Abstract
Within the traditional business organizational climate in which an executive coach operates, the identity of the coachee can be quite clearly differentiated from the business identity.This is not the case within the world of family business where the founder, the successor, the business, and the family culture are interwoven.This unique feature of family business means that for executive coaching to be effective within the family business environment a radically different approach to that used in traditional business environments must be adopted, namely the consideration of what generally are thought of as non-business variables. This paper makes the first attempt to address the key and unique variables executive coaches need to be aware of to effectively work within the family business environment
Background and Rationale
The foundation stone upon which this paper is predicated is the fact that in most, if not all, evolving economies the influence of family businesses is extremely important. Gersick et al (1997) and Barnett et al (2006) acknowledge that family businesses are perhaps the dominant form of enterprise worldwide as more than two of every three organizations are family owned and/or managed. Lee (2006) agrees saying “…the proportion constituted by global business enterprises that are owned or managed by families is estimated conservatively to be between 65%–80%. In the United States, approximately 50% of the gross national product is generated by family businesses…the proportion of family firms in the United Kingdom and in the European Union is estimated to be 75% and 85%, respectively (p.175).
We are reaching a period where many family business owners/founders are facing a crisis. This is because many are baby boomers and as such approaching retirement. To illustrate, a Canadian study undertaken by the University of Waterloo (1999) reveals that in the coming years Canada’s family business leaders will be retiring in significant numbers: 27% in the next 5 years, 29% in 6 to 10 years, and a further 22% in 11 to 15 years, leading to a potential succession crisis. Ip et al (2006) underscores the challenges succession presents for family businesses with respect to survivability in citing that only 5% to 15% of European family businesses reach the third generation, and 30% of closures may be considered transfer failures. This crisis situation requires an intervention that assists family business founders in successful traversing the unique challenges family business poses. We suggest in this paper that executive coaching may provide the necessary vehicle to undertake this task. Nonetheless, the special case family business represents requires a radical reconceptualization of the role, skills and scope of the executive coach. We advance such a reconceptualization beginning with a definition of family business and coaching, the unique issues family business poses for coaches, followed by presentation of our framework for executive coaching within the family business environment.
Family Business- A definition
The breadth of scope that constitutes a family business is as broad and diverse as the range of businesses that families are involved in. Gaining a clear understanding of what a family business is, largely determines the nature of the research, and it is a critical factor within the interplay of an external executive coach. Klein et al (2005) noted that when it came to defining a family business, depending on the definition the variance can be between 15% and 81%. Westhead and Cowling (1998) supported the “grayness” of definition, when they observed that in a study of 427 firms, 78.5% would be defined as family business based upon one definition, whereas when a more restrictive definition was applied only 15% of the very same firms in their sample were classified as family businesses. Smyrnios et al (2003) reported that there were over 20 definitions of what constitutes a family business, in itself a challenging conundrum, but even more so in attempting to gain an understanding of key family/business drivers that are critical in an effective and targeted executive coaching intervention.
This diversity of definitions for a family business suggests that researchers have struggled to gain a clear and concise definitional framework of what constitutes a family business. However, strategically in an early study by Davis (1983), an understanding of the uniqueness of a family business was established as the “…interaction between two sets of organizations, family and business, that establishes the basic character of the family business and defines its uniqueness” (p.47). A latter study by Dunnerman et al (2004) expanded this interactive relationship by acknowledging the relative impacts of both sub-systems when they identified a business to be a family business when the “…family dynamics and business dynamics demonstrably interact and influence each other. Then they contend that a synthesis exists between the two, meaning the emergence of a new and unique system identified as a ‘family business’…” (p.7). Steier et al (2004) acknowledged strategic definitional challenges when they stated that “… (a) while there is no universally accepted operational definition of a family firm there seems to be a theoretical consensus that a family’s ability and intentions to influence business decisions and behaviors are what distinguish family and non-family firms, and (b) a family’s influence on a business is manifest in different ways be it the manner in which succession, innovation, culture, or agency issues are handled...” (p. 296).
Klein et al (2003) attempted to define the “familiness” of a business by quantifying on a scale of a family’s influence on a business. The scale that was applied looked at the influence of (a) family power, (b) family influence and (c) family culture on the management and leadership of a business. Other researchers looked at content (Anderson & Reeb, 2003; Handler, 1989; Heck & Scannell,1999; Littunen & Hyrsky, 2000; Litz,1995), ownership (Lansberg, Perrow, & Rogolsky, 1988), management involvement (Barnes & Hershon, 1976), generational transfer (Ward, 1987), intended generational transfer (Barach & Ganitsky, 1995; Heck & Scannell Trent, 1999; Ward, 1988), and family business culture (Chua, Chrisman,& Sharma, 1999; Dreux IV & Brown, 1994; Litz, 1995) as determinates as to what constitutes a family business.
Executive Coaching-The Anecdote for Business Failure
Executive coaching has become increasingly popular despite limited empirical evidence about its necessity, its impact and wide disagreement about the professional qualification and skills set required by coaches (Baek-Kyoo, 2005). Sherman and Freas (2004, pp.82-83) stated that executive coaching is "like the Wild West of yesteryear, the frontier is chaotic, largely unexplored, and fraught with risk, yet immensely promising". There are numerous reasons for the increased use of executive coaching including: the rapidly changing global economy necessitating continued development (Sperry, 1993; Gray, 2006), a lack of opportunities providing executives for growth (Kiel et al., 1996; Saporito, 1996), and greater awareness by businesses that poor executive leadership and interpersonal skills can be a financial liability (Kilburg, 1996; Levinson, 1996). In spite of this, the authors of this paper found little evidence of the growth in executive coaching as a result of direct and targeted focus upon the needs and challenges within the family business sector.
The rapid growth and global popularity of the executive coaching industry has been well documented in recent years (Bacon & Spear, 2003; Diedrich, 2001; Gray, 2006; Kampa-Kokesch & Anderson, 2001; Kilburg, 1996). It has been estimated that there are 30,000 coaches worldwide, and the revenue generated by the global coaching industry is US $ 1.5 billion (according to a 2006 PricewaterhouseCoopers’ report). A survey conducted in 2004 by the UK's Chartered Institute of Personnel and Development's (CIPD) Training and Developmentfound that 95% of their management reported that coaching had increased in their organization in the last year, and 97% saw coaching as an important part of a manager’s skill set (Pemberton, 2006). The membership in the International Coaching Federation (ICF), which is the largest worldwide resource for coaches, has soared from about 1,500 in 1999 to over 12,000 (from 80 countries) as of July 2007.
Numerous definitions of executive coaching based on different perspectives exist. The definitions range from specific to comprehensive. For instance, some authors define executive coaching as a training technique specifically focused at the individual level (Kampa-Kokesch & Anderson, 2001; McCauley & Hezlett, 2001; Orenstein, 2002; Pemberton, 2006; Peterson, 1996), while others adopt a broader definition, extending coaching to the team and organizational levels (Bacon & Spear, 2003; Hall et al., 1999; ICF, 2007; Kilburg, 1996, 2000). Additional components mentioned by various authors include executive coaching as a highly confidential personal learning process that focuses not only on interpersonal issues, but also on intrapersonal ones (O'Brien, 1997; Witherspoon & White, 1996). It has been defined as an ongoing relationship, usually lasting anywhere from a few months to a year or more (Diedrich, 1996; Levinson, 1996). The executive coaching relationship is described as one in which the coach does not have any direct authority over the executive (Witherspoon & White, 1996), and this distinguishes executive coaching from the other developmental aspects of normal supervisory or managerial roles (Tett et al., 2000).
In this paper, the term executive coaching is used to refer to a one-on-one relationship between a professional coach and an executive/family member (coachee) in a family business environment for the purposes of enhancing the coachee's behavioral change through self-awareness and learning, and ultimately for enhancing individual, organizational, and family performance.
The aim of this paper is to bring together the literature on family business and executive coaching in order to inform the executive coaching industry about the core influences that directly impact upon the decision-making and succession planning processes within the family business environment.
Unique Family Business Influences and the Executive Coaching Challenge
Ward (1987) understood the unique and potentially diametrically opposed paradigms between what is family and what is business, and the potential impact these competing “life views” can have upon each other. Therefore, he argued that the nature of business often seems to contradict the nature of family. “Families tend to be emotional, businesses are objective. Families are protective of their members, businesses much less so. Families grant acceptance unconditionally whereas business grant according to one’s contribution…” (Ward, 1987, p.54). Lee (2006) supported the notion of the intimacy and interdependencies of family and the family business, and stated that “…it is clear that the uniqueness of a family business is the mutual interdependence between family and business. The family system is so closely and intimately interconnected with the business system that one cannot change without affecting the other system…” (p. 175) This potential for a dysfunctional outcome is reflected by Kepner (1983) who noted that “…the various perspectives all regard the family and firm as subsystems of a meta-system in which boundary conditions are overly diffuse and permeable, resulting in a high degree of mutual influence that is dysfunctional when viewed from the firm's perspective…” (p. 58).
A conceptual Framework for Executive Coaching
From an executive coaching perspective, it is essential to note that one size does not fit all and that to be effective as an executive coach an understanding and adequate preparation that is in alignment with the nuisances that influence decision-making in individual family businesses are factored into the coaching strategy.
Baek-Kyoo (2005) suggested a conceptual framework of executive coaching based on the integration of the literature and practice on executive coaching. This conceptual generic model (Figure 1) is the basis for dealing with three main questions. First, what are the antecedents of positive outcomes in executive coaching? Second, what is the process through which executive coaching leads to positive outcomes? Third, what outcomes might executive coaching achieve?
Figure 1: A Conceptual Framework of Successful Executive Coaching and Review Focus (shaded). [Adapted from Baek-Kyoo (2005)]
As Baek-Kyoo (2005) stated,” the suggested conceptual frame-work is far from complete and there are several caveats” (p.483). In discussing the implications for future research, Baek-Kyoo acknowledged that research on the antecedents, process, and outcomes of executive coaching would enhance the theoretical understanding of executive coaching. This paper will focus on the unique key antecedents within a family business environment that are suggested by the authors to be core determinants of an effective executive coaching.
Key antecedents within a family business environment
To effectively implement an effective coaching regime within a family business, it is imperative that the coach identifies key decision variables within that family business. Although the variables themselves might seem, in many instances, as generic and have application in a variety of business types, the uniqueness of each family business (like the families that run them) suggests that as a rule no two family businesses in themselves are identical. As such it is critical for the coach to gain an understanding of the dynamics that exist within each family business.
The paradox of this unique environment is that coaching requires a defined structure and generic understanding of the critical variables that will influence coaching. It is not just a question of predetermining these variables. An effective coach must also have the skill set and synthesizing mind to integrate and communicate his/her observations and recommendations to third parties whose passion and emotional commitment to what they believe is an extension of their own (familial) identity is far greater than that of a traditional business owner. Howard Gardner (2006) noted that one of the key cerebral capacities individuals must posses to be effective in the 21st century workplace is the capacity of synthesis, that is the ability to take information from disparate sources, to understand and evaluate that information objectively, and to put it together in a way that make sense to the synthesizer (coach) and also to the third parties.
Given the generic antecedents of effective executive coaching described previously in Figure 1, the key diverse areas unique to the family business environment upon which an independent coach must consider [within the scope of this paper] include: the internal management protocol, the values and cultural expectations of the family business and the associated family unit, and the interrelationships between family and non-family employees within the family business.
Executive coaching within the succession process
Figure 2 represents the convergence of the traditional executive coaching structures and key family business variables discussed within the following section.
Figure 2: The Proposed Key Organizational/Work-Group Factors Related To Executive Coaching Effectiveness in A Family Business.
As referred to earlier in this paper, Davis (1983) acknowledged the unique and dynamic nature of family businesses, when he observed that the environment in which a family business operates is an“…interaction between two sets of organizations, family and business, that establishes the basic character of the family business and defines its uniqueness…” (p.47). Therefore, it is fundamental for any coaching intervention that the coach is cognizant of the impact of traditionally non-business influences.
In the traditional world of the non-family business external influences also impact. However, in the world of family business, what is usually considered the external non-business world will, in all likelihood, merge into the culture and the persona of the family business. This phenomenon has the potential to exacerbate critical stress points within the life of the business due to the fact that the family business, to some degree, is a manifestation of the family actors themselves (Kepner, 1983). One such stress point is during the process of transition and/or succession, where not only the role within the organization will change, but in all likelihood, a dynamic within the family structure itself will occur where traditional roles and responsibilities are reversed (Stavrou et al., 2005).
In respect to the organization climate literature, research suggests that it plays a key role in influencing individual behaviour (Colquitt et al., 2000). Schneider (1990) defined organizational climate as the shared perceptions of organizational policies, practices, and procedures. Anderson and West (1998), who measured facet-specific climate for innovation within work groups, argued that “the diversity and sheer size of many organizations would suggest a more micro-analytical examination of sharedness at the level of the workgroup, team or subunit, is warranted” (p.236). In respect to the family business environment, the key influential work group that defines the organizational climate is the core family management group that draws its inspiration and cultural perspectives from the foundations of the family/cultural construct. This difference has important implications as illustrated next.
Based on research on traditional firms, Anderson and West (1998) identified the relationship between executive coaching effectiveness and proximal work group climate for transfer as distinct of individual (psychological) climate or organizational climate. This conclusion is unlikely to be appropriate for the family business environment, however, as there is the very real possibility that the influences upon the proximal work group i.e. the core family management group, emanate from outside the four walls of the business.
The coaching challenge within the transitional process associated with succession planning is the capacity to assist and manage the generational transference of the office holders and by association the realignment within the core family unit; in essence, a realignment of the organizational and family climate. Rouiller and Goldstein (1993) addressed this generically by defining the organizational climate for transfer as “situations and consequences that either inhibit or help to facilitate the transfer of what has been learned in training into the job situation” (p.379). The challenge for the executive coach in assisting a family business in its succession planning is how to manage the interdependencies that exist between the two social constructs of family and business as noted by Davis (1983).
Accepting the proposition of the mutual impact each social system (business and family/social) has upon each other, especially during the stressful period of succession, an executive coach must be in a position to identify the diversity of family cultural variations(Klein et al., 2005). This mutual influence is a two-way process, i.e. the family business may influence the family dynamics as much as the other way around. Kepner (1983) recognized this when he stated that “…the particular way in which the family's cultural dynamics are influenced by their relationship with a firm will vary depending on such factors as the management model adopted by the firm the clarity with which boundaries and opportunities presented by the firm to family members are communicated, and the particular family culture that develops independent of the firm's influences…” (p. 65).
Notwithstanding this interdependency (Klein, 1991), the family business culture is formed by values rooted in an organization, these values according to Koiranen (2002) “…demonstrate what the family and their business regard as important…” (p. 185). Both researchers recognize that the anchoring values of the organization reflect the core values of key people who form a critical part of the organizational climate. In addition to this, Carlock and Ward (2001) underscore the importance of core family values and their influence on a family business’ self-image, saying “…the family’s commitment and vision of itself are shaped by what the family holds as important “. . . For these reasons, core family values are the basis for developing a commitment to the business…” (p. 35).
The dynamic of succession within this fluid environment lends itself to the executive coaching construct in the sense that (a) the coaching intervention is of a limited life (Gray, 2006), (b) the coach brings to the debate independent and objective perspectives, (c) the coach’s core experiences add structure, rigour and introspection to what otherwise could be an emotional caldron and (d) focusing purely on the organizational climate will enable the executive coach to effectively gain an understanding of the key motivational tipping points within a family business.
With respect to the impact of organizational or workgroup climate on executive coaching effectiveness, there is limited empirical data. However, in the context of the general training literature, there is significant empirical support for workgroup climate as a major predictor of training effectiveness (Awoniyi et al., 2002; Brinkerhoff & Montesino, 1995; Chiaburu & Marinova, 2005; Clark et al., 1993; Cohen, 1990; Facteau et al., 1995; Gregoire et al., 1998; Gumuseli & Ergin, 2002; Noe & Schmitt, 1986; Tracey et al., 2001). Lim and Morris (2006) defined “organizational transfer climate variables” as “the work and environmental factors that inhibit, reduce, or promote training transfer” (p.90).Organizational/work group climate for transfer can be divided into two clusters of factors: factors related to the work system, and people related factors.
In terms of the family business climate for transfer, four critical factors are identified: (a) The willingness of the founding parent to relinquish control [acceptance of their mortality, 2) Establishment of protocols of transition, 3) Overt support of successor, (b) The nature of the internal family culture upon which the business is based [adaptability, flexibility, ethnicity, tradition], (c) The interface with non-family employees – meritocracy vs. paternalism, and (d)Internal non-family structures and influences [Board and external consultants].Each of these factors is explained next.
The founding parent
The critical determinant in defining the focus of the organizational climate within the family business construct during the succession process rests with people-related factors and more specifically with the founding parent, and to a lesser degree the other significant family members within the family business management group cohort. This issue of the nature of the relationship between the two generational pillars upon which the succession transition will navigate has been highlighted by Fox et al (1996) when stated that”…the leadership incumbent and the leadership successor affirm the importance of this relationship for the succession process and also highlight the quality of the relationship between these two principal individuals. Put simply, if these two get along well then managing succession and negotiating all the pitfalls becomes much easier…”(p. 15).
Gaining an understanding of the founding parent’s self-image is a critical variable in determining an effective executive coaching regime (Laske, 1999; Colquitt et al., 2000). Garcia-Alvarez et al (2002) identified four broad incumbent types:
- Founder of family tradition - positive views on human relations and linking family with business.
- Founder-achiever - business is a means to earn a living whilst retaining a strong sense of the importance of family values.
- Founder-strategist - business as the means to achieve the end of self-realization.
- Founder-inventor - business is a means to earn a living yet also a way of achieving self-fulfilment (p. 191).
Morris et al (1997) expanded upon this observation when they noted that “…the quality of the relationship between family members in general, whether they have a direct involvement in the business or not, is also vital clearly suggests that working at improving these relationships will positively influence any succession planning process more than efforts in any other single area…” (p. 400-401).
Dunemenn et al (2004) supported Morris’ position in that “…the problems encountered in family business succession planning are generally ‘human’ ones. Consequently, the areas most in need of consideration, the issues to be managed and the difficulties that must be overcome when family businesses plan for succession mostly revolve around relationships, individual attitudes and experiences, business and family cultures, and the values and aspirations involved…” (p. 2). The researchers went on to state that “how prepared each individual is for the transition will have a major bearing on the outcome of family business successions. The willingness and preparedness of the incumbent to relinquish control and the willingness and preparedness of a successor to assume control are major influences on succession planning…the more attached an individual is to their role, the more difficult this will be…” (p. 22).
The core challenge within this process is to what extent the founding parent is able to pass the business on to his/her children. This construct of passing on the control was described by (Vera et al., 2005) as acknowledgment of one’s own mortality. Kepner’s (1983) description of the succession’s challenges from a founder/family’s point of view is even more organic, when he stated that “…the succession issue is one that tests the ability of the family system to deal with the pain of loss, separation, and change in the inevitable process of growth and development, aging, and death…” (p. 69). Sharma et al (2003), and Stavrou et al (2005) point out that this succession challenge for the incumbent who is not psychologically ready to relinquish control, can lead to a critical succession failure.
Santarelli et al (2005) identified the potential of business failure during succession as an intrinsic link between the founder’s self-image, the family business, and the need for the founding parent to let go. They stated that “…strong bonds tying the founder to his firm, and stressed how in most cases he himself is one of the main obstacles against the transfer of the decisional functions to his successors...” (p. 190). To this extent the challenge is not just for the incumbent per se, there are also challenges for the family successor, both internally and with respect to how others within the family business might see them. Dunemenn (2004) noted that for generic acceptance it takes two, the successor, and the incumbent working together as a team, and argued that “…the preparation of the successor is another matter and, to some extent, relies on the actions of the incumbent. Successors need time and the opportunity to gain the credibility to be considered as an effective successor...” (p.23-24). Dunemenn went on to state that “…even family members may have difficulty assuming the role of leader, unless systems are enacted to allow for a transfer of knowledge from incumbent to successor...” (p. 32).
The family culture
Cultural influence may also reside with more than one family member, over and above that of the founding parent. Klein et al (2005) acknowledge this, stating “…although the culture subscale seeks the views of CEO/owner-managers, a strong case can be made to obtain the sentiments of other family members in order to obtain a broader picture...” (p. 326). This broader perspective is supported by Chrisman et al. (2005), when they acknowledged that the key influencer might not automatically be the founding parent. Stavrou et al (2005) expanded upon this perspective, when they observed that a “…significant relationship was revealed between personality and business culture, as well as between the successes of a transition …” (p. 197).
In accepting that the influence of the family, specifically its climate and associated self-image, has a significant impact upon the operations of a family business, the question then is asked, what type of family cultures components are prevalent in the family business environment? Do these components impact upon the succession processes? And which family cultural dynamic is the most fertile to facilitate an effective executive coaching regime? Dunn, (1995) asserted in his study of Scottish family enterprises that a good family relationship was one criterion for a successful family business.
Lee (2006) found that an adaptive family culture is seen as a critical starting point to ensuring an effective relationship between organizational and life outcomes “…family adaptability is found to be a positive and significant predictor of organizational commitment, work satisfaction, and life satisfaction. A balanced family system is characterized by a more open leadership style, more open communication, and sharing of roles, which are more clearly defined. Decision-making is conducted in an open and participative manner...” (p. 187).
Dunemenn (2004) and Chrisman et al (2003) supported the importance a family upon a family business culture by asserting that a principal indicator of a healthy family business culture, and thus the potential for successful succession, is the degree to which a business exhibits a participative culture where all family members, particularly the successor and incumbent, work cooperatively. Kontoghiorghes’ (2001) findings in his examination of the most influential variables for training transfer, are in line with the views expressed by Dunemann (2004), and Chrisman et al (2003). Two of the most important variables in his study were: supervisory support for new skills and knowledge, and participative organization characterized by a high degree of employee involvement.
The coachee’s receptivity to coaching and feedback is an important characteristic associated with the effectiveness of executive coaching intervention. London and Smither (2002) were the first to introduce the concept of feedback orientation as a construct consisting of multiple dimensions (at the individual and organizational level) that “work together additively to determine an individual’s overall receptivity to feedback and the extent to which individual accepts guidance and coaching” (p. 82-83). London and Smither (2002) suggested that the individual’s feedback orientation depends on part on the organizational support and climate for learning. London and Smither argued that Individuals who are high in feedback orientation recognize the value of feedback as they strive for self-awareness, self-verification, and self-enhancement. In regards to coaching, London and Smither (2002) proposed that coachees who are high in feedback orientation are more responsive to coaching. These types of individuals will especially value gifted and skilled experts who have something to offer them and wish to convey their skills and knowledge for someone else’s benefit. Baek-Kyoo (2005, p.480) concluded "how receptive the coachee and his/her organization are to feedback is critical to proximal and distal outcome variables”.
Paternalism vs. Meritocracy
It is reasonable to contend that in the vast majority of cases, small to medium-sized family businesses would have a number of non-family employees that are involved at a managerial/executive level, on the shop floor carrying out the directives of senior management or more than likely having non-family employees fulfilling both roles. The challenge for the family members within a family business is how to manage these “strangers” in a way that does not alienate, disenfranchise or reduce their overall effectiveness, while at the same time ensuring that the unique family relationships that constitute the essence of the business and that in may cases can give that particular business its character and competitive advantage is not diluted or corrupted.
Mitchell et al., (2003) supported this proposition when they found that non-family employees of family firms faced a particularly complex and uncertain situation in the family firm since they were part of the business, but not of the family system. Barnett et al (2006) suggested that this lack of “status” certainty within the family business social and business structure can have the effect of creating a “…in-group–out-group” perceptions that lead them to compare their treatment in regard to HR policies and procedures with family members in the “in-group.” (p. 846). The key determinant of the “in-group-out- group” is the fairness perception that exists within the family business’ practices. This position was identified by Barnett. et al (2006) who argued that “…non-family employees in firms with HR practices that suffer from bias, a lack of consistency, and inadequate explanations for why HR practices may favor family over non-family employees are more likely to engage in the “would” counterfactual thinking proposed by fairness theory...” (p. 845) put simply “…the non-family employee’s perception of justice serves as an indicator of his or her inclusion as a valued member of the relevant social unit (i.e., the family business system), and confirms the non-family employee’s social identity, particularly when the persons in charge are in-group (i.e., family) members themselves...”
Additional determinants within the “in-group – out-group” paradigms are:
Perceptions and procedural structures of justice and fairness.
Influence of external consultants, and independent board overview.
The justice/fairness coefficient
Barnett et al (2006) observed in the family business realm that “…employees’ perceptions of distributive, procedural, and interactional justice each affect social exchange relationships between employees and their organization and between employees and decision makers...” (p. 846).
Barnett et al (2006) defined three contributing factors that form employees’ perceptions of justice within a family business:
Distributive justice- concerns one’s perceptions of the fairness of the outcomes of a decision process relative to referent others.
b)Procedural justice- the perceived fairness of the decision-making processes by which outcomes is determined.
Interactional justice- defined as the quality of interpersonal treatment received as decision processes are carried out. (p. 841).
Fair process is therefore, an essential part of establishing organizational/work group climate of trust, receptivity, effective engaging and communication, commitment, and satisfaction in family firms. In respect to executive coaching, London and Smither (2002) suggested that feedback culture is an important component within the organizational/work group climate for learning. They described a supportive feedback culture as “one where individuals continuously receive, solicit, and use formal and informal feedback to improve their job performance” (p.84). They argued that the individual’s feedback orientation depends in part on the organizational/work group support and climate for learning. Consequently, they propose that the more support for learning and development, the more the individual is likely to develop a positive orientation toward feedback. A supportive feedback culture characterized by individuals who seek and receive feedback more often, deal with it, and use it to find new opportunities and improve their performance.
In regards to people related factors relevant to training effectiveness, research has confirmed the positive impacts of both supervisors support (Awoniyi et al., 2002; Facteau et al., 1995; Gumuseli & Ergin, 2002; Van der Klink et al., 2001) and peer support (Chiaburu & Marinova, 2005; Ruona et al., 2002) on pre-training motivation and skills transfer. As several researchers have argued (c.f. Baldwin & Ford, 1988; House, 1986; Lim, 2001), supervisory variables impose a critical influence on personal outcomes and on the likelihood of successful skills transfer. Lim (2000) noted that among the many people-related organizational climate factors for transfer, three factors appeared to influence transfer more than others: discussion with a supervisor about implementing new learning, positive feedback from the supervisor, and the supervisor’s involvement or familiarization of the training process.
Influence of external consultants, professionals and independent board overview
In line with the process of objective and professional feedback, Khai et al (2003) noted the uniqueness within family businesses, where there was a tendency for management systems and processes to be highly idiosyncratic. The researchers saw this as not necessarily a negative factor, but it is one which needs to be understood. To the extent that a successor is extensively schooled in all facets of the business, this can promote succession as there is a tendency for both business and successor to ‘need each other’. That is when, both the business and the successor benefit from the successor keeping those highly idiosyncratic skills in the firm, but the individuality of the firm in itself can create a sense of an ad hoc approach when compared to “text book” verifiable business principles. In deed Bennedsen et al (2006) found that “…unrelated CEOs are significantly more qualified than family CEOs: they are more likely to have previously served as CEOs and to have attended college than family CEOs...” (p. 31).
The need for effective planning, however, is fundamental, as Dyer (1986, p.405) noted; “…family firms that have some objective standards for monitoring the performance of family managers and are willing to enforce discipline may realize the advantage of lower monitoring costs since the goals of owners and managers are aligned. However, those firms that allow nepotism to run rampant, without adequate monitoring, may be at a competitive disadvantage….” In fact, Stavrou et al (2005) found that a collaborative family and a participatory business culture were key indicators of successful transition and long term business survival. With respect to the Board’s role, Stavrou et al found that an advisory board configuration was best suited to a successful transition. Notwithstanding this observation, what seemed to be critical was the common understanding as to the role of the board by the both the former and latter management group.
The utilization of an executive coach during the succession process is akin to the role an external management group or independent board would play within the day-to-day running of a family business, and that is to give perspective to the process and act as a mitigating factor between the competing demands of the family and the business. Lukaszewski (1998) noted that most people close to executives are afraid or do not know how to confront them regarding their behaviour. Palmer and Reed (2006) explained this difficulty of senior executives to receive feedback from their subordinates by the need for “homo-sociability”-the proven tendency in practices such as mentoring and training to feel more comfortable with people from similar social characteristics and backgrounds (Blackmore, Thomson & Barty, 2006). This opportunity for gaining an understanding of how one is perceived by others in the organizational context is vitally important to leadership and managerial effectiveness according to the literature on self-perception accuracy (Ashford, 1989; Bandura, 1982; Bass & Yammarino, 1991; Yammarino & Atwater, 1993).
Discussion and Limitations
As the business environment becomes more complex and the pace of change accelerates, it is reasonable to assume that traditional family business structures will be placed under greater stress and be confronted by challenges that were not present less than a generation ago (e.g. the global environment, the speed to market, the emergence of new and diverse industries, coupled with the life-cycle reality that the baby-boomer generation is reaching retirement age and being superseded by the X and Y generations of today’s digital world). During this stressful transition, the executive coach will be in a unique position to add real value to this process, provided that the coach is cognizant of the unique nature of the motivational and associated variables that are present in family business structures.
This paper addresses some of those variables, and attempts to put them into context. Issues of the founding parent’s identity and role within the transition process will be the key stone to not only a successful transition, but also to enable the family’s acceptance of the new social order within the family group. How the founding parent handles the transition process will also go a long way in determining how the non-family employees accept the new regime. In addition, underpinning this acceptance will be, how the non-family employees perceive the process itself, has justice prevailed, or more accurately has justice been perceived to prevail. The research presented in this paper contends that structured HR practices, coupled with mitigating non-family influences such as, independent boards and external consultants will have a material impact upon non-family acceptance.
Notwithstanding, the critical nature of the variables stated, these influences are but the tip of the iceberg. Family business researchers have over the last 25 years identifies numerous influences that determine business decisions within any family business. To name a few, issues of work/family conflict (George et al., 1990; Greenhaus et al., 1985; Parasuraman et al., 1996), leadership, personality style (Kepner, 1983; Myer et al., 1990; Stavrou et al., (2005), culture (Diericks et al., 1989; Heck, 2004; Steier et al., 2004), ethnicity, kinship, altruism (Dyer, 2003; Karra et al., 2006; Peredo, 2003; Shulze, 2001), generational commitment (Dyck, 2002; Habbershon et al., 1999; Lee, 2005; Sharma et al., 2005), gender and interfamily role expectations (Cole, 1997; Kepner, 1983; Vera et al., 2005).
In addition to the breadth of research mentioned above, an executive coach in a family business environment needs to understand the relative importance of the variables and their interdependencies and dynamic influences upon one another and upon the family business decision structures. From a coaching perspective, not understanding or appreciating this environment is like a basketball coach attempting to coach an Australian Rules football team in a game of soccer; they are all ball games, just different rules.
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