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While I agree with the suggested governance and succession planning practices, they may be more achievable for larger organisations that have the resources, time, and funding to invest in developing future leaders from within the family.

In smaller family businesses, limited resources could make it difficult to implement these best practices fully.

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Potential challenges and negative consequences:

1. Lack of separation of duties - family members may hold multiple leadership and governance roles, reducing independent oversight and accountability. This can increase the risk of poor decision-making, inadequate controls, and governance failures.

2. Perceived and actual conflicts of interest - family relationships can create situations where personal interests influence, or are perceived to influence, business decisions. Even where decisions are made appropriately, perceptions of bias can damage trust among employees, stakeholders, and other family members.

3. A non-reporting culture for non-family members - employees who are not part of the family may feel uncomfortable raising concerns, challenging decisions, or reporting misconduct. They may fear negative consequences or believe their concerns will not be taken seriously. This can result in important issues remaining unreported, limiting transparency and preventing the organisation from identifying and addressing risks early.

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I agree with the answer provided by our first contributor - the challenges include tif a strong governance baseline is not in the DNA of the family business, a loss of the mission or what is called the family 'gravity' which is what makes these companies largely beat the returns of listed companies without predominate family ownership, and a lack of effective succession planning the bringing in of outsiders where it is warranted and needed and allowing them to use their skills and capabilities. The consequence of not engaging in these best practices leads to generations 2 to 4 losing the success of the founders and the family business no longer being an ongoing concern.

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I would say I largely agree rather than totally as the sample size whilst substantive of around 50 that were all in the top three in their geographic markets and industries is pretty good. The best practices identified appeared robust.

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Potential challenges could be not setting clear boundaries between family and business, weak governance, succession uncertainty, cultural fit, poorly managed integration of new CEO's and inadequate oversight resulting in organizational instability, recruitment challenges, succession failures, governance gaps, cultural misalignment.

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Yes I agree with this article

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Leadership Lessons from Great Family Businesses

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Leadership Lessons from Great Family Businesses

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Here is the article for those who couldn't access it

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Leadership Lessons from Great Family Businesses

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Hi, I can not access the Harvard Business Review article. It says the content is reserved for subscribers only.