INTRODUCTION
Human resources seem to be one of the family firms’ main challenges because family members simultaneously maintain family and business relationships. This duality generates a series of interactions that make management more complex than in non-family firms and create a unique context with advantages and disadvantages. The challenge, therefore, is to exploit the benefits arising from the family nature of the business and to manage these human resources to produce a competitive advantage (Habbershon & William, Reference Habbershon and William1999; Sirmon & Hitt, Reference Sirmon and Hitt2003).
Professional development is one of the functions in human resource management that can make the difference between success and failure, because it contributes to making a company more adaptable to changing and competitive environments (Palmer & Johnson, Reference Palmer and Johnson2005; Becker, Hyland, & Acutt, Reference Becker, Hyland and Acutt2006). Of the techniques that family firms can use for professional development are mentoring and coaching. Both the practices have been designed from organisational theories and are ‘new career practices’ that have emerged as alternatives to traditional techniques (Hezlett & Gibson, Reference Hezlett and Gibson2007) for the professional development of executives.
As a result of the above, firms have shown a growing interest in implementing mentoring and coaching in business. In contrast, researchers have shown considerably less interest in the practices; few articles examine the importance of mentoring and coaching for family businesses (Hartel, Bozer, & Levin, Reference Hartel, Bozer and Levin2009; Van der Merwe, Venter, & Ellis, Reference Van der Merwe, Venter and Ellis2009; Duh, Belak, & Milfelner, Reference Duh, Belak and Milfelner2010). Thus, there is a need for further empirical research on the effects of mentoring and coaching on family firms. The current work therefore fills a gap in the research that has been an obstacle to a better understanding and wider application of these practices (Kampa-Kolesch & Anderson, Reference Kampa-Kolesch and Anderson2001; Kilburg, Reference Kilburg2001; Orenstein, Reference Orenstein2002; Sherman & Freas, Reference Sherman and Freas2004).
Moreover, we study these practices in family firms because we believe that many factors make human resource management different in family firms in comparison to non-family firms. Family firms are characterised by a long-term orientation, a collective identity, strong family values, outstanding commitment, and a desire to survive across several generations (Arregle, Hitt, Sirmon, & Very, Reference Arregle, Hitt, Sirmon and Very2007). Hartel, Bozer, and Levin (Reference Hartel, Bozer and Levin2009) point out that several key aspects of family firms are unique and may affect mentoring and coaching. These aspects include the family environment, the internal management protocol, firm values, the firm culture, the expectations of the firm and the associated family, and the complex interrelationships between family and non-family employees.
Family firms manage human resources differently from other firms because of the direct interaction of the family (De Kok, Uhlaner, & Thurik, Reference De Kok, Uhlaner and Thurik2006). Family firms, for example, pay more attention to professional development practices (Miller & Le Breton-Miller, Reference Miller and Le Breton-Miller2006), are highly committed to the people in the firm (Donnelley, Reference Donnelley1964; Horton, Reference Horton1986), and have a special capacity for transmitting tacit internal knowledge (Sirmon & Hitt, Reference Sirmon and Hitt2003; Howorth, Rose, Hamilton, & Westhead, Reference Howorth, Rose, Hamilton and Westhead2010). These unique organisational characteristics affect the application of mentoring and coaching in family businesses as a result of the interaction between the family and business systems (Chrisman, Chua, & Litz, Reference Chrisman, Chua and Litz2003; Habbershon, William, & McMillan, Reference Habbershon, William and MacMillan2003). When a family business uses these practices, the transmission of knowledge will be positively affected by the organisational climate (Tagiuri & Davis, Reference Tagiuri and Davis1996), the family ties among the participants, the degree of organisational commitment to the practices, the organisational culture (Vallejo, Reference Vallejo2008; Duh, Belak, & Milfelner, Reference Duh, Belak and Milfelner2010), and the firm's own dynamic capabilities.
Thus, we contribute to the literature in the field and shed light on the relationship between these practices and family business performance. We highlight the key features of both practices, how they develop, the conditions that make them effective, and their benefits. The results of this work should help managers understand the potential of both practices and their effects on human resource development. A unique contribution of this paper is that it takes advantage of the similarities between mentoring and coaching and compares their effects on the performance of family businesses to understand, which has a greater impact.
We have divided this paper into six sections including the introduction. In the second section, we present the theoretical framework, mentoring and coaching, the research question, and the hypotheses. In the third section, we explain the methodology we use. The fourth section reports the results, and the fifth presents the discussion, managerial implications, limitations, and future lines of research. Finally, in the sixth section we offer our main conclusions.
Theoretical framework and hypotheses
According to the resource-based view, organisations whose resources are valuable, rare, inimitable, and non-substitutable enjoy a competitive advantage. Human resources are one of the intangible company assets that are most difficult to imitate (Lippman & Rumelt, 1982) and can create competitive advantages for a business (Barney, Reference Barney1991; Grant, Reference Grant1996).
The practices of mentoring and coaching are tools that provide employees with knowledge, skills, and the ability to improve their work, and hence contribute to the objectives of the business (Allen, Smith, O'Shea, Mael, & Eby, Reference Allen, Smith, O'Shea, Mael and Eby2009; Núñez-Cacho, Grande, & Pedrosa, Reference Núñez-Cacho, Grande and Pedrosa2012). The benefits individuals obtain are shared with the business (Wright, Dunford, & Snell, Reference Wright, Dunford and Snell2001). However, to create this competitive advantage, family firms have a critical firm-specific and intangible resource, tacit knowledge (Kogut & Zander, Reference Kogut and Zander1992), which family members obtain and develop through their education and experience both inside and outside the firm (Zahra, Neubaum, & Larrañeta, Reference Zahra, Neubaum and Larrañeta2007; Chirico & Salvato, Reference Chirico and Salvato2008). This knowledge has the features that allow us to describe it as strategic – meaning that it can generate revenue streams for the company (Barney, Reference Barney1991).
From the knowledge-based view, Cabrera, De Saá-Pérez, and García (Reference Cabrera Suarez, De Saa-Pérez and García2001) and Steier (Reference Steier2001) point to the importance of transferring resources between generations and emphasise on the process of transferring resources to achieve the continuity of the family business and increase the positive influence of the family in the firm. This theory suggests two paths for how information is shared in family businesses: the first path refers to the formal knowledge that is contained in the firm, whereas the second refers to the informal knowledge, which is tacit, constructed collectively, and shared socially (Zahra, Neubaum, & Larrañeta, Reference Zahra, Neubaum and Larrañeta2007).
The transmission of tacit knowledge is more complex and is carried out by slow and costly processes (Grant, Reference Grant1996). The effect of the family on family firms (the ‘familiness’) facilitates the transmission of such knowledge, because living with the family and working in the business from an early age helps members develop high levels of tacit and specific knowledge (Chirico & Salvato, Reference Chirico and Salvato2008; Chirico & Nordqvist, Reference Chirico and Nordqvist2010). Furthermore, family businesses must preserve tacit knowledge because it is vital for the development of future managers (Miller & Le Breton-Miller, Reference Miller and Le Breton-Miller2006).
In order for knowledge to be successfully integrated, a firm needs dynamic capabilities, defined as the firm's ability to extend or modify its resource base (Helfat & Peteraf, Reference Helfat and Peteraf2003). Family firms have idiosyncratic dynamic capabilities that arise from the interaction between the family and the business. Thanks to this ‘familiness’, the exchange of knowledge is more effective in this type of firm than in non-family firms (Eisenhardt & Martin, Reference Eisenhardt and Martin2000; Chirico & Nordqvist, Reference Chirico and Nordqvist2010). Thus, these firms could base their competitive advantage on the effectiveness of mentoring and coaching. By transmitting knowledge, these processes confer a strategic character to human capital and turn it into a resource base that is very difficult for competitors to imitate.
Thus, when a family business carries out coaching or mentoring, a formal and informal knowledge transfer takes place between two people, and this action will result in the personal and professional development of the participants. Mentoring has various functions, and some of these functions are related to the development of the protégé's career and include learning and preparation for promotion, training, and counselling. Mentoring is seen as a mechanism that accelerates the transmission of tacit knowledge in the company (Kitchener, Reference Kitchener1992; Harvey, McIntyre, Heames, & Moeller, Reference Harvey, McIntyre, Heames and Moeller2009). Thus, this practice helps achieve personal and professional development and also improves skills and leadership abilities (Hunt & Michel, Reference Hunt and Michael1983; Viator & Scandura, Reference Viator and Scandura1991; Levesque, O'Neill, Nelson, & Dumas, Reference Levesque, O'Neill, Nelson and Dumas2005). On the other hand, coaching helps the coachee focus on developing new opportunities for growth and development and enhances their skills. Therefore, coaching provides a proactive guidance for action, decision making, and the acquisition of the strength to undertake the changes needed to produce positive results (Colomo & Casado, Reference Colomo and Casado2006).
Mentoring and coaching in the family firm
Many factors make management different in family firms in comparison with non-family firms. Family businesses differ in their objectives (Lee & Rogoff, Reference Lee and Rogoff1996), culture (Vallejo, Reference Vallejo2008), and corporate governance methods (Randoy & Goel, Reference Randoy and Goel2003). In addition, significant differences exist between family and non-family businesses in how they manage human resources, and these differences are caused by the interaction of the family (De Kok, Uhlaner, & Thurik, Reference De Kok, Uhlaner and Thurik2006).
The influence of the family results in more efficient human resource practices in family firms than those usually found in non-family firms, and these practices help generate a competitive edge over other firms (Levering & Moskowitz, Reference Levering and Moskowitz1993). Family businesses share a family language that allows them to communicate more efficiently and exchange information with greater privacy (Tagiuri & Davis, Reference Tagiuri and Davis1996). The resulting working environment creates more motivated, loyal, and trusting employees (Vallejo, Reference Vallejo2008; Duh, Belak, & Milfelner, Reference Duh, Belak and Milfelner2010).
Moreover, and according to Miller and Le Breton-Miller (Reference Miller and Le Breton-Miller2006), because of their long-term orientation, family firms pay more attention to human resource practices and make greater efforts in career development policies than non-family firms, because they seek to attract and retain, for the whole of their careers, talented individuals who believe in the mission, fit in the culture, and grow independently. They can do this by investing in mentoring programmes that improve the employee's versatility and skills and develop their whole potential. These unique organisational characteristics affect the application of mentoring and coaching in family businesses as a result of the interaction between the family and business systems (Chrisman, Chua, & Litz, Reference Chrisman, Chua and Litz2003), and the results are extremely positive both in the individual's career development and in the firm's performance.
As discussed above, processes of transmission and exchange of information and knowledge in family firms encourage the development of skills, and these factors positively affect the current and future abilities of employees and the productivity of the firm. In conclusion, mentoring is a resource that contributes to career success (Singh, Ragins, & Tharenou, Reference Singh, Ragins and Tharenou2009; Núñez-Cacho & Grande, Reference Núñez-Cacho and Grande2012) and is seen by firms as a mechanism for accelerating the transmission of knowledge, allowing the family firm to gain a competitive advantage in complex and dynamic markets (Harvey et al., Reference Harvey, McIntyre, Heames and Moeller2009). Various factors influence the success of mentoring, including the working environment, the positive development of the mentoring relationship (Hezlett & Gibson, Reference Hezlett and Gibson2005), previous negative experiences (Burk & Eby, Reference Burk and Eby2010), the quality of the relationship, the support provided by the organisation, the rapport that exists between the participants, their affinity with each other (Russel & Adams, Reference Russel and Adams1997), and the degree to which the participants are committed to mentoring (Burack, Reference Burack1990).
Another issue that influences effectiveness is whether the relationship is established in a formal or informal manner. Egan and Song (Reference Egan and Song2008), Parise and Forret (Reference Parise and Forret2008), and Orpen (Reference Orpen1997) indicate that both approaches are equally effective, whereas Wanberg, Kammeyer, and Marchese (Reference Wanberg, Kammeyer and Marchese2006) list the many advantages of participating in formal mentoring programmes, for example, the fact that they often better satisfy the requirements of the participants because they have been designed by the company.
Many of the factors affecting the effectiveness of mentoring are integrated into the family business, thanks to ‘familiness’. Family firms pay great attention to human resource development (Miller & Le Breton-Miller, Reference Miller and Le Breton-Miller2006), and therefore when implementing mentoring they are actively involved in its management. The influence of the family in the firm creates a unique environment that facilitates communication and the exchange of information (Tagiuri & Davis, Reference Tagiuri and Davis1996). The family character and cultural harmony of these firms give the participants a strong commitment to establishing quality mentoring relationships (Vallejo, Reference Vallejo2008; Duh, Belak, & Milfelner, Reference Duh, Belak and Milfelner2010). All these factors favour the transmission of knowledge between mentor and protégé, and this is further enhanced by the idiosyncratic dynamic capabilities of family firms (Chirico & Nordqvist, Reference Chirico and Nordqvist2010).
The influence of the family in the firm means that the protégé receives the benefits of the mentoring relationship and therefore improves their individual performance in the firm. This improved individual performance results in enhanced company performance (Wright, Dunford, & Snell, Reference Wright, Dunford and Snell2001). Accordingly, we can expect that family-firm performance will improve when mentoring is used. We therefore propose the following hypothesis:
Hypothesis 1 : Mentoring positively influences the performance of family businesses.
Hypothesis 1a : Mentoring positively influences employees’ performance.
Hypothesis 1b : Mentoring positively influences growth of sales, market share, and productivity.
In the previous sections, we discussed the idea that the coaching relationship is based on training the coachee to perform his or her role by providing proactive guidance for decision making. A harmonious relationship must be established for coaching to be successful, and the coach must understand the various features of the family business, including its dynamics, internal protocol, values, and culture (Hartel, Bozer, & Levin, Reference Hartel, Bozer and Levin2009). In addition, the commitment of the firm, the integrity of the participants, the degree of trust, and the mutual affinity between the participants will help determine the success of the process (Wanberg, Welsh, & Hezlett, Reference Wanberg, Welsh and Hezlett2003). As Levin, Bozer, and Hartel (Reference Levin, Bozer and Hartel2008) point out, the fact that family businesses may prioritise non-economic or socio-emotional variables means that the coach must understand the socio-emotional stress points that may have an impact on the firm. One of these points occurs during generational succession or transmission, when the roles and structure of the firm may change. The coaching challenge in the succession process is to assist and manage the transfer between generations and the realignment of the principles of the family unit. The process of succession is essentially a realignment of the family climate and the firm.
We believe that the family's influence on a firm provides a working environment that encourages coaching relationships because there is clear communication and greater privacy (Tagiuri & Davis, Reference Tagiuri and Davis1996). Similarly, the participants’ commitment and the family cultural climate foster a trusting and harmonious relationship between the parties (Vallejo, Reference Vallejo2008), and these factors help make the process successful. Furthermore, as family firms tend to be very interested in how their executives advance in the firm (Miller & Le Breton-Miller, Reference Miller and Le Breton-Miller2006), they are more actively involved in the coaching relationship. Thus, an optimal environment for the relationship is created, one that helps ensure that the coachee improves their performance. All these factors support the key process of the relationship: the exchange of knowledge between coach and coachee. This process of exchanging knowledge is supported by the dynamic capabilities of the firm. As a result, the coachee is able to improve their individual performance and this will in turn affect the performance of the company (Joo, Reference Joo2005). Thus, coaching should improve the performance of family firms and hence we propose the following hypothesis:
Hypothesis 2 : Coaching positively influences the performance of family businesses.
Hypothesis 2a : Coaching positively influences employees’ performance.
Hypothesis 2b : Coaching positively influences growth of sales, market share, and productivity.
Mentoring and coaching have certain similarities, especially because both aim to enhance the professional development of executives in the firm. They also follow a similar approach in establishing a relationship between the two participants: one of whom guides and advises the other (Joo, Reference Joo2005). However, some differences exist, making it wise to compare their effects.
Coaching is always a systematic and structured process (Grant, Reference Grant2003; Stern, Reference Stern2004), which is facilitated by a qualified expert in adult learning or psychology (Vacilotto & Cummings, Reference Vacilotto and Cummings2007), whereas mentoring may be considered an informal development approach. In addition, mentoring is a longer term, open-ended process, and mentors are not usually trained in developmental techniques and have to rely on their experience to achieve developmental outcomes (Strong & Baron, Reference Strong and Baron2004). Thus, some authors consider that one of the tools available to the mentor is coaching, because in terms of career development functions, the mentor assists the protégé by coaching in social or corporate norms (Harvey et al., Reference Harvey, McIntyre, Heames and Moeller2009). Coaching may be viewed as a form of mentoring, or as a certain aspect of mentoring, but one that has a narrower focus, generally relating to an individual's specific job task, responsibilities, or skills (Fielden & Hunt, Reference Fielden and Hunt2011).
Another difference is that coaching focuses the coachee on the task of improving performance in their current role, whereas mentoring starts from the socialisation of the employee and aims to improve current and future performance in work and social spheres (Swerdlik & Bardon, Reference Swerdlik and Bardon1988; Wilde & Schau, Reference Wilde and Schau1991; Goldshark & Sosik, Reference Goldshark and Sosik2003). Thus, mentoring focuses primarily on the development of the individual – in addition to the performance of current and future tasks (Joo, Reference Joo2005).
In addition, coaching is performed by outside professionals, whereas mentoring can be performed by employees in a more senior post than the protégé, or family members. Therefore, under extreme conditions of confidentiality, external coaches are more practical because of the nature of the topics discussed. As family businesses tend to give priority to socio-emotional issues (Gómez-Mejía, Haynes, Nuñez, Jacobson, & Moyano, Reference Gómez-Mejía, Haynes, Núñez, Jacobson and Moyano2007), we can expect that their coaching processes will differ from those of non-family firms.
These differences suggest that the benefits of mentoring will only partially be reflected in an improvement in the professional skills of the protégé in the firm because mentoring is a preparation for a promotion in the future that may never occur. Thus, some of the knowledge gained during mentoring may not be automatically transferred to the company (Bozionelos, Reference Bozionelos2006). In contrast, the effort that the family business invests in coaching will be fully rewarded with an improved job performance by the coachee. This instant return is further enhanced by the fact that coaching has a shorter duration and therefore requires less investment effort than mentoring, and as a result the effect of coaching is felt more intensely than that of mentoring. The final hypothesis is as follows:
Hypothesis 3 : Coaching has a greater influence on the performance of family businesses than mentoring.
The studies that analyse the performance or business benefits associated with human resources are numerous – and as heterogeneous as the variables used to measure performance; for example, Delaney and Huselid (Reference Delaney and Huselid1996) break performance down into two parts – organisational performance and market performance – whereas Huselid, Jackson, and Schuler (Reference Huselid, Jackson and Schuler1997) use productivity, gross rate of return on assets, and Tobin's q-ratio as performance indicators.
Most of the discussion in the literature uses financial indicators (Walker & Brown, Reference Walker and Brown2004). Thus, Hansson (Reference Hansson2007) measures performance through profitability, whereas Chand and Katou (Reference Chand and Katou2007) use a construct called organisational profitability (as measured by sales growth, productivity, profitability, the degree of fulfilment of objectives, and the quality of goods and services provided).
We should note that while measuring performance in the family firm no consensus exists, on which a set of variables defines the objectives and determine performance, because in addition to the concept of competitive success, we must also include what the family considers success to be (Sorenson, Reference Sorenson2003) and the socio-economic variables of such firms (Gómez-Mejía et al., Reference Gómez-Mejía, Haynes, Núñez, Jacobson and Moyano2007). However, we must make two clarifications: first, the accepted performance indicators for organisations in general are applicable to family businesses; and second, because of the family nature of these businesses, additional variables not listed above may be useful indicators of success (Hienerth & Kessler, Reference Hienerth and Kessler2006).
Moreover, when we develop the performance construct, we must take into account that our aim is to analyse the impact of mentoring and coaching on family-business performance and that the resource-based view is the focus of our approach. Accordingly, we aim to discover whether these practices generate a competitive advantage, a term that prompts much debate because of its ambiguity and inconsistency (Leiblein, Reference Leiblein2011). Hoopes, Madsen, and Walker (Reference Hoopes, Madsen and Walker2003) define competitive advantage as the relative difference between the willingness to pay for a product and its costs in relation to competing products. Peteraf and Barney (Reference Peteraf and Barney2003) indicate that a company has a competitive advantage if it can create greater marginal economic value than its competitors in a given market, using the framework value–price–cost (Brandenburger & Stuart, Reference Brandenburger and Stuart1996). These definitions create considerable operational difficulties, and thus we rely on Walkers (Reference Walkers2004). This author describes competitive advantage in terms of a superior economic contribution (value creation) and sustainable market position (captured value) and therefore adequately encapsulates the meaning of the term.
From all these approaches, we use two dimensions to build a construct of family business performance. The first is ‘business growth’, and reflects the firm's growth in sales, market share, and productivity over the last three years. This construct is in line with Walkers’ (Reference Walkers2004) definition of competitive advantage.
On the basis of previous human resource research, and following the decomposition scheme of the two-dimensional performance construct proposed by Hernández and Peña (Reference Hernández and Peña2008) and Delaney and Huselid (Reference Delaney and Huselid1996), we add a second dimension – ‘employees’ – that includes indicators relating to the performance of the human resources: the level of employee commitment to the firm, the level of employee satisfaction, and the reduction in employee turnover. Figures 1 and 2 show the research model and hypotheses.
Research model with direct effects Source: The authors
Research model with indirect effects
Methodology
To test the hypotheses, we use structural equation modelling, a technique based on multivariate analysis that examines the effect of an explanatory variable on an explained variable, and the extent to which the observed variation is due to changes in the explanatory variable. We incorporated variables that are not directly observable (latent variables or constructs) into the model. These variables can only be measured through other directly observable variables or indicators. Once the constructs were developed and the indicators chosen, we tested whether the model offered a reasonable fit, as this would be evidence that could support the convergent validity of these indicators (Anderson & Gerbing, Reference Anderson and Gerbing1984).
Sample
The study population consists of family firms, following Vallejo (Reference Vallejo2007) definition: ‘a family firm is one in which the members of a single family have a sufficient participation in the capital to dominate the decision-making of the owners and a representative body, whether this is formal or informal in character; and in addition there is a desire or intention for the business to remain in the hands of the succeeding generation’. The questionnaire includes items that identify family firms.
The information was obtained from the Spanish SABI database and the final sample consisted of 630 randomly selected companies. The confidence level for the sample was 95% (z = 1.96), the sampling error was 3.9%, and the fieldwork took place from 5 January to 30 June 2009. To obtain the data, we used a questionnaire that had been designed after a review of the literature concerning the theoretical approach to the problem. The individual items on the scales were submitted to a panel of experts for consideration. The variables used for the scales measuring the mentoring, coaching, and performance constructs are listed in the Appendix. The information was gathered in a telephone survey, as this method enabled us to achieve accurate and completed questionnaires – as well as a high response rate.
Scales
Scales measuring mentoring, coaching, and performance were created for use in this study by adapting mentoring variables from Egan (Reference Egan2005), Goldshark and Sosik (Reference Goldshark and Sosik2003), and Lai Wan (Reference Lai Wan2007); coaching variables from Olivero, Bane, and Kopelman (Reference Olivero, Bane and Kopelman1997), Rock and Donde (Reference Rock and Donde2008), and Gould (Reference Gould1997); and performance variables from Kallemberg and Moody (Reference Kallemberg and Moody1994), Chand and Katou (Reference Chand and Katou2007), Huselid (1995), Hernández and Peña (Reference Hernández and Peña2008), Delaney and Huselid (Reference Delaney and Huselid1996), and Carlson, Upton, and Seamans (Reference Carlson, Upton and Seamans2006).
We began the analysis by examining the dimensionality of the measurement scales using exploratory factor analysis. The Appendix shows that the factor loadings (weighting of each variable observed in the corresponding dimension) in all cases are >0.5. The results of the KMO, Bartlett's test of sphericity, and the explained variance show the suitability of the clustering of variables around the corresponding dimension or construct. To analyse the scale reliability, we used Cronbach's α. The results reported in Table 1 show that the Cronbach's α satisfy Bagozzi and Yi's (Reference Bagozzi and Yi1988) recommendation.
Correlations, means, standard deviations and αs for study factors
Note. Number in parentheses on diagonal is coefficient α for that scale.
To determine the scale validity, we focused on the process for the creation and development of measurement scales including the correct specification of the construct, the generation of items so that the domain is covered, and the purification of the measurement scale. In short, we ensured that the procedure to make the scales was adequate (Peter & Churchill, Reference Peter and Churchill1986) and that the items in the scale were valid for evaluating the construct (De Vellis, Reference De Vellis1991). Following Zeithaml, Berry, and Parasunaman (Reference Zeithaml, Berry and Parasunaman1988), we specified the domain of the construct, identified the dimensions, and generated a series of items covering all aspects of the construct. We then refined the scale, made a pre-test, and formulated a large number of items, as indicated by Grapentine (Reference Grapentine1994).
Finally, we analysed the convergent and discriminant validity. For this task, we performed a confirmatory factor analysis and confirmed that the variables in each construct match the proposed model. An evaluation of the analysis shows a good fit using accepted criteria (McDonald & Ho, Reference McDonald and Ho2002; Kline, Reference Kline2005); for example, the Satorra–Bentler scaled χ2 statistic is 134.67, with 116 df, and p = .113. Results for other commonly used indices are: NFI = 0.904, NNFI = 0.983, MFI = 0.906, and the RMSEA error is <0.04. The Cronbach's α coefficient of the scale as a whole is 0.925, and the composite reliability index is 0.947. Thus, the proposed scale has convergent validity.
The divergent validity between the mentoring factors, human resource indicators, and growth is confirmed by the low correlations between the factors, which do not exceed 0.3. The same occurs with the correlation between coaching, personal development, and growth. However, a high correlation exists between mentoring and coaching (0.77), and this reveals similarities, implying that they could be considered as members of a single factor for the model.
To examine which of the models is most appropriate (the model that includes mentoring and coaching as a single factor, or the one that considers them to be two different factors), we compared the fit between the model with two separate factors and the model with a single factor (Table 2). We can see that the two-factor model is clearly superior to the one-factor model, as it shows a better fit through the χ2 and has higher significance. The NNFI index is also closer to one than in the one-factor model, indicating a better fit, and finally, the RMSEA indicator error is smaller. For these reasons, we selected the model with two factors.
Comparison of models with one and two factors
Source. The authors.
RESULTS
The information provided by the previous analysis enabled us to carry out an estimation of the proposed model that relates mentoring and coaching with the performance of employees in family businesses. Figure 3 shows the results of the model that was specified, identified, and estimated, and Table 3 reports the values of the indices.
Results of estimation of causal model Source: The authors (meaningful relationships for a confidence level of p = .05)
Fit indices of estimation of model
Source. The authors.
The indices showed a good fit considering accepted criteria (McDonald & Ho, Reference McDonald and Ho2002; Kline, Reference Kline2005). In addition, analysis of the standardised residual matrix revealed that nothing required changes. Similarly, we confirmed that all the model modification indicators were small, suggesting that subtracting or adding to the model relations would not improve the fit, thus avoiding random capitalisation while maintaining model parsimony, as Goffin (Reference Goffin2007) and Barret (Reference Barret2007) recommend.
After confirming the model's goodness of fit we tested the hypotheses. Figure 3 reports the values of the standardised solution (λ). Hypothesis 1 postulates that mentoring has a positive impact on performance in family firms. The results show that the direct relation is significant, with λ = 0.266, which provides support for this hypothesis.
With regard to the influence of mentoring on employee performance (Hypothesis 1a), the fit of the structural model confirms this. The indirect effect has value λ = 0.181, and the relation is significant at the 95% level (see Table 4). The results also provide support for Hypothesis 1b (indirect effect with λ = 0.077, the relation is significant at the 95% level). Thus, mentoring has a positive influence on growth in family businesses.
λ of indirect effects of practices
Note. All relations significant for p = .05
Looking now at the hypotheses related to coaching, the results of the estimation of the structural model (see Figure 3) show that the coefficient in the direct relationship between coaching and family business performance is λ = 0.653, and thus the relation is significant at the 95% level. This result provides support for Hypothesis 2, and therefore a positive relationship exists between coaching and performance in family firms.
Analysing the indirect effects (Table 4), we can also confirm hypotheses 2a (λ = 0.190, relation significant at the 95% level) and 2b (λ = 0.446, relation significant at the 95% level), confirming that coaching has a positive impact on employee performance and firm growth, respectively, in family businesses.
Hypothesis 3 compares the effects of mentoring and coaching. To test this hypothesis, we analysed the direct effects of each practice on performance. Table 5 reports the results of this analysis. According to this table, the coefficient for the relation between coaching and performance (0.653) is higher than the coefficient for the relation between mentoring and performance (0.266). Thus, while mentoring and coaching both influence the performance of family firms, coaching has a stronger effect than mentoring. This is a particularly important finding of this work.
Comparison of effects of both practices
Note. Both relations significant for p = .05.
DISCUSSION
Human resource management in family businesses is a challenge; yet there are a number of factors that can help turn the influence of the family into a competitive advantage through mentoring and coaching. Family businesses are more concerned with the management of human resources than other businesses and pay more attention to professional development. This interest may reflect the long-term orientation of family businesses and their desire for generational continuity (Miller & Le Breton-Miller, Reference Miller and Le Breton-Miller2006). Family businesses with their values, commitment to professional development, collective identity, positive attitude, involvement in social and emotional processes, and dynamic capabilities are able to create an atmosphere of commitment, loyalty, and trust that facilitate the transmission of knowledge.
The first finding of our study is that the formal mentoring process (in which objectives are set, participants who are committed to the process are selected, and the process is considered as long term) has a direct causal effect on corporate performance (reflected by the parameter λ = 0.266). Mentoring influences employee performance and the firm's growth. This finding confirms the first of the assumptions made in this research. The transmission of tacit knowledge is particularly necessary for the continuity of family businesses and the family firm is a favourable context for carrying out the mentoring process. Because the mentor is from the same firm and knows the family character of the business, they can successfully prepare the protégé for the roles assigned by the firm in their career plan.
The second finding highlights that coaching also improves the performance of family businesses, being related to both employee performance and business growth. Therefore, the firm should plan this process adequately. It should provide a coach who comes from outside the company but understands the values, culture, protocol, and behavioural norms of family businesses. The participants in coaching should be people of integrity who are committed to the family business and are able to create a trusting relationship. In this way an optimal organisational climate for coaching to achieve the objectives will be created and this will be reinforced by the dynamic capabilities of the family. The results enable us to confirm the second research hypothesis, which postulates that coaching has a direct causal effect on the performance of family businesses (λ = 0.653).
The third finding of this research is that the performance construct based on indicators of business growth, including increase in market share, is appropriate in the resource-based view for measuring the complex concept of competitive advantage (Walkers, Reference Walkers2004; Leiblein, Reference Leiblein2011). In addition, it becomes very difficult for competitors to imitate this advantage, given the particularities of each company, the confidential environment in which mentoring and coaching are used, the ability of family firms to communicate tacit knowledge, and the diseconomies of time and causal ambiguity that Lippman and Rumelt (Reference Lippman and Rumelt1992) report. Moreover, including organisational performance indicators enables us to draw conclusions for family firms, and thus to avoid the approach used in numerous studies of generalising from the individual to the organisational level with inferences that can easily lead to fallacies of the wrong level (James, Reference James1982; Allen et al., Reference Allen, Smith, O'Shea, Mael and Eby2009).
The use of indicators related to human resources – commitment, satisfaction with the company, and low number of quits – enables us to confirm that by using these practices family businesses retain human capital better. By using a strict resource-based view approach, it can be said that mentoring and coaching are isolating mechanisms that facilitate the sustainability of competitive advantage.
Finally, the fourth finding of this research is a comparison of the effects of both practices. The research model has enabled us to verify that the impact of coaching on performance (0.653) is stronger than that of mentoring (0.266), thus confirming the third hypothesis. We believe this is an important finding because researchers to date have studied the impact of one practice or the other on performance and not compared the two effects. In this paper, we highlight the differences between mentoring and coaching, and we believe that coaching's stronger effect on firm performance may be related to several factors. The first is the duration of the process. Coaching is more focused on the short term, and thus its implementation is cheaper for a company than long-term-oriented mentoring. The second factor is that coaching directly and immediately affects professional performance, thus immediately benefiting the family business. In contrast, some of the effects of mentoring – particularly those related to psycho-social functions such as developing personal skills – will not be immediately felt in the firm. Moreover, there is no guarantee that the firm will receive the full benefit in the future – as this can only happen if the protégé is eventually promoted to a post, in which they can exercise their new abilities and knowledge.
Implications for management
One of our aims in writing this paper has been to provide useful information to businesses. In this sense, our work empirically justifies the effort and investment that family businesses put into mentoring and coaching by showing that company performance is positively affected by these practices. A number of practical implications of this finding are highlighted below.
We show that mentoring is an important tool for family businesses. The process begins when an individual who is likely to be promoted to a senior post joins the company. At this point, a suitable mentor must be selected and the more closely the mentor reflects the expectations of the firm, the more successful the process will be. Numerous studies have shown that key issues determining success include the affinity and rapport between the mentor and protégé, their gender, the origin of both participants, and their personalities.
The mentor and protégé must be committed to mentoring, the mentor may be a family member who is more experienced than the protégé, and if the mentor does not belong to the family then he or she must understand its idiosyncrasies. The firm must provide adequate support for the relationship by analysing the functions to be transmitted through the mentoring relationship and defining the benefits to be achieved. This requires a carefully planned formal process lasting a year or more and the development of the process should be continuously reviewed.
There are several practical implications to consider about coaching. The process prepares the coachee to better perform their current role in the family firm, and therefore the coaching process should be planned and programmed from within the firm. The first step is to identify those employees who are likely to benefit from coaching. At this point, the firm will need to hire a coach: the individual should not be an employee or member of the family, but they must understand the company, its values, and internal protocols. A trusting relationship must be built between coach and coachee and it must be remembered that this is a learning task with a number of short-term objectives. Coaching has various functions, especially training and professional development, and can also help the employee identify new opportunities and become more proactive when taking decisions.
Limitations
This paper has a number of limitations that may affect the conclusions reached, also while suggesting future lines of research. As a questionnaire was the main instrument for collecting information, the study suffers the specific constraints arising from the subjectivity of questionnaires. Another limitation arises from the cross-sectional nature of the research. The information – except for the performance indicators – was collected at a given moment in time, and it would be useful to analyse the effect of mentoring and coaching on the performance of firms from an evolutionary perspective. Using a longer term approach it should be possible to isolate temporal phenomena and circumstances that may have distorted the current results.
The performance construct also has its limitations. Most of the research in the area points to the difficulty of measuring organisational performance, and the task is even more difficult for family businesses, where other components are relevant, such as altruistic or socio-emotional factors (Gómez-Mejía et al., Reference Gómez-Mejía, Haynes, Núñez, Jacobson and Moyano2007). However, we opted for a broad indicator that records the various dimensions and encompasses the ideas of competitive advantage and performance.
Future research
Our first suggestion was derived from one of the limitations we identified above. It would be interesting to analyse the influence of mentoring and coaching over a longer period of time to observe the changes in the variables under study. In particular, we would suggest measuring the impact on performance over the medium to long term. Weinberg and Lankau (Reference Weinberg and Lankau2010) show that a longitudinal examination of mentoring reveals interesting features, particularly aspects related to the duration of the process.
We have analysed mentoring and coaching for the development of executives in a family firm. Any employee with the potential for promotion was considered. However, the most important promotion in family businesses is the generational change, and therefore a promising line of research would be to discover the effects of mentoring and coaching on succession in family business, noting the extent to which these practices facilitate and contribute to success. We have noted that many of the managers (parents) have been mentoring since the future successors (children) began their education, transmitting knowledge about the company and its market, family values, and principles.
It would also be interesting to conduct a comparative study on the effects of these two practices in family and non-family firms, and hence establish the differences between them. This line of work could verify approaches such as that of Ibrahim, Soufani, Poutziouris, and Lam (Reference Ibrahim, Soufani, Poutziouris and Lam2004), who propose that the union of family and business makes human resource management in family businesses unique.
Finally, researchers could incorporate variables moderating the effect of these practices into the model. One of these variables could be the influence of the family and to this end it may be possible to use the F-PEC scale (Astrachan, Klein, & Smyrnios, 2002) to make groups of family businesses and observe the effects. Another variable that may act as a moderator is the culture of the firm or family.
CONCLUSION
In managing human resource, family firms produce a unique working environment characterised by a climate of trust, harmony, commitment, loyalty, and motivation. In this context, family firms can use a number of practices for developing their executives. Two very useful ones are mentoring and coaching. These practices are affected positively by the quality of ‘familiness’ that helps these firms improve their ability to transmit knowledge, especially the tacit or informal knowledge (Hutchinson & Quintas, Reference Hutchinson and Quintas2008) that is more complex but essential for company survival over generations. Moreover, the dynamic capabilities of family firms and their organisational climate permit a greater flow of information between the participants. The coach strives to improve the results of the process, while the coachee is committed and favourably disposed: essential requirements for the process to be effective. On the other hand, in the mentoring process, the mentor, who is either a member of the family or intimately familiar with it, will transmit knowledge and skills that are of great value to the protégé, whose favourable disposition will ensure that the process takes place with great intensity and in an atmosphere of complete trust between both participants: fundamental aspects for the effectiveness of mentoring. These two practices will therefore help to ensure that the professionals make good progress in their career development, which will translate into performance gains for the firm. Nevertheless, coaching has a stronger effect than mentoring. We believe that this is because of the fact that coaching has an impact on the current activity of the professional, and hence its effects translate into an immediate improvement in their performance, whereas the effects of mentoring are appreciated only in the longer term.
Acknowledgment
The authors would like to express their appreciation for Santander Universidades by financial support through Family Business Chair Santander of Jaen University.
Variables used for mentoring, coaching, and performance measurement scales
