Effective Change Management in a Family-Owned Business
Chapter 2: Literature Review
Introduction
Family-owned businesses are a dominant form of business model in Islamic communities, and their leadership is governed by a family member, usually the family leader. The objective of this literature review is to explore other scholars work on the issues of change in management styles, transition in leadership, advantages and disadvantages of family-owned businesses, management of non-family staff members, and how corporate and non-corporate business environment influence the performance of the business (Barnes & Hershon, 2020). Family firms encounter challenges that contribute to business failure like any other business but have additional challenges, such as interference of business decisions by family wrangles (Zellweger and Sieger, 2010). This interference accentuates the challenges that business encounters in addition to those presented by the business environment. Such challenges threaten the businesss ability to withstand the family differences and the competition as well.
The family firm leader embodies the values and the ethics ingrained in the companys culture. Succession from such leaders by a new generation presents an array of challenges with new ideas in entrepreneurship emerging and the change management styles in the ever-changing business environment (Zellweger and Sieger, 2010). While these might be a challenge that is perceived as an attempt to undermine the predecessors management styles, they might be revolutionary by taking a proactive approach to change rather than a reactive one. Caving to the inertia of relying on the previous handling crisis measures stifle the growth of the corporation and its adaptation to the new environment. Nordqvist and Zellweger (2010) argue that such differences in the strategy during transition create tension between the need for stability and the desire for change.
Such concerns are warranted if the new leader is not experienced within the firm or in the business and the proposed measures are not conventional. The facts of an organizational structure that will be focused on in this study are strategy, structure, processes, rewards, and people as suggested as critical facets of an organization by Canterino et al. (2013). Ultimately, this literature review will explore a suitable succession planning and transition strategy that can encourage a smooth transition in leadership from one generation to the next.
Change Management
Family businesses comprise three entities that are interdependent despite each being a standalone entity in the business. The three entities are management, family, and ownership of the business. A family fully owns some family firms while others have external shareholders but still have majority ownership of the business equity (Zellweger & Sieger, 2010). Ownership plays a critical role in how business is run since the representatives of the owners from outside of the family in the board of directors have to influence the decision-making process of the corporation. The family fully holds ownership; the firm relies on the family or business leader for the final decision. In either case, the family greatly impacts the business decision and the firms management styles (Ye, 2013). Whenever there is a requirement to make changes in leadership or the adoption of new management styles or leadership, the conventional challenges that non-family businesses encounter but also suffer challenges that might arise due to the culture observed by the family, such as Islam in this case, and ethics, and values purveyed by the founder or leader of the family business.
Figure 1: Three cycle model of family business characteristics (Vazquez, 2016).
Inherently, a family business is grounded on a long-term strategy that may develop short-term goals and realize the source of conflict. Such differences may arise among family members due to the perception it might be at...
…rules of the manner an organization operates.
Prospective employees whose belief systems should not be hired into the organization would undermine the founding that guides the organizations operations, especially in difficult times. However, the employees who have different ideologies to the management and family members should not be shunned but allowed to express their ideologies (Dieleman & Koning, 2019). creating this room is essential for free expression creates room for constructive criticism, and develops a better approach to problem-solving.
To overcome the challenge of establishing a familial bond with employees who are not family members showing interest and providing for the workers family, offering medical insurance cover for employees and their immediate family, Contributing to the employees education, offering housing, scholarship to employees children, and creating an annual family gathering creates more intimate bods with employees, making them feel like part of the family business (Zellweger & Sieger, 2010).
Advantages and Disadvantages of a family business model.
Family businesses propagate a positive work environment where the employee feels accepted, a sense of belonging, and their talents and expertise are appreciated. As a result, the family business builds trust in the workforce, openness, and commitment that gives the business competitive advantages and distinctiveness in its products and services (Barnes & Hershon, 2020). Family businesses founded on family and cultural values, such as respect, dutifulness, and trust, generate intangible resources such as a unique potential for trust, human resources, and leadership across all tiers of the organization that contribute to the success of the organization.
The bundling of resources and capabilities in a family business influences business and differentiates a firms performance through the unique capabilities ideal to the firm and the family (Chirico & Nordqvist, 2010). However, family businesses encounter challenges if there are differences among family members that may compromise the family values and interfere with…
