Family Fortunes: How to Transform a Family Business
If it’s true that every unhappy family is unhappy in its own way, then this surely applies to family businesses too. Issues of familial disharmony, expectations, values, succession, legacy, reputation and talent can all be the ruin of a great enterprise. A family business will always have its own very specific commercial and governance concerns around continuity and growth, and these must be managed with great care, especially where its culture has survived several generations.
The key to managing that process lies with the governing bodies. It is their responsibility to define, manage and control the business, set strategy and determine priorities. In doing so, they must bring clarity and coherence to numerous fundamental questions, such as: what sort of company the owners want to build; when should family members take a job in the business, under what conditions, and with what training; how to handle the succession process; and what dividend policy to adopt. Serious strategic reflection and good corporate governance are essential, and this in turns requires:
- a holistic vision of the environment, the business and the family;
- passion for strategic transformation at every stage of the business; and
- a commitment to investing the necessary resources and time.
‘Above all, a family business must be prepared for change by infusing a spirit of transformation throughout its ranks’
Entrepreneurial families are often effective at driving change, but unless that change is sustainable and the family is happy with it, it can damage an all-important legacy. A management model must therefore always be ready to evolve as new challenges emerge. This might mean adopting a less hierarchical more collaborative approach, abandoning defunct practices or simply integrating new people, skills and ideas. But above all, the family business must be prepared for change by infusing a spirit of transformation throughout its ranks to cope when the need arises.
Although many of these issues will be familiar to all organizations, the very survival of a family business can turn on whether it finds that delicate balance of economic, business, social and emotional factors. It needs a unifying and transformative leadership model, and this can be achieved systematically through the following steps:
- Understand the context: Keep abreast of today’s business trends, especially diversity, transparency and technology.
- Analyze your peculiarities: Identify and strengthen your competitive advantages.
- Define the family’s challenges: Get everyone to agree on the family’s core values.
- Define the company’s challenges: Develop a strategy that preserves the essence of the business.
- Strengthen governing bodies: Good governance helps a family business stay competitive and in tune with the business environment.
- Seek outside help: An advisory board and trusted professionals who understand the company’s ethos can help it survive beyond its founders.