New Year resolutions for family businesses
Resolve to be aware of festering problems and possible trade-offs that the family business is facing now or will face in the future.
Face urgent issues head-on, and start preparing for family and business needs for the long-term.
For conflicts to be resolved, family members and employees should first be aware of them. Hiding our head under the sand is counterproductive.
Minor issues, such as who gets the corner office or which company logo to adopt, can fade away. But major problems, usually involving roles, personalities, responsibilities, expectations, targets and practically everything else, will cause conflict if not resolved.
Resolve to start succession planning for ownership and management.
Involve all relevant people: Elders, the succeeding generations, professional employees, consultants.
The best time to do succession planning is when money is good and relationships are solid. Conversely, the worst time is when crises happen.
When patriarchs pass away suddenly, with no anointed successors, then clear-headed thinking will disappear. Emotions will run high, factions coalesce, resulting in infighting.
Or founders may wait until the last minute to announce successors, when they fall ill. If they have never let go of the reins, no one might be prepared to take over.
Training takes years and immense effort, and to ensure continuity of the family business, heirs must generally be accepted by the board, the owners, the management, the employees, the partners, the suppliers, and so on.
If you are not sure about how to plan for succession, consult experts. But start planning now.
Resolve to create a training program for the next generation.
The next generation can usually be divided into two: Those who intend to work in the business and those who may have other occupations (not in the family business) but intend to sit on the board.
The former should be trained to ascend the management track, as for example, to attend courses in finance or marketing, to apprentice in a related field, or to directly report to an expert mentor in the company.
This does not mean that the latter do not have to be trained at all. On the contrary, future owners are very likely future board members, and need expertise and experience to steer the company in the right direction.
Training for future owners usually entails getting an MBA in order to be aware of general business management, not because they will be involved in day-to-day operations, but for them to make sense of company issues at least from a macro-level.
Unfortunately, I have seen many would-be successors who have no idea how to deal with banks or even how to make sense of financial statements. They leave everything to hired non-family professionals. This might be well and good, but they run the risk of being swindled or betrayed. How can they take the helm of the business in the future?
Another essential training for future owners is to “shadow” present board members.
A daughter can observe board meetings in the presence of her mother, and quietly learn from the wise and the poor decisions made, without yet having the right to vote. When her time comes to sit on the board, then she can be prepared to lead with confidence and skill.
Resolve to streamline career development for non-family employees.
Many family business owners complain that it is difficult to find quality employees. The smart ones do not want to stay, they say, while those who fewer options are not as competent.
The key is to retain the star performers, while encouraging the others to level up.
Good employees will stay not only when the pay is right, but also when they have a clear career path that they are interested to pursue.
If the path is nebulous, or if they are promised promotions or bonuses that never materialize, they will not stay.
Talk with them about their plans, for the business, for their family, for their self-growth.
In a family business, dealing with Human Resources may not be enough; it would be more satisfying for these star employees to negotiate with the owners or top management.
Help employees discover their strengths. Once passions and interests are made clear, employees can be trained accordingly.
Why force an accountant to tally figures all day long if she is an extrovert who wants to do marketing? Never mind if she has more accounting units: If her heart is in marketing, then urge her to take courses in marketing, and let her test the waters in the marketing team.
Have a fruitful year ahead.
Queena N. Lee-Chua is on the Board of Directors of Ateneo de Manila University’s Family Business Development Center. Get her book “Successful Family Businesses” at the University Press (e-mail [email protected].) E-mail the author at [email protected].
