Family businesses face the biggest threat of continuity. Only 10% of the family businesses pass on to the third generation.
Successful family business organizations must address the governance issues, which can easily derail the family business. Family members must address the governance challenges to ensure the business keys are passed on to the next generation with ease.
The common business challenges are: Family or Business first, Family Conflicts, Equality, Family Values, Moving On, Power Control and Delegation.
It is important to balance both rather than prioritizing any of them. Clear definitions of family and business through their set of policies, structures and systems can help both survive for long. Along with this, employment to family members should be treated at par with other employees. The family name should not be the driver of the employment process.
The family conflicts must stay away from the business, as the ownership and management are independent. The family business advantage of speed of thought and speed to market can be lost in the conflicts. Business agility is crucial for survival and growth.
All founder members, partners and siblings may or may not be performing equally and may not have the same financial requirements. Therefore, the compensation and dividend distribution should be as per need and performance.
Family values, culture and purpose need to be maintained with growth of the number of the family members and the business. The spirit of entrepreneurism should not get lost in the business bureaucracy, lack of professionalism and the conflicts.
The culture of forgiveness, letting go and moving on with greater transparency are crucial for the founder members of the business. This can keep the arising acrimony and conflicts at bay.
The senior generation needs to delegate their work for better professionalism. Power and control centers need to be eliminated and team work should be encouraged for speed and performance. Family members should look forward to professional inputs from teams rather than banking on the family always.
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