Consulting Process

Chemistry Meeting

Letter of Engagement

Assessment

Feedback/PlanningImplementation

Follow-up

Exit

ReentryFirst Contact

From Hilburt-Davis & Dyer (2003) Consulting to Family Businesses

Overview of the Consulting ProcessOverview of the Consulting Process

First Contact

Letter of Engagement/Contract

Areas for Assessment

Family:• Roles and Relationships• Culture and Values• Decision making, communications, conflict management

Business/Management:• Mission and Strategy• Structure and Culture• Systems and Processes• Leadership

Ownership/Governance• Mission and Goals• Ownership distribution• Legal Form/Board of Directors

BARRIERS TO GROWTH

1) Failing to Plan for Growth

2) Ineffective Leadership and Management Style

3) Ill Defined Organizational Structure

4) Lack of Information Systems

5) Unqualified Personnel and a Lack of HR Systems

6) An Organizational Culture that Fails to Foster Growth

7) Poor Partner Relations and an Ineffective Board of Directors

Family Factors Contributing to High Performance Family Factors Contributing to Low Performance

Agency Benefits Lower agency costs due to the alignment of

principal-agent goals Lower agency costs due to high trust and shared

values among family members

Agency Costs Higher agency costs due to conflicting goals in the

family Higher agency costs from opportunism, shirking,

and adverse selection because of altruism (i.e., family members fail to monitor each other)

Family Assets Human capital: the family has unique training, skills,

flexibility, and motivation

Family Liabilities Family lacks necessary skills and abilities due to

small labor pool, lack of talent, or inadequate training

Social capital: the family develops relationships outside the family with employees, customers, suppliers, and other stakeholders that generate goodwill

Family “branding” of the firm or of the firm’s goods and services may generate goodwill and a positive image with stakeholders

Family fails to develop social capital with key stakeholders due to distrust of outsiders (i. e. “amoral familism”)

Family relationships lead to complex conflicts among family that may undermine image and goodwill with stakeholders

Physical/financial capital: the family may have physical or financial assets that can be used to support the firm

Family uses firm assets for personal use, thus draining the firm of financial and other resources

Table 1“Family Factors” Affecting Firm Performance

AGENCY COSTS

FAMILYASSETS

Figure 1Typology of Family Firms

Quadrant IIQuadrant I

Quadrant IVQuadrant III

HIGH

LOW HIGH

HIGH

ProfessionalFamilyFirm

ClanFamilyFirm

Self-Interested FamilyFirm

Mom & Pop FamilyFirm

LOW

LOW

FAMILYLIABILITIES