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A degree of family education

GOVERNANCE: BUSINESS EDUCATION

Gordon Cairns is a freelance journalist based in the UK.

Family Business MBAs are becoming more and more common across Europe. But how do they compare with a regular MBA? And is it better for students to specialise or to learn about the entire business world? Gordon Cairns finds out …

Family Business, Master of Business Administration degrees first appeared in the early 1990s in the US, before crossing more recently into Europe. There are now estimated to be 12 full Family Business MBAs across Europe, while many more business schools offer modules in running, or dealing with, family-owned companies.

Randel Carlock, senior affiliate professor of entrepreneurship and family business at business school INSEAD, was instrumental in the establishment of the first family business modules in the US 15 years ago. He stresses the importance this course of study can have on business and family life.
 
"You cannot believe the difference teaching family business makes to people's lives," he says. "When you take a course in finance and marketing you may acquire some knowledge that you will apply maybe once or twice a day in your career. But when my students go back to their families after doing the course, they have acquired knowledge which affects every aspect of their lives."

From 2008, the Coles College of Business at Kennesaw State University, Atlanta, GA, is offering a new Executive MBA for Families in Business that is aimed at family business CEOs and executives. The programme, which was created in direct response to demand from family business leaders, incorporates innovation in established family business and strategies for building family unity. Family business insights are integrated into every aspect of the curriculum, which uses case studies to demonstrate the competitive advantages that are unique to family businesses.

In the UK, the University of Gloucestershire introduced a Family Business MBA in 2002 and it has now seen two cohorts of students completing the degree, which encompasses modules such as strategic management in the family business, leadership in family business and the family business in context. Course leader Philippa Ward said the impetus for the course came from looking at teaching trends in business and demand from MBA students wishing to learn the specifics of a family business.
 
"There is a range of issues faced with running a business, and integrating family management into the process makes it an even more complex process," she says.

Business success
Skills developed on the Gloucestershire MBA helped graduate Roman Cooper become managing director of his family business, Allcooper, despite being the youngest of three brothers who all worked for the company. "At the time of deciding to study for a Family Business MBA, I was in a branch of our business which was in a bit of a backwater," he explains. "I knew some of the decisions we took were right, based on gut feeling, but I didn't know why they were right and didn't know how to articulate it."

Although he had no qualifications beyond A levels from school, he decided to take the MBA to help develop business strategies. When his father retired from the business, the family realised there was no leadership and Cooper took control, in part because of his newly acquired academic background. By applying what he had learned in the classroom, Cooper had an immediate effect on the running of the company.

He said that the biggest impact was to introduce a strategy for restructuring the business. "This caused my eldest brother Tim to leave and have his share of the company bought out. This was achieved amicably through what I had learned from the course," he adds.

Cooper's experience illustrates what Carlock considers to be the central concern of a family business – negotiating the inevitable crossover between family life and the business. Carlock believes that through education, families can juggle the two entities successfully.

"The basic issue is an overlap of your family system and your business system," he says. "You have a lot of issues where the values of the family don't apply to the business and the values of the business don't apply to the family."

Carlock believes a good Family Business MBA teaches students how to deal with both. "We plan for the family and business in parallel. What happens too often is that the business has reached a very high level but nothing has been done for the family, with no provision for the ownership or the next generation and no family meetings. Generally it's the family that starts to be the area of conflict, not the business."

Specialist education
However, Carlock is not convinced that an MBA that focuses on family businesses alone is the best choice. "I'm very concerned about any course of study, including an MBA, that's overly specialised. The most important thing to learn in any business graduate programme is how to think, plan and problem solve in many different situations.

"I think you lose something if everything is about family business rather than being related to the larger world," he adds. "On top of that, your customers and suppliers are not always going to be family businesses and I think it is best to understand how those businesses work."

This view is shared by George Morris, chairman of Morris and Spottiswood, who considers a better option to be an MBA that has a component of family business. Morris has overseen the rapid growth of the business established by his grandfather. It now has a turnover of £130 million and was voted 46th in a British newspaper's 100 Best Companies To Work For list in 2006.

"I'm not sure that I would have been interested in a specific Family Business MBA because I think the benefit of an MBA is that it is quite general," he says. "If it was one of the topics on offer, I would have probably taken it. I think if you are choosing a business school, you should choose one with a reputation for good teaching."
 
Mr Morris, who studied for his MBA in Melbourne in 1995, did so to smooth the transition from being a corporate lawyer to working in his father's fit-out and facilities management company. He admits that the MBA he studied probably didn't prepare him completely for taking over the family business, but does not know what else he could have done.
 
"I think the purpose of an MBA is to take specialists and give them that rounded knowledge to let them see what is happening in other areas of the business," he says.

Traditional values
However, Ward disagrees that the Family Business MBA is an any less valid course of study than a traditional qualification: "What people need to understand is that to use the title MBA you have to cover the same range of functional aspects of a standard MBA programme. It simply contextualises the MBA within a family business framework."

Roger Crockford, chartered financial planner with Financial Connections Wealth Management, is currently studying towards his Family Business MBA. Like Ward, he does not consider the MBA to be too family business specific. Crockford, who wants to be able to offer financial advice to family businesses on completion of his course, says that the core subject matter of the Family Business MBA is the same core subject matter of a regular MBA, with two components specific to family businesses.

"The biggest difference is that all of the other students in the second cohort were members of family businesses," he explains. "When the lecturers taught on the generic MBA subjects, the discussions of the students brought the subject round to the application within the family business."
 
"I think it could be described as an MBA with a family business twist rather than as a purely Family Business MBA."

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