Craig E. Aronoff's scientific contributions
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Publications (159)
Some of the strong personality characteristics that enable entrepreneurs to succeed against the odds in launching their business may actually complicate the transition to the sibling generation. For example, children who are raised by controlling parents may not develop great self-confidence which could affect their ability to build a team or to ma...
The appropriate management structure of an enterprise at the sibling stage will vary depending on the business, industry, markets served, number of employees, etc. It is beyond the scope of this book to prescribe optimal management structures, but it is almost certainly necessary to move the company away from the hub-and-spoke model of management t...
The transition from the founding generation to the sibling generation is considered the most challenging of succession journeys for families in business for many reasons. Some significant ones include: the intensity of sibling relationships, the arrival of in-laws, and the difficulties the founder may have in letting go. We will touch on these and...
Susan’s story is a composite of the many, many stories we have heard from spouses in business-owning families. Quite simply, it is hard to marry into a family business. The arrival of in-laws in the family system is a significant event; it represents growth in the family and the possibility of a next generation, but it also generates a lot of anxie...
Love and strong family ties can blind some families to future risks. When siblings have trusting and close relations with one another, they often resist setting up formal processes and policies because they do not feel they need to create so many structures and systems to manage their company. After all, they grew up together, work well together, s...
The sibling partnership stage is generally more intense and volatile than any other. As a result of their growing up together, the level of intimacy is higher among siblings than it is in the cousin generation that follows. This deeper knowledge of one another can foster a particularly strong partnership between individuals who can finish each othe...
Sometimes with all the time and work required to become an effective and successful ownership and leadership group of siblings, it is easy to lose sight of what a family business is really all about: family. It’s about each sibling’s own family and extended family, Mom and Dad, brothers and sisters and their spouses, and nieces and nephews. Without...
While proactively planning for the rise of the sibling generation will improve the odds of a smooth intergenerational transition, its accomplishment requires hard work, tenacity, and patience. There will be bumps in the road and roadblocks. We have alluded to some of these challenges throughout this book, but let’s take a closer look at some of the...
Successful transition to sibling generation leadership requires preparation and effort by all stakeholders of the family business. The complexity of the sibling stage in a family business typically requires adjustments in management, business governance, and the family’s decision making. Ideally, the senior generation works with the next generation...
Planning for the continuity of your enterprise has never been more relevant. As the baby-boom generation (persons born between 1946 and 1964) is reaching and passing the age of 60, our culture is facing an unprecedented “bubble” of individuals moving toward retirement age. In an extensive survey of family businesses, wealth management advisors Lair...
Statistics show that many family businesses fail by the third generation-- those that survive are able to navigate the transition from a sibling run business to an expanded family run business. Here Aronoff and Ward show siblings and cousins how to work together on key issues that are critical to the future success of the business including how to...
Ownership in a family business can be a rewarding and important role. It means stewardship, protection and nurturing the family business. As a guide for shareholders, this book will developing understanding and insight into the role of becoming more valuable as an owner, not just financially, but intellectually and emotionally as well. It aims to p...
Strategies for family firms, unlike those of other businesses, can and should incorporate family factors. Responsible and disciplined strategic integration of family and business goals, strengths and values produces powerful results. In Preparing Your Family Business For Strategic Change, you'll learn: * How to reach your family business's strategi...
Family business leaders of the past could often guarantee decades of success built on a single, long-lived strategic plan. But the current rapid rate of change makes ongoing success an infinitely more difficult challenge. What works today is passé tomorrow. In Make Change Your Family Business Tradition, those involved in or with a family firm will...
Jeffrey doesn’t like the way things are going. As the 17-percent owner of Woodruff Hardware, a wholesaler serving southeastern Pennsylvania, he thinks his opinion ought to count for more. A member of the family business’ third generation, Jeffrey shares ownership equally with two brothers and three cousins. Only his brother, Phil, the CEO, and his...
Families can be good for the businesses they own, and businesses can be good for the families that own them—particularly when owners pull together in the same direction. Like one hand washing the other, a business can provide the cohesive focus that brings a family together, and the family cohesion, in turn, benefits the business and moves it forwa...
When we consult with a group of cousins in a business-owning family, we nearly always open the proceedings with two questions: “Do you want to continue to own this business together? If so, why?” These are the most critical questions the cousins have to answer and we urge them to be particularly thoughtful as they explore the questions together. It...
Every family business has “insiders” and “outsiders”: owners who work in the business and owners who don’t; family members who own shares and family members who don’t; married couples where one spouse is an owner and the other is not; owners with voting stock and owners with non-voting stock or family members whose shares are held in trust, majorit...
When you act like an owner—that is, a good owner—you accept a host of interesting and challenging responsibilities. You adopt what we call an “ownership attitude.” If we had to describe what an ownership attitude means in one word, we’d say stewardship.
Accepted wisdom suggests that family businesses are more flexible, more innovative, and more responsive to market changes than publicly held companies. Family firms don’t have to answer to outside shareholders. They can move quickly. They can turn on a dime.
Family business succession is an often misunderstood concept. Many think of it as simply passing the top executive slot from one person to another at a certain point in time. But it’s much more extensive and complex than that. Among other things, succession involves preparing the entire family business governance system for continuity. It’s about t...
It’s one of the facts of life: Nothing is constant except change. Let’s look at some of the events—or changes—that trigger change within a family business:
Death, incapacitation, or retirement of a family member. While the death of any company’s CEO is always traumatic, in a family business, the death of family members—and non-family key executives...
The foremost responsibility of a new leader in a family business is to preserve the best of the past while at the same time opening up the organization so that it is willing and able to accept and embrace continuous change. Mastering this paradoxical challenge is, we believe, central to the success of successor leadership.
At a very early age, children begin to learn attitudes about money, wealth, and pay that stay with them for a lifetime.
Paradox: How you define your business and what brought it success determine your ability and freshness to see new ways to do business. A narrow definition of the business and its success factors can lead to paradigm paralysis.
A key to an effective compensation system is building trust among family members, employees, and others. Here are some issues that often arise as business owners try to build trust in the compensation planning process.
It is no longer the leader’s job just to create strategy. It is the leader’s job to ensure the organization stays fresh strategically. The difference is profound.
Why should business families be concerned with the workings of the family? Shouldn’t business and family issues be kept separate?
Many compensation conflicts stem from misunderstandings and misinterpretations, misaligned and unrealistic expectations, a lack of awareness about how equitable pay systems should work, or bigger problems resulting from historical accommodations. Without a working knowledge of a rational compensation system, attempts to correct an existing problem...
As the business and the family members mature, their needs, expectations, and goals may conflict. The current leader must sort through and address these needs.
Many business families are so accustomed to weathering hardships and challenges together that they assume they can get through almost anything.
Strategic planning is not necessarily a straightforward, objective process in a family business. Current and future leaders who understand this spare themselves, their managers, and their families considerable frustration.
To navigate your way to where you want to go, you need to know where you are now.
As the year leading up to John Smith’s planned retirement wears on, he prepares to work with a family business consultant on the financial issues raised by ownership succession. But he is hampered by a growing sense that all the fun seems to have drained out of life. Roh and Kathy are avoiding one another, and they argue a lot when they do work tog...
Here are a few more principles that, in our experience, have helped many business families:
Develop a family code of conduct. (See Exhibit 5.)
Hold family meetings. (See Family Meetings: How to Build a Stronger Family and a Stronger Business.)
Keep confidential all of your discussions about family patterns and behavior.
Never undermine another fami...
When trouble arises, some families find it helpful to bring in a family business professional, such as a consultant, an organizational psychologist, or a trained therapist or counselor with an understanding of family business.
While there are no hard and fast rules about what policies a family firm needs or when it needs them, we believe there are core policies that benefit most, if not all, business-owning families. These include:
Family decision-making/governance policies
Compensation/performance evaluation policies
Employment policies
Codes of conduct
As the Smiths have discovered, any transition that brings a reorganization of the family, the business or both can lead to tension or conflict in even the most peaceful families.
What is the point of delving into the workings of the family?
Because it contains several family business policies, developing a shareholder agreement is often a great challenge to business-owning families. Such an agreement is needed whenever a business has more than one owner (as in a partnership), or when a founder begins to distribute shares to children or other family members. Shareholder agreements—some...
Sam Walton’s father was an avid trader who bargained hard for low prices in the Depression-era dust bowl of Oklahoma and Missouri. The late Mr. Walton took that core value and transformed it into Wal-Mart, a retailing empire built around serving the customer with low prices. The same value drove his relentless insistence on squeezing costs out of t...
The pace of change in business and the economy has never been faster. New-product life cycles have shrunk dramatically. Companies merge and restructure almost overnight. Industries combine, transform themselves, and re-emerge with a different focus. Business strategies are rendered obsolete in a heartbeat.
As we discussed in Chapter 4, we like to see the leadership solution evolve over time. When the siblings work together as an executive team, they begin to develop their own leadership and decision-making systems. And the choices available to the family become clearer.
Family and business are so fundamentally different that they naturally pull apart over time.
Where do values come from, and how do they take root and endure in families? Families begin transmitting values very, very early, often before consciously realizing they are doing so. Parents teach values mainly by living them. This process begins almost at birth. It may be intentional or unintentional. After the husband-and-wife owners of one fami...
A man we’ll call Roger and the family he works for represent almost the ideal when it comes to the relationship between a key non-family executive and a business-owning family. And the benefits of this good relationship are standing all parties in good stead now that the children are beginning to take positions of leadership in the family business.
Policies governing the relationship between the family and the business are important to any family business. What is more important, however, is the process family members engage in when they create policies. We cannot emphasize that enough.
Consider two families who want to develop a policy that will offer guidelines for the employment of family members in their respective businesses. Both families operate successful companies, and both are made up of thoughtful people who want the best for their families and their business. Beyond that, they are very different—and so are the policies...
Several communication techniques have proven effective in helping the family and the board function smoothly and fostering trust and confidence between the two.
With the members of your sibling team spending so much time in the business and so much time with each other, you may lose sight of what family business is all about: family. That is, each sibling’s own nuclear family and extended family— Mom and Dad, brothers and sisters and their spouses, and your nieces and nephews. Without their love, happiness...
An important way to move toward the goals of a strong business and strong family is through family meetings.
A well-organized family and board, while focusing on their distinct responsibilities, also share broad areas of synergy.
Two brothers, Andrew and John Woods, inherited their parents’ business 50–50. For many years, times were good, Woods Electronics did well, and the brothers got along. But Andrew, the older of the two and president of the company, overlooked it when John borrowed money from the company and didn’t pay it back. John had a big family to support, after...
Whatever the impetus for a family meeting, the act of gathering as a family can encourage members to act on deeply felt, shared values. The result can be a landmark achievement for both the business and the family.
Each generation of a family business is unique and faces its own special set of challenges. We believe, however, that the sibling team—frequently the second generation—faces some of the most difficult challenges of all. If you are a member of a sibling group, be prepared to spend enormous effort building and maintaining an effective team. The deman...
If you’re a new non-family executive in a family company, or if you’re thinking about accepting a management position in a family firm, you may be wondering how to make the experience a successful one. It’s a wise thing to think about, because family firms pose many challenges to executives that they don’t encounter in other companies.
While families often have meals together or gather for holidays or special occasions, the idea of holding a structured, purposeful family meeting is new to most. Here are some practical suggestions for planning, arranging, and conducting successful family meetings.
When leadership and ownership of a business move from the founder to next-generation siblings, the enterprise doesn’t just change hands. It often moves from being an entrepreneurial, informally run business to one that needs more formal structures, systems, and procedures. This formalization is often referred to as “professionalization.”
When it comes to rewarding non-family executives, family business owners face several challenges: How, for example, can you structure compensation so that it links the performance of an executive to the long-term performance of your company? How can you avoid overpaying in your effort to retain valuable talent, while at the same time being sure you...
Just as the attributes described earlier signal benchmark service by an advisor, some behaviors should sound an alarm.
In a printing company we’ll call Hubbard Graphics, Dad learned that his three kids were considering purchasing a very expensive German press. Yes, he knew he had put them in charge and begun semi-retirement. But he thought buying the press would be a big mistake. It was just too costly, and the company was not doing the kind of printing that would...
One of the surest ways to retain talented non-family managers and to increase their value to your company as time goes on is to make them a full-fledged part of your team—whether they are mature senior executives or younger, lower-level managers with the potential to handle greater responsibility.
Turning any group of people into a team is a tough assignment. Forging two or more siblings into a team, especially if they didn’t have team-building experiences growing up, is even tougher. The emotional issues we talked about earlier frequently get in the way—all the more reason to be aware of and understand these issues so that any negative impa...
We have discussed in previous chapters of this book some important principles of managing liquidity needs and cost of capital. This chapter outlines a variety of financial tools designed to help business families meet liquidity needs in a planned fashion.
Throughout the world and across the centuries, family businesses share a common set of challenges: liquidity for shareholders, capital for business growth, and responsiveness to shareholders’ control objectives. Let’s consider the case of Carwood, a U.S. family business:
Judging from their beautiful new headquarters on the outskirts of Cleveland, t...
A succession process isn’t complete until the transition from one leader to the next has actually taken place. How a family business “gets from here to there” requires forethought, tact, and the ability to ease the fears of those affected by the change of leadership. And both outgoing CEO and successor will have to be deeply involved during this st...
In the previous chapter, we described 11 ways to raise external capital for growth. Because of the increasing availability of private equity capital for family companies, this chapter will explore the private equity solution in much greater depth.
Some pitfalls of succession have already been mentioned. But a few are so common that they deserve a closer look.
Often, a primary objective for business-owning families is to maintain control over their own destiny. In today’s global economy, one question that family business owners face is whether to sell the business, keep it as it is, or expand it internally or externally.
If you are among the increasing number of owners intending to transfer your business assets to multiple heirs, you need to give thorough attention to the role of your children as business partners. Often, family business leaders are so distracted by the complexities of estate planning, personal financial planning, and leadership succession that the...
Some business owners cherish a dream that a particular child will lead the business.
Families often hesitate to convene regular family meetings. For some, the formality of meetings seem strange when family communication has been spontaneous and informal. For others, a meeting’s democratic spirit seems unsuitable for the inequality of parents and children.
Few business owners use professional advisors wisely. Nearly one-third of family businesses have no trusted advisor outside the family, a recent survey by Massachusetts Mutual Life Insurance Co. shows. (Please see Table 3.)
The attitude of the family business leader is the single most important factor in any succession. But preparing for succession often brings an owner face-to-face with unexpected emotions and daunting personal obstacles.
Once you know what you want in an advisor—and what you want to avoid—how do you find the right one?
While venture capitalists are not always the best friends of family business, they have a useful rule of thumb: as soon as you get involved in any deal, start working on an exit strategy.
Preparing someone else to take over your business can be a confounding challenge for many entrepreneurs. Let’s take a look at some of the personal issues it raises.
“I dont’t get it,” said Alan, the 20-year-old grandson of the founder of a substantial distribution business. Although not active in the business, he owns a small stake in it and he regularly attends family meetings. He was talking with a cousin during a break. As a philosophy major in college, he felt that he was headed in professional directions...
Joining the family business offers the rare opportunity to build one’s own destiny on a foundation laid by previous generations.
Ahealthy family is the foundation of continued success in a cousin-owned business. By “healthy family,” we mean one where relationships are respectful and friendly, communication is good, and conflicts are prevented or dealt with satisfactorily. All of us know of family businesses that have crumbled because the owning family fell apart.
Good advisors to the family business are more than just experts in their field.
If a business-owning family can successfully make its last major transition, the transition to the cousin stage, then it has achieved a secure foundation for becoming a “dynasty.” We use that word not to mean a succession of family rulers but to mean “everlasting.” And some family businesses around the globe do seem to be lasting forever. While a n...
As you and your cousins think about how your business should be managed while you are in charge, it is helpful to review some of the changing dynamics we described earlier. Your parents, the sibling generation, may have been seen as equals. Each probably had his or her own area of responsibility—perhaps a business within the family enterprise—and d...
Once the business starts taking off, the factors that brought success tend to become institutionalized into a rigid strategy and structure. That dampens, not enhances, future growth.
How you manage your resources—people, money facilities, equipment, and so on—has a great deal of influence on your ability to change and to do it in a timely, appropriate, and profitable fashion.
As one who left his father’s farm at the age of 18, John Smith is proud to have created what he sees as a “family business.” He is pleased that his own son, Rob, at 35 is still working by his side. And he is proud that he has built a substantial legacy for Rob and Kathy to share. The energy shared values, and cohesiveness of a close family can be a...
To create a tradition of change in a family business, you must develop a culture of change. In other words, you need to put together an environment that embraces change, encourages it, and thrives on it. In a culture of change, an organization is flexible and adaptable. You can have continuous incremental and relatively painless change rather than...
As you can see from reading Chapter 2, we urge families to put policies in place before the need arises. For example, consider a business run by a founder or founding partners with children still too young to join the company. It is easy to say, “I don’t have to worry about the kids entering the business—that’s still a few years off.” But if you wa...
For many business owners, recognition of the need for change in compensation practices begins a process of transformation.
Sometimes the implementation of a policy goes awry, despite the fact that all the relevant decision makers seem to agree on what the policy would be. One or more family members may deliberately ignore parts or all of a policy. Grandpa, the founding chairman, may see that his 20-year-old grandson gets a job at an out-of-town plant despite the family...
Most enduring family businesses hit compensation trouble spots. Awareness of these potholes can help the business owner develop policies in advance to deal with them. A sampling of “sticking points” is contained in Table 8.
Citations
... Partager la direction d'une entreprise en fonction de ses goûts, compétences et savoir-faire a du sens (Heenan & Bennis, 1999). Le sujet renvoie cependant à l'identification des facteurs améliorant la probabilité de réussite d'une direction partagée, dans la mesure où cette approche collective s'inscrit dans la durée (O'Toole et al., 2002 Les trois approches présentées dans le tableau 1 amènent à des situations très différentes mais soulèvent une question commune relative à l'équité (Ayres & Lansberg, 1989;Aronoff & Ward, 1992;Nicholson & Bjönberg, 2008) entre frères et soeurs : est-il juste de partager la propriété entre tous les enfants, dans le cas où l'un d'entre eux travaille dans l'entreprise depuis plus longtemps que les autres ? Cette interrogation nous guide, et dans un souci d'homogénéité, nous ne retenons que les cas de figure dans lesquels les membres de la fratrie se partagent de manière égale la propriété de l'entreprise (première colonne du tableau 1). ...
... LMX theory emphasizes a dyadic relationship suggesting that depending on the relationship between leaders and followers (Graen & Scandura, 1987;Graen & Uhl-Bein, 1995), lower or higher quality exchanges will be forged (Wat & Shaffer, 2005). We move beyond the dyadic relationship between leader and follower and find that a network of relationships with various family and non-family stakeholders is key to fostering high-quality relationships (Salvato & Corbetta, 2013;Ward & Aronoff, 1994). This finding is in line with recent research on social capital highlighting how intra-and extra-firm and -family relationships interact with each other, affecting goals, resources, and governance in family firms (Zellweger et al., 2019). ...
... While the state offers more stability than alternative sources of funding, it does compromise private initiative and creativity, leading to sport becoming entangled with politics (Van Eekeren, 2006, p. 10). Of course sport is not totally 'free of politics' as former International Olympic Committee (IOC) chairman Avery Brundage so boldly stated over 50 years ago (Cashmore, 1990). This is nowhere more evident than South Africa, which endured sports boycott during apartheid and has since put sport at the forefront of state policy, hosting mega-events such as the 2010 World Cup and developing an agenda and scorecard for transformation in sport. ...
... To address this research gap, we present a conceptual analysis of shareholder agreements and their effectiveness in attaining family and business goals as a function of strategic fit with relevant dimensions of family firm heterogeneity. On the one hand, we review the practitioner literature on shareholder agreements to distill four dimensions that characterize them (Aronoff, Astrachan, & Ward, 1998). On the other hand, we focus on two prominent dimensions of family firm heterogeneity namely the family's value and goal system (Frank, Suess-Reyes, Fuetsch, & Kessler, 2019;Seaman, Bent, & Silva, 2019;Zellweger, Eddleston, & Kellermanns, 2010) and the level of maturity of the family (e.g. ...
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... On one hand, a team with multiple successors who have complementary skills might be more successful (Aronoff 1998;Cater and Justis 2010;Farrington, Venter, and Boshoff 2012). But on the other hand, team dynamics could give rise to specific management challenges related to collective decision making and task sharing (Aronoff et al. 1997;Cisneros and Deschamps 2015;Nelton 1996), which ultimately might lead to succession failure. ...
... They are reluctant to permit information to be obtained from employees (Ward, 1997) and they protect knowledge about their internal activities related to the competition (Donnelley, 1988). Similar difficulties in obtaining data relate to the values and traditions of business families that avoid negative advertising (Aronoff and Ward, 1997) and prefer not to say anything that might damage their reputation. ...
... Ni siquiera será suficiente con aprender a responder y adaptarse a los cambios del entorno. Para perdurar en el tiempo será preciso tomar la iniciativa y promover el cambio (Aronoff y Ward, 2001;Amat et al., 2008). La gestión emprendedora que asegure el crecimiento rentable y sostenido es fundamental teniendo en cuenta además el incremento de complejidad que se incorpora al sistema familia-empresa con cada nueva generación. ...
... Because of their inherent diversity, it is also impossible to provide a simple concept of a family company (Pan et al., 2016;Peruzzi, 2017). In these organizations, family values and their roots are of considerable value, and younger generations have continued to stay loyal to the way their family conducts business (Zahra, 2003;Aronoff et al., 2016). These dimensions are vital because the family's history and values are preserved unchanged and become a practice that anchors decision-making. ...
... It is also known that the economic and cultural background of the nation influence family policy decisions and, thus, family firm's decision-making (Ward, 2004). ...
