When its not clear where authority lies in the business, its impossible to get a consensus and move ahead on important decisions.

Authority and Decision-making: Who is the boss?

Our services include evaluations of the authority and of the decision-making system in a family business, and helps family members to satisfactorily address their concerns without jeopardizing the authority structure that the family business must have to function properly.

The authority structure and the decision-making responsibility are spelled out in the organization chart. Every business, family-owned or public, is organized so that the authority, responsibility, and accountability of the leadership are well represented in the reporting system. That system is always laid out in a hierarchical manner. However, it is not uncommon to find that in family businesses such an organizational chart is complex. The reporting lines are not straight and may go to more than one person. Even, if the official reporting system looks fine on paper, sometimes there is also an "unofficial" reporting system that bypass those who are supposed to be in authority. This problematic system is more typical of a family business where both the first generation: the founder(s), and the second generation, an offspring who is the President and/or CEO, are running the business.

O, Brother!

Other challenges to the official business authority may come from siblings. These are brothers and sisters who are absent shareholders, i.e., not working in the business. An indirect challenge to the official authority may also come from in-laws — family members married to the owners. Such a challenge may occur among first generation owners, that is, the founder's siblings. It is more common, however, and often more severe among the second generation (and the third generation if the business survives as a family enterprise). The chart below shows a graphical representation of the areas where challenges to the family business leadership appears.

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