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Success and succession: Five characteristics of a good family business

Wednesday, 20 September 2017

Chances are high that seven out of 10 of the businesses you know are family owned. As defined by audit firm PricewaterhouseCoopers (PwC), a

 

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How CEOs Can Work with an Active Board

Wednesday, 20 September 2017

At companies of almost all sizes, across all sectors, boards are undergoing a profound transformation. Largely as a result of

 

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Solving the Puzzle of Ownership Alignment in a Family Enterprise

Wednesday, 20 September 2017

alignment  noun | ə-ˈlīn-mənt State of agreement or cooperation among persons, groups, nations and the like with a common cause or view

 

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Case Study 

A father who changed his mind

This case study is the story of a Father, majority shareholder and CEO of a relatively large manufacturing and service company.

 

When he first engaged with Family Business Ireland he was in his early ‘60s. He had recently separated from his wife. There were a number of adult children of which two worked in the business. He had no succession plan in place and wanted to commence a process whereby he could ‘step out’ of the business after what had been a stressful few years.  The company did not have a functional board and the Father really dictated the strategy and pace of all key decisions. His perception was that his sons were not yet capable or experienced enough to manage the business. The Father’s personality would be described as fair minded, strong and forceful when required. The leadership role sat easily with him and everyone would have seen him as the legitimate authority of the business.

 

The process of engagement had four phases:

 

Phase 1:     external/internal assessment

 

Phase 2:    analysis/diagnosis

 

Phase 3:    agreed plan of action

 

Phase 4:    implementation

 

The initial phase involved peer discussion with other family business owners. The external engagement really did impact the Father’s thinking. It somewhat deconstructed his (the Father’s) closely held perception of his sons abilities. He also recognised the need to professionalise the board and to create a fully functional board that could manage without the continuous need of his operational oversight.

 

Once the process commenced with facilitated internal conversations in the business, the family quickly brought about a change of thinking and this change imbued the whole company with energy and confidence. Once the father began to think and act differently he could see how quickly others and particularly his sons rose to the challenge. This ‘new’ environment led to many changes and ultimately to a fully functional board. It is now some five years on and the Father now sits as Chair of a holding company of four family owned businesses. Both sons are MDs in their own right and two non-family members are MDs of the other two businesses.

 

This case is about a founder, principal and Father who recognised the need to manage the future. In doing so he created the space and time that enabled the future to be ‘created’ by consensus and dialogue. He admits his perception of both his sons’ capabilities was simply wrong. He underestimated their skills and drive. He also states that it was his peer support and independent facilitation that enabled a proper and fit for purpose solution to emerge. He was well supported by his long standing and trusted advisers and whilst they were somewhat circumspect of the process at the start they very quickly got on side and saw the process for what it was.