Family businesses are a cornerstone of the Gulf Region’s economy. With a fast-approaching shift in leadership, it is imperative that family firms address contrasting generational approaches to the governance, management and strategy of the business. Senior generations of family businesses often carry different priorities as compared to younger generations. Having the dual roles of being both members of the family and active members of the firm can prove to be challenging and create tension as well. If left unaddressed, this can quickly become a source of conflict and potentially bring instability to both the family and the business. By setting clear paths on how to balance expectations, goals and demands, such conflicts can be averted.
A survey conducted by PwC on the successors of family businesses identified three common gaps that they often face: the generation gap, the credibility gap and the communication gap between the younger and senior generations of the family. Whilst the next generation of leadership often seeks innovation and change within the business to keep up with global advances; senior leadership often desires to hold onto the stability they have established. This webinar explored how channels of open communication and building a new, shared future vision embedded with family values, will allow generational expectations to be managed and secure the sustainability of the family firm.
The follow topics will be discussed:
- Understanding generational expectations & goals
- Managing role conflict of family members involved with the firm
- Creating channels for open communication
- Strategies on how to build a new shared future vision
What we learnt:
- The family patriarch should take the initiative to pre-emptively restructure the business with the view of avoiding disputes and disruptions after his passing.
- Timely estate planning is needed for the long-term continuity and sustainability of the family business, keeping in mind the nature and location of assets and the various laws and regulations governing them.
- As part of an estate planning endeavour, it is often also beneficial to have an exit plan for the business to tap into as and when required. This does not only imply a sell-out. There are various avenues for an exit plan, including bringing in new investors, cashing-in a part of the business, or having a profitable arm of the business spin-off into its own venture.
- Family firms should comply with and implement corporate governance and ethical practices within their business. Through this, some points of conflict will naturally guide and correct itself – such as a successor being chosen based on merit and capabilities instead of familial hierarchy.
- Having qualified management in place will not only allow the business to transition seamlessly following the passing of the patriarch, but also allow the business to thrive and grow.