Consulting Process Chemistry Meeting Letter of Engagement Assessment Feedback/Planning Implementation Follow-up Exit Reentry First Contact From Hilburt-Davis & Dyer (2003) Consulting to Family Businesses Overview 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 PerformanceFamily 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 FAMILY ASSETS Figure 1 Typology of Family Firms Quadrant IIQuadrant I Quadrant IVQuadrant III HIGH LOWHIGH Professional Family Firm Clan Family Firm Self-Interested Family Firm Mom & Pop Family Firm LOW FAMILY LIABILITIES