Types of Family Businesses 4: Steward?
Let us look back for a moment, on the various family types we have come through. We have been unpacking the issue of the various types of family and family businesses combinations and their leadership dynamics. As you may have seen in family business, a lot of different issues can affect the growth of the family business and most importantly, the continuity and survival of the business falls into understanding the pertinent as much as the underlying issues of the family that owns and controls the business.
Family and Family business combinations could be categorized into four basic types – "James Bond," "Eternus," "United," and "Steward." This identification was made through a study that was done over several years on 21 German wine-business families by Sabine Rau, Partner at Peter May Family Business Consulting. What they identified as unique about each type of family combination is that each makes different decisions, raises its next-generation differently, and ultimately engages in different succession processes bringing about unique outcomes. Understanding the four different types may help develop a next-generation leader and ensure the continuity of your family business. And further examinations of these types and exploring the African Family Businesses further may help us identify and grow our businesses better.
I'm going to take the four different types of families and explore them in the context of our African landscape and see if we can identify these unique families within our communities and possibly in ourselves as family business owners.
We have explored the "James Bond," "Eternus," and "United," type families, and identified the pros and cons of each organization and possible resolutions on taking these families into a Multi-generational wealth organizations. The last family business type we want to unpack is the:
Steward Family Business Type
Steward is defined in the dictionary as to manage or look after (another's property).
Stewards differ profoundly from the other types by the extent to which the family and business spheres are interwoven. Not only are family members brought into the business, but the business permeates the home, and the extended family – grandparents, aunts, uncles, and cousins – are involved in the business and in each other's lives. Raising children, for example, involves the entire family network. Succession in these families is taken-for-granted in the sense that there are rules in place designating the successor, usually the eldest son. Succession in these families comes with little conflict, and successors are, on average, highly qualified, motivated, and entrepreneurial because of the resources devoted to train and educate the successor and the high expectations set by a cohesive and focused family. Although there is one designated successor, other children are also educated and involved in the business, and the older generation supports the younger generation as they bring their new knowledge into the firm and fuel innovative projects that lead to "entrepreneurial leaps."
Let’s have a quick look at the Pros and cons of our United family type on a table format for clarity:
While it might seem that these families do not require external advisors, it is fascinating that these families are the most proactive in using them. Many have long-standing relationships with advisors who help them successfully integrate future in-laws into the family and organized annual retreats that involve all current and potential in-laws.
Steward Family types would often be in the 4th generation management upwards. There is tradition and experience in the succession of the business and managing the family through this. The family has most likely grown and matured from the various other typical family structures and is now at a point where it is a custodian of wealth for future generations. As the family grows, everyone knows their role or is groomed into taking up a seat at the table that is defined for them. The leader is respected as the head of the family and acts accordingly to preserve the family, its business, and its future. While at the same time, the next generation is focused on taking the business into the future as a strong entity that can only grow stronger.
A communication advisor and conflict mediator can help Steward families better understand their communication differences and manage potential issues on the horizon. This is particularly important because, although a designated successor helps focus resources, those who are ignored because of gender or birth order need emotional support and opportunities to foster their contributions to the family enterprise. In most cases, when a family becomes one of a steward type, it is now in a space where the family business is now a family enterprise with vast myriads of wealth.