Perhaps, family business is not spicy enough to spark our discussion. Still, it’s not like there is nothing to it. In current global world, high-profile families who owns big corporations are commonly found in the news. Even if the owner of the business is obviously known as a family, but we seldom refer to it as family business. This is more likely a result of the common practice in which management consists of professionals, instead of the owner. There is a distinction between ownership and how the business is being managed.
Yet, I believe in most Asian countries, the term family business is still relevant. For at least in Indonesian context, family business can be comprehended literally, as it refers to way of running business; not merely ownership. In comparison to common management theories, family business is a different realm of business organizing. While it is often associated with traditional and conventional style of management, family business has its own complexity. This unique complexity lies within this single concept: the nature of relationship.
Relationship does matter in any kind of business. Public owned enterprises, multinational corporations, or privately owned SMEs; the relationship factor is pertinent. Relationship forms structures, dynamics, teams, networks and other patterns that construct the business process in any type of organization. In many example of family business, kinship is the right word to name that relationship. Yes, there might be several positions filled by family outsider. But, strategic positions are restricted to the owning family members or their next of kin.
I’ve observed that relationship bond in family business is highly influenced by individual values, rather than professional values. Thus, willingness to commit and interpersonal bonds are more essential in any kind of process. In addition, trust and psychological contract are more prominent than motivational transaction. As most other types of business see that loyalty is an absurd concept, and professional commitment is what we should expect from people; psychological bonding toward loyalty is a central issue in family business. Therefore, the idea of developing loyalty perhaps is more compelling than the idea of developing professionalism values in family business.
Nevertheless, there are numbers of cases showing Indonesian family businesses as professional business organizations. They hire professional people, or at least they appears so. Still, family business is family business. It means that to assure business sustainability, it must be managed by people who have the commitment at their best. Who are they? Those who share ownership of the business through unretractable relationship: family and kinship!
This is quite the opposite of ideas such as competency-based recruitment, equal employment opportunity (EEO), and affirmative action. Instead of being inclusive and politically correct in their HR policy, family business owners concern more about risks of having outsider in strategic positions. Hence, the only way to manage that risk is by entrust those positions to people with the most binding contract: (once again….) family and kinship!
It is very likely that in most family businesses, sustainability means keeping the business in ‘safe-hands’. By securing strategic positions to people who trustworthiness is bound by familial relationship, it is considered as a way to guarantee business sustainability. The only issue is whether this type relationship is really representing trustworthiness. I think this way: Us being a relative to someone does not mean we are trustworthy for that someone.
So, here is my opinion: The essence of this relationship is trustworthiness. I believe we all agree that trustworthiness is a necessity. In family business, family and kinship is ‘the pact of trust’, just like employment contracts in modern professional businesses or organizations. While most organizations emphasize more on competence, no one will argue that value fit and trust within interpersonal relationship is irreplaceable. And, in the case of mostly Indonesian family business, it is a main part far greater than competence. Some even said this : ‘It’s better we have a trustworthy fool than a mischievous hot-shot! A fool can be trained, but a viper can never be tamed.’
This does not go without warning. It is more likely when competence is not a priority, while the person assigned could not meet the expected trustworthiness; disaster happens. Why? The answer is simple: It is really a big problem to ‘kick-out’ someone for his or her incompetence, when that someone is our family members or close relative. The risk is higher either way. We put the business at risk when keep that incompetent person. This will damage our leadership.
On the other hand, our personal and familial relation with that person may no longer at ease if we remove him or her from her place. This one may bring conflict into our personal life. Not to mention the feeling of trust betrayal resulted from conflict among family members or relatives. The bet is a complex mix of business sustainability and personal wellbeing.
Still, family business can become very solid and effective when it find ways to manage all of those risks. I have no intention of saying competence has nothing to do with business sustainability. In fact, it is the very heart of sustainability. But, competence won’t work without trust in relationship. I think in any kind of business, we need people we can trust, people who shares same values with us; so we can always reconcile no matter the difference we have among us. This perhaps explains the increasingly popular concept of brotherhood and sisterhood in current pop-culture. This value-based relationship resembles familial relationship in some ways.
For some people, family business is a discriminative and unfair ways of management. But, that’s not the only notoriety they are known for. Strength and solidity is often associated with them too. So, there must be something we can learn from them. I’m sure there is more to it than meets the eye.
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