I recently had
lunch with one of my very good friends and her sprightly white-haired
father who is in his seventies. We had arranged to catch up over lunch
on a weekday and I was surprised to learn that her father, who still
worked in the office with her, would come along as he did several times
a week.
In the course of
the meal, as is usual with people in their 70s, we were treated to many
anecdotes, most of which my dear and indulgent friend had heard many
times over the years. What caught my ear most particularly was the tale
of how she joined the family business, which is a manufacturing concern.
Like his father and
his father’s father, her older brother joined the family business as
soon as he left university. Both siblings grew up visiting the factory
as young children and I recall spending a day there with them on school
holiday when we were all in our teens. If there was any question of her
brother choosing another career,it was never discussed. Soon after she
finished university, my friend also joined the company – continuing a
family tradition started three generations before.
When she arrived to
join the administrative side of the business, she was welcomed with
relief by the staff, much to her father’s surprise. Her brother was
working on the revenue generation side of the business. They felt that
as a person with long familiarity with the business, who had worked
there intermittently, and who was hard-working and well-educated, she
would be a contributor and not a drain on resources.
Twenty years later,
she and her brother have taken over the management of the family firm.
Their father retains his desk in the office in a titular role as
chairman. Their own children, in turn, spend school holidays working in
the factory or lending a hand in the office when their parents need
them to. It would be interesting to see how many more times the
company’s management will pass from parent to child.
Several years ago, Leap Africa Foundation published, ‘Defying the Odds:
Case studies of Nigerian organizations that have survived generations’.
They could only find seven family businesses that had successfully passed from one generation to another.
Examples that I am
familiar with, where the founder brought in his/her children to work,
are common in the traditional professions and in new entrants such as
telecoms, oil and gas and information technology. In most of these
cases, the parents are still firmly at the helm or providing leadership
while the children are in management or on the board. Clearly outlined
succession either to one’s child or to an identified executive is so
rare that it is notable.
Unfortunately, few
of the family firms have truly institutionalized or gone public. So,
corporate governance that would manage succession is absent or
imperfect. In a few cases, succession has been forced due to
irresistible external pressures.
Missing on positives
Where it has
occurred that a parent passes their business or influence onto their
child, how successful has the transition been? Again, from anecdotal
evidence, not very successful! For starters, it is rare for the child
to have grown up with the business as a significant part of their lives
– other than as a source of their parent’s income and pocket money for
them. Then, where the child knows that the business is his/her
inheritance, it is both their expectation and their parent’s plan that
they will take over as workers and not necessarily as management.
The in-depth
knowledge of the business, the day to day interaction with customers
and stakeholders, the ability to relate to and empathize with the
circumstances of their staff – all these things that are necessary to
give them a good probability of maintaining or building on the success
of the business – is mostly absent. To explore the reasons why family
enterprises are failing to be sustainable, let’s start with our history
and culture of running enterprises. Historically, there was nothing
like work/life balance. One’s personal life was involved in one’s work
and vice versa. Farming involved the entire family, and when visitors
came to say, they automatically helped out as well. Children would help
in the farmhouse or on the farm from when they were small, and unless
they were that odd individual who yearns to leave home to discover the
unknown, they would grow into that life and the cycle would continue.
For professionals,
parents would heavily influence the choice of training and career,
sometimes only paying tuition for the course they want they child to
follow. Of course, there are cases where the children admire their
parents so much that they want to be exactly like them.
The missing link
Why doesn’t succession work?
Major contributing factors on the side of the parents are parental interference,
refusal to
relinquish authority, inability to view their child as a competent and
capable adult, resistance to institutionalization, unrealistic
financial demands and expectations, unwillingness to transfer key
stakeholder relationships,
favouritism between
children, sabotage to prevent the child from outshining their own
achievements and more. The crux is agreement about ownership of the
vision and the assets of the family business.
Yet with all the
difficulties, sitting with my friend and her father over lunch, all I
could think about was how blessed they both were to be working together
in relative harmony.
