Companies are complex, and are more if they are familiar. Having to deal with family problems and activities for the company to grow can be a headache. A puzzle that seems to never end assembly, as each new day is a different challenge. As you progress are emerging new problems that entrepreneurs have to solve to keep the family together and strong company.
According to Forbes, only 30% of companies go to second generation, 12% to the third and only 3% in the fourth. The reasons may be many, but among them the situation of succession.
Fredda Herz Brown, a consulting Relative Solutions, over the last 35 years has specialized in helping family businesses to continue keeping time. In an interview with Forbes talks about what have been their best strategies for maintaining a family business forward and upward.
The first task is to understand the complexity of exactly what the family can be. “You start with a couple of people, growing at seven or eight other people, get married, then they have more children,” says Herz Brown. “By the time you reach the second or third generation, you have a lot of things happening that have to be dealt with urgently, but most families do not wake up until it is too late.”
The problem with the increasing number of people is that there are differences in experiences, loyalties, motivations, many of which could not be linked to the vision of the family business. Like family members who join through marriage that are totally different cultures, added to this are the cousins, for example do not grow in the same house and do not have the same understanding of the personal styles of the leaders the family business. Herz Brown says: “They are dispersed geographically, are further from the company that originally made them money, so often there is a disconnect unless you really work within the business” As families grow and disperse, dynamics becomes familiar dynamics of the clans, he added.
For this type of family network a strong system of government in order to survive it is proposed. Who you are in the business and who is not? Who has shares and who has not? Who is in charge? What is needed to become part of the circle of leadership? And, perhaps most importantly, how can the largest set of extended families communicate in a way that puts all parties involved on the same page? Families must agree on a set of processes to bring order to a lot of gray areas. “It’s a way to put some stands in the way of making bad decisions sometimes take” says Herz Brown.
The first thing that every family business has to do is decide who will make the decisions of the organization and occupy leadership positions in the future. “We believe that people who will live with the decision must participate in setting the standard,” says Herz Brown. “It may not necessarily have a vote yet, but it definitely needs to be present his voice.” At that meeting, all parties should discuss goals, what works and what does not.
Once the roles of family businesses are established, other issues must be taken out. Herz Brown has discovered that families have to join for serious discussions on issues such as leadership development (how to groom a new generation of leaders within the family?), Accountability and financial management (which are the goals and standards should leadership meet?), family communication, and understanding of how the organization and those in which they fit into the larger world (ie, effective communication with employees and understanding of the personal and organizational) perspective.
The change is a challenge
A large number of other factors make family businesses are difficult to maintain long-term, among them the leeway that each new generation of leaders in the redefining of management. The change in business, it is essential for the survival and future leaders must evaluate the benefit of the company, although sometimes this is a difficult decision to make. “Many of the families I’m seeing are suffering in various ways,” says Herz Brown. “One is to continue to invest in your business because that is what they do best, but do not think about where the company is in terms of the industry.”
One solution is to open the opportunity for stakeholders to advise the company to generate good ideas on the strategic direction, but without voting rights. Even a legacy significant changes leading a company is a good idea, if the industry you are going through a major disruption.
People tend to live longer and avoid removal adds a new facet of the dynamic family company, says Herz Brown. “We’re not passing the baton from one generation to the other and the older generation retired, as used to happen 35 years ago. Today they have at least three generations working together. The middle generation of the three has a place unique, one where your view should be recognized but risks being overlooked. ”
How can families respect the legacy of a much older and still active member of the company, while, perhaps, have to make major changes in the company? How a family that grows increasingly continues to support itself? Can new generations of leadership have a transition too late or too early?
The answers to these questions, as many dynamics of family businesses are not written in stone, says Herz Brown. Every family is different and must be evaluated on its own complexities.
Having a planning that includes the family and the business, accept that they have to make changes, and recognize the longevity of the members are important factors to consider to keep a business running. If companies are complicated by nature, they are more if you add the familiar term. The important thing will be to maintain harmony in the group.