The Reger Group

The Family Business System

Surprisingly, the study of family business is still relatively new.

However, there are some approaches to dealing with family dynamics in business which have proven to be effective. One model that has gained acceptance, around the world, is the three-circle model which describes the family business system as three independent but overlapping subsystems: business, ownership and family.

Any individual in a business family can be placed in one of the seven sectors that is formed by the overlapping circles of the subsystems as outlined below

The three-circle model has met widespread acceptance because it is a very useful tool for understanding the cause of interpersonal conflicts, role dilemmas, priorities and boundaries in family firms. This model helps to break down the complex interactions within a family business and makes it easier to understand what is actually happening - and why.

Business System Family System
Results Based Emotion Based
Mission: Produce Profitable Goods and Services Mission: Nurture Offspring into Competent Adults
Competency Prevails Equality Prevails
Acceptance is Based on Performance Acceptance is Unconditional
Relationships are Temporary and Conditional Relationships are Permanent
Power is Based on Authority and Influence Power is Based Largely on Generation/Birth Order