Hello Careher members,
I hope you all had a great summertime and are ready for the back to school season. At least in Europe, September is kind of a big deal: after almost two months of break, schools, offices, businesses are going back to regular working hours.
For this edition of Global Perspectives, we will focus on the traditional working environment and, more specifically, on Family businesses. I am not an expert on the topic, therefore when I heard family business before learning about Taiwan business culture, I pictured small shops/factories consisting of the father working with his brothers, sisters and kids! After digging deeper into family businesses across Taiwan and the rest of the world, I figured out that some of the world biggest companies are or once were family structures, and three main topics stood out:
- Succession planning: what are the keys to succession planning for family businesses?
- Conflict and crisis management: how to manage tensions and performance issues?
- Innovation: how to reconcile tradition and innovation?
1. Succession planning: what are the keys to succession planning for family businesses
Family businesses are the lifeblood of the Middle East. How do we ensure they survive?
The World Economic Forum published last year an interesting piece from Hassan Jameel, Deputy President and Vice-Chairman, Abdul Latif Jameel Company Ltd. In his article, we get a perspective on how traditional family businesses are lasting in the Middle east. In this region, family businesses represent three-quarters of the private sector economy’s workforce and play a large part in the economic growth.
世界經濟論壇去年發表了一篇有自Latif Jameel Company Ltd. 副總裁Hassan Jameel的文章， 從他的文章中，我們看見傳統家族企業如何在中東永續經營。而在中東，家族企業佔私部門經濟勞動力的四分之三，扮演經濟成長的重要角色。
- The same surveys [ Future-proofing Middle East family businesses, PWC] reveal that preparing and training the next generation and putting in place succession planning are the primary concerns for senior generations. Despite identifying these concerns, a survey this year by PwC showed 69% of family businesses in the Middle East (and 85% globally) have no formal succession plan in place.
- It is essential to find a balance between the family’s informal approach and more professional governance, gradually shifting company culture from a kitchen table to boardroom table approach.
- Putting in place the structures to empower and nurture future generations, and giving them the room to explore and develop their interests is the best way to encourage strong leadership and success in the long-term.
Managing an Underperformer in a Family Business
How do we manage an underperforming employee in a family business? We know this can be already tricky when there is no family relationship, but what happens when you have a management issue within a family ecosystem? What do you do about the under-performers?
該如何管理家族企業中表現不佳的員工？ 在沒有家人關係的情況下，這已經很棘手，但是當您在家庭企業中遇到此管理問題時，又會是什麼情況呢？ 您會怎麼處理表現不佳的人呢？
- Start with an open discussion about accountability. It’s fine to show deference for family membership, but it’s still essential to be candid about business needs.
- Shift their role or responsibilities. Can they work as an independent contributor or as a subject matter expert?
- Reassign the family member to a non-family leader. It’s crucial for the non-family leader to be confident that they have the backing of the senior leadership, including family.
- Construct off-ramps when necessary. Consider designing a sabbatical process for long-standing employees, or experiment with part-time, flex-time or remote assignment
By using a combination of these four approaches, you may be able to avoid a forced exit and instead help the family member be a productive participant in the company.
- 必要時為他們設立「工作引道」。 考慮為資深員工設計長期休假計畫，或兼職、彈性工作或遠端工作。
2. Conflicts and crisis management: how to manage tensions and performance issues
4 Tensions in Family Businesses — and How to Work Through Them
In this article, HBR analyses the four main tensions that can lead a family business to break down. When family dynamics play an essential role in decision-making and succession planning, finding a balance between business performance and family members’ expectations can be challenging.
Here are four common fault lines that lead to family business breakdown.
- Lack of trust: Only 30% of family businesses survive into the second generation. This means that in 70% of family businesses, the family loses control of the assets, and relationships are potentially destroyed. A lack of trust and communication are responsible for 60% of that failure rate.
- Lack of a shared purpose
- Control vs. care
- Cordial hypocrisy: Family members too often avoid tough issues by avoiding meaningful conversations. Left unaddressed, these tensions increase distrust in families and obstruct performance in their organizations.
- 缺乏信任：只有30％的家族企業能夠生存到第二代。這代表70％的家族企業，家庭對於企業資產失去控制權，且關係也可能破裂。 而缺乏信任與溝通佔了60％企業無法傳承的原因。
- 控管 vs. 照護
- 形成脆弱的表面和平：家族成員經常避免有意義的對話，以避免討論棘手困難的問題。 留下這些待解決的議題，增加了家族間的不信任，阻礙了企業的表現。
Family Business Responses to COVID-19
European Family Business – an EU federation of national associations representing long-term family-owned enterprises- has recently launched a case study about family business’s responses to COVID.
While traditional textile and pharmaceutical businesses have switched focus to produce masks and hand sanitizers, others have provided services and their workforce to make a difference.
For example, in the Netherlands, Louwman, an online car salesman, part of the Louwman Group, launched a campaign to provide car-free carers dependent on public transport with a temporary free car. The company has provided over 700 vehicles to carers.
3. Innovations: how to manage tradition and innovation?
Why family businesses are the natural home of innovators
Family firms are often perceived as anything but innovative, with long traditions, an aversion to risk, and a reluctance to change. The reality is very different as it turns out that there are an inherent entrepreneurial spirit and innovative power in those business structures.
Keeping their founders’ innovative vision alive helps family businesses to thrive. What can we all learn from their success?
While this “innovative spirit” isn’t easy to quantify, there are three key elements that truly innovative family business often share, which many non-family businesses would be wise to replicate:
- Entrepreneurial culture: this can be seen from the start-up phase of these businesses, as driven inventors and innovators became family business founders, turning new ideas and advances into the start of long-lasting family businesses. Growing up close to the business gives many family business members a taste for entrepreneurialism, an emotional connection to the business and a personal commitment to the values of the founder.
- Responsiveness to change: It’s also about responsiveness to change in the marketplace, as well as finding and responding to new opportunities in an agile way. The most successful family businesses are willing to move away from traditional opportunities in order to forge fresh ideas.
- Investing seriously in R&D: One of the core strengths of many successful family businesses is their commitment to investing in innovation.
- 創業家文化：這可以從企業的創始階段看出來，因為發明家和創新家會成為這些家族企業的創辦人，將新的想法轉變成家族企業的開端。 因為跟著企業一同成長，也使許多家族企業成員具有創業家的精神、與企業的情感連結，以及傳承了創辦人的價值觀。
- 應變能力：指的是對市場變化以及敏捷地找尋與反應新機會的應變能力。 最成功的家族企業願意擺脫傳統的機會，以提出新的想法。