Who Gets a Voice and Who Gets a Vote

Who Gets a Voice and Who Gets a Vote

The Three Circles of a family business, and the conversation that untangles them

From Family Legacy by Design · Adapted from the Family Legacy by Design book, Chapter 12

Family-owned businesses are the backbone of the economy. Between 65 and 80 percent of all businesses worldwide are family owned, 40 percent of Fortune 500 companies are family owned or controlled, and family businesses generate half of the gross domestic product and employ half of the workforce. Which means that if you serve families of wealth, you serve family businesses, and you have seen what happens inside them when roles blur and expectations collide.

The son works sixty hours a week in the business and gets frustrated when his sister across the country, an owner who has never worked a day there, questions his decisions. She has ownership rights, but she does not understand the day-to-day challenges. The long-time office manager feels undervalued because she has been there longer than the son but holds no stake. And the father, sitting in the middle of all of it, is trying to keep everyone happy and making no one happy.

Sound familiar?

The model

There is a simple framework that untangles this, and it has been quietly doing so since 1978, when Renato Tagiuri and John Davis developed it at Harvard Business School. It is called the Three Circles model, and we teach it throughout Family Legacy by Design.

Draw three overlapping circles. The first is Family, the people related by blood or marriage. The second is Ownership, the people who own shares in the business. The third is Business, the people who work there. Where the circles overlap, seven distinct roles appear:

1. Family only. A spouse or relative not involved in the business who owns no shares. Your son-in-law who works as a teacher.
2. Ownership only. A shareholder who is not family and does not work in the business. An outside investor.
3. Business only. An employee who is not family and owns no shares. Your long-time office manager.
4. Family and Ownership. A family member with shares but no active role. Your daughter who lives out of state and receives dividends.
5. Ownership and Business. A non-family employee with equity. A key executive with shares from a succession plan.
6. Family and Business. A family member working in the business without ownership. Your nephew in the warehouse who owns no stock.
7. Family, Business, and Ownership. A family member who owns shares and works in the business. Your son who is being groomed to take over.

Why does identifying these roles matter? Because each of the seven sees the business differently, and when people do not understand that, conflict erupts. The son and the sister in the story above are not difficult people. They are a circle seven and a circle four having a conversation neither of them has named.

The conversation

Healthy families acknowledge these differences. They talk openly about roles, expectations, and decision-making authority. They clarify who gets a voice and who gets a vote. A family meeting is the perfect place to do it, because when everyone understands where they sit in the three circles, conversations become clearer and conflicts become manageable.

If you advise a family with a business, here is an exercise worth doing this week. Print the one-page tool below, and in your next meeting with one client family, invite them to write their own names into the seven roles. It takes five minutes. The conversation that follows tends to be the one they have been avoiding.