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1.3 Home Assignment. Family roles and relationships

1.3.1 Exercise 1. Read the text at home making notes the following way: in the left-side column put down the main statements, definitions or terms, in the right-side column your comments, thoughts, etc.

Vocabulary Notes:

simultaneous – одновременный;

to exert – напрягать (силы), оказывать влияние;

diligence – прилежание, усердие старание;

to counsel – давать совет, рекомендовать;

to perplex – ставить в тупик, запутывать, усложнять;

integral – неотъемлемый, существенный, целый;

to eclipse – затмевать, заслонять;

to dissipate – расточать, растрачивать (время, силы);

zest – интерес, энергия, живость;

strain – напряжение;

collaboration – сотрудничество, совместная работа;

to groom for – готовить к определенной деятельности, карьере;

aptitude – склонность, пригодность, способности;

bent – склонность, наклонность;

aspiration – стремление, сильное желание (достичь ч. –л.)

mould (AmE mold) – форма, лекало, шаблон; характер;

self-esteem – чувство собственного достоинства, самоуважение;

on one’s own – самостоятельно, по собственной инициативе.

Mom or Dad, the Founder

A common figure in family businesses is the man or woman who founded the firm and plans to pass it on to a son or a daughter. In most cases, the business and the family grow simultaneously. Some founders achieve a delicate balance between their business and family responsibilities. Others must exert great diligence to squeeze out time for weekends and vacations with the children.

Entrepreneurs who have children typically think in terms of passing the business on to the next generation. Parental concerns involved in this process include the following:

– Does my son or daughter possess the temperament and ability necessary for business leadership?

– How can I, the founder, motivate my son or daughter to take an interest in the business?

– What type of education and experience will be most helpful in preparing my son or daughter for leadership?

– What timetable should I follow in employing and promoting my son or daughter?

– How can I avoid favoritism in managing and developing my son or daughter?

– How can I prevent the business relationship from damaging or destroying the parent-child relationship?

Of all the relationships in a family business, the parent-child relationship has been the most troublesome. The problem has been recognized informally for generations. In more recent years, counseling has developed, seminars have been created, and books have been written about such relationships. In spite of this extensive attention, however, the parentchild relationship continues to perplex numerous families involved in family businesses.

Couples in Business

Some family businesses are owned and managed by husband-wife teams. Their roles may vary depending on their backgrounds and expertise. In some cases, the husband serves as general manager and the wife runs the office. In other cases, the wife functions as operations manager and the husband keeps the books. Whatever the arrangement, both parties are an integral part of the business.

A potential advantage of the husband-wife team is the opportunity it affords a couple to share more of their lives. For some couples, however, the potential benefits become eclipsed by problems related to the business. Differences of opinion about business matters may carry over into family life. And the energies of both parties may be so dissipated by their work in a struggling company that little zest remains for a strong family life.

Adele Bihn and Murray P. Heinrich of San Jose, California have experienced both the joys and strains of working together as business partners. After 12 years of marriage and collaboration in their business, Data Marketing, Inc., they are described as "still blissfully happy." Adele, mother of their four children, owns 50 percent of the company and serves as president. Murray owns the other 50 percent and heads up product research. To maintain their happiness, they must deal with strains imposed by the business. They have worked together to resolve these pressures by using a variety of methods, including semiannual visits with a marriage counselor, annual away-fromwork business strategy sessions, Saturday morning breakfast dates without the children, and annual separate vacations. Their experience shows that entrepreneurial couples can maintain good marriages, but it also shows that such couples must devote special effort to both business and family concerns.

Sons and Daughters

Should sons and daughters be groomed for the family business, or should they pursue careers of their own choosing? In the entrepreneurial family, a natural tendency is to think in terms of a family business career and to push a child, either openly or subtly, in that direction. Little thought, indeed, may be given to the basic issues involved, which include the child's talent, aptitude, and temperament. The child may be a chip off the old block but may also be an individual with different bents and aspirations. He or she may prefer music or medicine to the world of business and may fit the business mold very poorly. It is also possible that the abilities of the son or daughter may simply be insufficient for a leadership role. (Of course, a child's talents may be underestimated by parents simply because there has been little opportunity for development.)

Another issue is personal freedom. We live in a society that values the right of the individual to choose his or her own career and way of life. If this value is embraced by a son or daughter, that child must be granted the freedom to select a career of his or her own choosing.

A son or daughter may feel a need to go outside the family business, for a time at least, to prove that "I can make it on my own." To build self-esteem, he or she may wish to operate independently of the family. Entering the family business immediately after graduation may seem stifling – "continuing to feel like a little kid with Dad telling me what to do."

If the family business is profitable, it does provide opportunities. A son or daughter may be well advised to give serious consideration to accepting such a challenge. If the business relationship is to be satisfactory, however, family pressure must be minimized. Both parties must recognize the choice as a business decision as well as a family decision – and as a decision that may conceivably be reversed.

1.3.2 Exercise 2. Translate the following text in written form

Special features of family firm management.

The complexity of relationships in family firms creates a demand for enlightened management. To a considerable extent, this just means good professional management. However, certain special techniques are useful in dealing effectively with the complications inherent in the family firm.

The Need for Good Management

Good management is necessary for the success of any business, and the family firm is no exception. Significant deviations for family reasons from what we might call good management practices, therefore, only serve to weaken the firm. Such a course of action runs counter to the interests of both the firm and the family. For the benefit of both, we suggest three management concepts that are particularly relevant to the family firm:

1 A family firm must be able to rely on the competence of its professional and managerial personnel. It cannot afford to accept and support family members who are incompetent or who lack the potential for development.

2 Favoritism in personnel decisions must be avoided. If possible, the evaluation of family members should involve the judgment of non-family members – those in supervisory positions, outside members of the board of directors, or managers of other companies in which family members have worked.

3 Plans for succession, steps in professional development, and intentions regarding changes in ownership should be developed and discussed openly. Founders who recognize the need for managing the process of succession can work out plans carefully rather than drift toward it haphazardly. Lack of knowledge regarding the plans and intentions of key participants creates uncertainty and possible suspicion. The planning process can begin as the founder or the presiding family member shares his or her dream for the firm and family participation in it.

The family firm is a business – a competitive business. The observance of these and other fundamental precepts of management will help the business thrive and permit the family to function as a family. Disregard of such considerations will pose a threat to the business and impose strains on family relationships.

1.3.3 Exercise 3. Read the text and render the main idea of it

Vocabulary notes:

consideration – рассмотрение, обсуждение, внимание, соображение;

inside track – выгодное положение, преимущество;

advancement – успех, прогресс, продвижение;

frustration – расстройство (планов), крушение (надежд), разочарование;

to negotiate – вести переговоры, договариваться;

to buy out – выкупать;

to aspire – стремиться;

feud – длительная вражда, междоусобица;

to perceive – воспринимать, понимать, осознавать, постигать, ощущать;

hazard – риск, опасность;

to plague – досаждать, надоедать, беспокоить.

Nonfamily Employees in a Family Firm

Even those employees who are not family members are affected by family considerations. In some cases, their opportunities for promotion are lessened by the presence of family members who seem to have the inside track. What parent is going to promote an outsider over a competent daughter or son who is being groomed for future leadership? The potential for advancement of non family members, therefore, may be limited, and they may experience a sense of unfairness and frustration.

One young business executive, for example, worked for a family business that operated a chain of restaurants. When hired, he had negotiated a contract that gave him a specified percentage of the business based on performance. Under this arrangement, he was doing extremely well financially – that is, until the owner called on him to say, "I am here to buy you out." When the young man asked why, the owner replied, "Son, you are doing too well, and your last name is not the same as mine!"

The extent of limitations on non-family employees will depend on the number of family members active in the business and the number of managerial or professional positions in the business to which non-family employees might aspire. It will also depend on the extent to which the owner demands competence in management and maintains an atmosphere of fairness in supervision. To avoid future problems, the owner should make clear, when hiring nonfamily employees, the extent of opportunities available and identify the positions, if any, that are reserved for family members.

Those outside the family may also be caught in the crossfire between family members who are competing with each other. Family feuds make it difficult for outsiders to maintain strict neutrality. If a non-family employee is perceived as siding with one of those involved in the feud, he or she will lose the support of other family members. Hard-working employees often feel that they deserve hazard pay for working in a firm plagued by an unusual amount of family conflict.

1.4 Homereading. Transfer of Ownership

1.4.1 Exercise 1. Remember the following terms:

succession – наследование, правопреемство;

inheritance – наследование, наследство;

estate – имущество, состояние;

share – доля, часть, пай; брит. акция;

holdings – вклады;

to bequeath – завещать имущество;

tax – налог;

warehouse – склад, хранилище, оптовый магазин;

distributor – агент по продаже, оптовый торговец;

assets – активы, средства, капитал, фонды, имущество;

business property – собственность фирмы;

monetary values – денежные ценности.

A final and often complex step in the succession process in the family firm is the transfer of ownership. Questions of inheritance affect not only the leadership successor but also other family members having no involvement in the business. In distributing their estate, parents-owners typically wish to treat all their children fairly, both those involved in the business and those on the outside.

One of the most difficult decisions is determining the future ownership of the business. If there are several children, for example, should they all receive equal shares? On the surface, this seems to be the fairest approach. However, such an arrangement may play havoc with the future functioning of the business. Suppose that each of five children receives a 20 percent ownership share even though only one of them is active in the business. The child active in the business – the leadership successor – becomes a minority stockholder completely at the mercy of relatives on the outside.

Ideally, the founder has been able to arrange his or her personal holdings to create wealth outside the business as well as within it. In this way, he or she may bequeath comparable shares to all heirs while allowing business control to remain with the child or children active in the business.

Tax considerations are relevant, of course, and they tend to favor gradual transfer of ownership to all heirs. As noted above, however, transfer of equal ownership shares to all heirs may be inconsistent with future efficient operation of the business. Tax laws should not be allowed to blind one to possible adverse effects on management.

One creative ownership transfer plan was worked out by a warehouse distributor in the tire industry. The distributor's son and probable successor was active in the business. The distributor's daughter was married to a college professor at a small southern university. Believing the business to be their most valuable asset, the owner and his wife were concerned that both the daughter and the son receive a fair share. Initially, the parents decided to give the business real estate to their daughter and the business itself to their son, who would then pay rent to his sister. After discussing the matter with both children, however, they developed a better plan whereby both the business property and the business would go to the son.