Family businesses are unlike any other. The close connections are a strength, but when it comes to tough conversations, like handling underperformance or deciding who fits best in what role, those connections can complicate things. Fortunately, using frameworks like the Entrepreneurial Operating System (EOS) alongside the Harvard 3 Circle Family Business Model can help keep those discussions focused, fair, and most importantly, effective.
The 3 Circle Model: Simplifying Family Business Dynamics
The 3 Circle Family Business Model, developed at Harvard, breaks family businesses down into three areas: Family, Ownership, and Business.
This model is an absolute gem for clearing up who is responsible for what & where they get to be involved:
- Family Circle: Think of this as the relationship space, where harmony and legacy are paramount.
- Ownership Circle: This defines who owns what and makes decisions about the family’s assets and investments.
- Business Circle: This is the operational heart, where performance, structure, and roles are based on what’s best for the business.
Example 1: Bringing Clarity with the 3 Circles
Take the case of a family business where one sibling was struggling to keep up with his role but was still deeply valued as a family member. His siblings were afraid to talk to him because they were worried it would upset the family dynamics.
Using the 3 Circle Model, they realised he could remain part of the Ownership Circle and always have a voice in the Family Circle, but his role in the Business Circle needed to change. This framework made it possible to address performance concerns without upsetting the family dynamics.
He eventually decided to leave the business and work elsewhere but still took a very active part in the family and the ownership of the assets of the family. Everyone was happier.
EOS Tools for Tackling Tough Decisions
While the 3 Circle Model helps clarify the roles, EOS tools offer specific ways to define and support those roles. For example, the Accountability Chart allows you to set out roles based on the business’s needs rather than individual wants or family assumptions.
- Accountability Chart: This tool goes beyond a typical org chart, helping you match people to roles they actually Get, Want, and have the Capacity to fulfil—known in EOS as “GWC.”
- Scorecards and Metrics: Relying on data and objective measures keeps performance evaluations fair and grounded in facts, helping you remove personal biases from decisions.
Example 2: GWC in Action
One family business I worked with had a brother who wanted to lead, but after evaluating his skills and interests through EOS, it was clear that he didn’t have the passion for it. Instead, his sister, who lived and breathed the business, stepped into the Integrator role, while he moved into a different role that played to his strengths. This shift, though initially uncomfortable, made everyone happier in the long run.
Addressing “Rotten Apples” and Unfit Roles
One of the most challenging aspects of family business is when a family member doesn’t fit their role or, worse, becomes a “rotten apple.” A rotten apple in this sense is just someone who isn’t right for the business. It could be that they don’t share the core values or it could be that they don’t get, want or have the capacity to do the role that they have. EOS and the 3 Circle Model can help take the sting out of addressing these situations by keeping the focus on accountability, not family loyalty.
- Honest Conversations: When someone isn’t meeting the expectations of their role, using EOS tools and the 3 Circle Model lets you address these issues directly without risking relationships.
- Objectivity First: Defining roles with the Accountability Chart and supporting them with rocks and measurables, means each family member knows their responsibilities, and if they’re not meeting them, it’s clear what steps need to be taken.
Example 3: Handling a “Rotten Apple” with grace
In another business, a family member wasn’t meeting the standards required for their role and was, quite frankly, becoming a bit of a drain.
It wasn’t just the other family members that could see it – all the staff could see it and it was starting to create some negativity.
The Accountability Chart made it easier for the leadership team to highlight the mismatch objectively. Instead of pushing him out entirely, they found a non-operational role in the Ownership Circle where he could contribute without impacting daily operations.
However, if there hadn’t been a role for him there, they still would have made the right decision. Both he and the business were happier as a result.
Keeping the Focus on Fit and Fulfilment (or love!)
At the end of the day, everyone in the business should be there because they truly want to be and are in a role where they can thrive. We describe this as “Doing what you love, with people you love”. If someone isn’t in the right seat, EOS and the 3 Circle Model provide ways to explore alternatives that may be better suited to them - inside or outside the business.
- Ensuring Role Alignment: When every role aligns with a family member’s strengths and interests, everyone wins.
- Respecting the Family First: It’s okay if someone’s best fit is outside the business - this doesn’t take away from their value as family.
Conclusion
Using EOS and the 3 Circle Model together helps you approach family business decisions with clarity, fairness, and compassion.
It’s all about creating a business where family members are in the right seats for both the business’s and their own good. And sometimes, the best way to support family members is by helping them find their best path - even if that path takes them outside the business.
Debra Chantry-Taylor is a Certified EOS Implementer, an Accredited 3-circle Solution Guide & an FBA Accredited Family Business Advisor.
For more detailed guidance on implementing EOS or using the 3-circle solutions, book a complimentary session with Debra – www.businessaction.co.nz
Business Action offers structured business coaching programmes, leadership coaching, business masterminds & EOS Implementation by accredited EOS Implementers.
Disclaimer
The views expressed in this content are those of the author, who is also responsible for any errors and omissions. Family Business Association provides this article for your information only. The content of the article should not be taken as advice. If you wish to explore this topic, please consult an advisor who you consider to have the expertise to provide specific advice in relation to your family business.
