Ivan Lansberg on managing human resources in family firms, she said families and businesses exist for different reasons. The study said a family exists to assure the care and nurturance of its members while businesses exist to generate goods and services through organized, tasked behavior.

Tolentino, who was in Cebu last week for a seminar on sustaining the family business, showed the way family goals can be different from that of a business.

She said family goals make sure there is opportunity for all members and that there is equality. They are paid to support their well-being and that succession is used as basis for family leadership.

Business goals, on the other hand, should hire and promote on based on merit and that members should be paid based on their performance. Executive positions should also be open to non-family members and that funds are meant for reinvesting capital.

She also said that family relationships are more permanent and that its members are bound by unconditional love whereas business relationships are temporary and rely on conditional approval. While family roles are based on the relationships, business roles are based on one’s function. The power in the family is based on generational status but in business, it is based on performance and title. Both also have different meanings of fairness. In the family, it means everything is equal or the same but in business, to be fair means to evaluate on one’s performance or equity.

Goals for the family, she said, are meant to maintain harmony while in business, it is to maintain productivity.

She admitted that the challenge for most family businesses is where to draw the line. Creating a structure to ensure both sides are balanced is what family businesses need to do to sustain future ownership.

What separates family enterprises with those of a corporate setup are the emotional entanglements that come with family businesses. This, she said, is not necessarily a hindrance.

“Many consultants say emotional connection is important for a family business and it can bring on a competitive advantage,” Tolentino said. Members, she said, can express their emotions constructively, rather than by finger pointing and blaming one another.
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