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Sunday Times Article - The "sticky baton" of family business succession

Wednesday, 24 May 2017

We trust that you will discover is a highly valuable read below from the Sunday Times. Succession is the key subject as it is keyin reality

 

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Sunday Times Article - The "sticky baton" of family business succession

Wednesday, 24 May 2017

We trust that you will discover is a highly valuable read below from the Sunday Times. Succession is the key subject as it is keyin reality

 

Read more


The Hofstede Centre

Wednesday, 24 May 2017

Thinking of going Global with your business? Are you looking to move your business into a country that may have  completely different cultures

 

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Case Study

 

The Right Way

 

This case study is a classic example of the right and correct way for a founder owner-manager to lead the exit process from the business he created, and in doing so create a supportive and nurturing environment for the next generation to not just emerge and take ownership, but use the foundation to enable the business to blossom.

 

At the time the change process commenced the company had grown to 120 employees. It had a formal management structure and was well managed. There were two directors, the founder and his wife. There were four children all of whom worked in the business. All had gone to college and each had attained a degree in four separate disciplines.

 

The founder was aware of the challenges surrounding succession in a family business and set about getting advice and expertise. His wife was very supportive, very knowledgeable of their own business, confident and independent of thought. She did not engage in business related activities external to the business. On the issue of succession the founder acquired information, he read, he attended many seminars and spoke with some very knowledgeable experts. Whilst he did learn a lot about the tax code, financial structures and appropriate legal frameworks he was dissatisfied with progress for two reasons. First, he found the process very expensive in terms of professional fees and secondly the professionals he met had little desire to deal with the emotion, relationships and wellbeing of the family. In short he found lots of theory and expertise but little practical understanding of the psychological need.

 

He and his wife knew their family business circumstances were not unique however they like many other family run and owned businesses kept their internal business private. The key catalyst to change was when the founder decided to partake in a succession planning programme. In this programme he and his wife got to meet with eight other family business owners. This was the first time the founder and his wife had the opportunity to meet with, speak with, and exchange views with other likeminded couples.

 

The group was established under a strict code of conduct central to which was confidentiality. This created a safe environment. The founder and his wife actively engaged in the process speaking openly about their circumstances for the first time. All other participants did likewise. They had found what they were seeking – a safe environment to discuss their thoughts, a place of positive challenge, a place to share their views and listen to other views. They of course had a great starting point. They wanted to know and understand how best to exit the business and transfer to the next generation. They were proactive. Within twelve months of engaging with the process the transfer was underway. This is a very short time frame and clearly demonstrates that they were motivated.

 

This case study is about the importance and the value of the founder proactively managing and leading the change process. Obviously this couple understood the importance and value in removing isolation from their decision making thinking and process.

 

The founder has retired and is now chairman of the board. He attends quarterly board meetings and is available to advise. The company CEO is the second eldest son. The eldest son did originally take on the role of CEO however due to health reasons stepped aside and he now heads up a very vibrant R&D department. The third brother is the assistant financial controller and the sister left the business to follow a totally different career. There is a fully functional board where all business related matters are managed. There are two non-executive directors. There is a family senate that meets once a year. There is an induction programme for all family entrants to the business. The roles of director, shareholder, executive manager, employee and family member are all clearly distinguished. The company is focused on profitable growth, has good planning and is well configured to deal with any unplanned, critical or unforeseen events.

 

The company today employs over 500 people is active throughout Europe. The founder continues as the chairman of the board and has announced he will be fully retiring from the position this year. He is now 74 and will meet his target of full retirement at 75. The priority of the founder and his wife was always that their children would be happy and healthy and that the business was to be a source of good in all their lives. They achieved this and in doing so ensured that negative voices, sibling rivalry and self-interest never had an opportunity to get a foot hold. They are a happy family. They have a great business. They have great opportunities.

 

 

The case study is about leadership and values. All good and functional family units have at their core a moral and ethical code where the values of one generation are passed on to the next in a variety of ways.

 

Making the family code the central driving force of a business is not an easy task but when done through example and behaviour and clear leadership it can achieve great things.