This essay examines the issue of organisational change and its management, with specific regard to succession and generational change in family businesses. This short essay attempts to analyse the bringing about of organisational change in family businesses, with specific regard to the impact of succession and generational change upon organisational change management strategies. The essay discusses the rationale for organisational change, describes relevant change management models and furthermore takes up the limitations and challenges of succeeding generations to respond to changing environments and manage change. Use is made of various change management models and succession theories for the evaluation of this study.
Table of Contents
1. Introduction
2. Overview
3. Discussion and Analysis
3.1 Rationale for Change
3.2 Important Change Management Models
3.2.1 Lewin’s Model of Change
3.2.2 Kotter’s Change Model
3.3 Important Features and Attributes of Family Businesses
3.4 Use of Theory for Understanding Family Businesses
3.5 Succession Issues in Family Firms
3.6 Limitations Created Generational Change upon Organisational Change Management Strategy of family Businesses
4. Conclusions
Objectives & Research Topics
This essay explores the intersection of organizational change management and family business dynamics, specifically focusing on how succession and generational shifts impact strategic decision-making and firm longevity.
- The rationale and importance of effective change management in dynamic business environments.
- Evaluation of classical change management models (Lewin and Kotter) within family-owned firms.
- Analysis of family business unique attributes, including systems theory and agency perspectives.
- Examination of succession challenges, including the "generational shadow" and resistance to change.
- Impact of generational transitions on strategic stagnation versus business growth.
Excerpt from the Book
Succession Issues in Family Firms
Family owned firms have small management pools, which are essentially headed by the owners and their close relatives or associates. With growth in business of such organisations often being restricted and slow, most of the organisational responsibilities are handled by the owners, family members and very few trusted managers (Davis & Harveston, 1998). Whilst organisations run by appointed managers routinely experience the entry and exit of employees at all positions, the senior positions in family firms see very little turnover and remain static, in the same family hands, for years on end (Davis & Harveston, 1998).
Succession in such businesses involves the induction of the next generation of family members into positions of managerial responsibility at various organisational levels, their orientation in business activities and their being given positions of responsibility within organisations (Perez-Gonzalez, 2006). Succession in family run firms furthermore moves on reasonably predictable lines with the founder of the business being succeeded by his son (s) or daughter (s), followed by the possible induction of their spouses into the business (Perez-Gonzalez, 2006).
Research studies reveal that approximately 70% of family owned businesses close down before their transition into the second generation. The ownership structure of the businesses that do continue into the second generation becomes more diffuse, with management responsibilities spread over larger numbers of people (Bocatto, et al, 2010). These phases, namely the second and third generations, are also associated with the growth of tensions between family members on various business aspects. The third generation of a family firm is very likely to include cousins and members with minority ownerships, who neither work in the business nor participate in any sort of decision making in business activity (Bocatto, et al, 2010).
Summary of Chapters
1. Introduction: Outlines the scope of the essay, focusing on the management of organizational change within the specific context of family business succession.
2. Overview: Provides global context on the prominence of family firms and the critical necessity of effective change management to avoid organizational obsolescence.
3. Discussion and Analysis: Examines theoretical frameworks, family-specific business attributes, and the significant challenges that generational transitions impose on strategic flexibility.
4. Conclusions: Summarizes that while generational shifts bring new knowledge, they often lead to strategic stagnation due to internal family tensions and the influence of previous generations.
Keywords
Family Business, Change Management, Succession, Generational Change, Organizational Strategy, Systems Theory, Agency Theory, Lewin, Kotter, Business Stagnation, Leadership Transition, Entrepreneurial Orientation, Generational Shadow, Firm Longevity, Strategic Management
Frequently Asked Questions
What is the core focus of this research?
The research examines how generational changes and the succession process within family-owned firms influence their ability to implement effective organizational change management strategies.
What are the primary themes discussed?
The text covers the importance of change management, the unique structural characteristics of family firms, theoretical models for analysis, and the challenges inherent in intergenerational leadership transitions.
What is the primary research goal?
The goal is to analyze whether and how generational change acts as a catalyst for or an impediment to successful strategic change management in family enterprises.
Which scientific methods are employed?
The study utilizes a qualitative literature review and synthesis, applying established change management models (Lewin, Kotter) and family business theories (Systems, Agency, Resource-based) to evaluate existing research findings.
What topics are covered in the main body?
The main body details the rationale for change, compares various change management models, dissects the unique features of family business ownership, and explores how succession often leads to organizational conflict and stagnation.
Which keywords best describe this paper?
Key terms include Family Business, Succession, Generational Change, Change Management, Strategic Stagnation, and Leadership Transition.
What does the "generational shadow" imply for a family business?
The "generational shadow" refers to the enduring influence of older family members on their successors, which can constrain the innovation and motivation of the new leadership and lead to dysfunctional change management.
Why do many family firms struggle to reach the third generation?
The text suggests that growth in management complexity, internal tensions between family members, and a failure to transition from founder-centric strategies often result in stagnation, with approximately 90% of family firms failing by the third generation.
- Quote paper
- Alexander Schmithausen (Author), 2012, Impact of Generational Change on Change Management Strategy in Family Businesses, Munich, GRIN Verlag, https://www.grin.com/document/199981
