Posted by janeadams on March 17, 2010

Why Family Businesses Need a Boundary Statement

Many family businesses have mission statements that clarify their values, goals and principles. But few have a boundary statement, which is even more important to the operation, profitability, reputation and stakeholder satisfaction of a family-owned enterprise.

A boundary statement sets out the lines, or boundary, between the business and the family. It protects both from boundary violations – the family from unwarranted intrusions on the business, and the business from unacceptable demands from family members.  It’s not just about leaving family “baggage” outside the plant, office or boardroom or letting outgrown family roles like spendthrift or tightwad, mediator or instigator, determine how family member view or interact with each other.  A well-written boundary statement recognizes that the needs of the business and those of the family are not necessarily or always the same. It sets out procedures to be followed when, for instance, the problems of a family member who works in the company affect not only the individual but the business itself – alcoholism or drug abuse, for example.

Healthy family systems don’t necessarily translate to healthy business systems – for one thing, businesses put the best interests of the enterprise ahead of those of its people, even if it disadvantages some individuals. But families exist to nurture and support their members and further their personal agendas.  For another, decision-making in families is frequently based on emotions, whereas business decisions are (or should be) based on facts, not feelings. A well-crafted boundary statement takes issues like these out of the closet (maybe even the same one where family secrets, skeletons and animosities are buried) and exposes them to the light of reasoned discussion and agreement.

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