Latest News

The Impact of Family Business in Ireland

Sunday, 20 May 2018

Although this repost is based on findings up to 2005. It is important to know the impact that family business has in Ireland. 

 

Read more


What Daughters Learn When Mom Is the Boss of the Family Business

Sunday, 20 May 2018

A well-run company may be the best Mother's Day gift of all for women who follow their mothers into family-business leadership roles. After all,

 

Read more


Your Family Business Won't Survive If You Don't Plan for the Leadership Transition

Sunday, 20 May 2018

The artice below is based on a topic that we here at Family Business Ireland are passionate about. Approximately 70% of Family Businesses in ireland

 

Read more



The Impact of Family Business in Ireland
Sunday, 20 May 2018 21:56
Although this repost is based on findings up to 2005. It is important to know the impact that family business has in Ireland. 
 
 
This report presents a comprehensive picture of the contribution of family businesses to the traded
services sectors in Ireland. The information is sourced from the 2005 Annual Services Inquiry
(ASI). The ASI is an enterprise survey covering the retail, wholesale, real estate, renting and
business services and other selected services sectors.

 

Click on the link below to read more:

https://www.dcu.ie/centre-for-family-business/impactoffamilybusiness.shtml

 
What Daughters Learn When Mom Is the Boss of the Family Business
Sunday, 20 May 2018 21:43

A well-run company may be the best Mother's Day gift of all for women who follow their mothers into family-business leadership roles. After all, their mothers were the ones who taught them about leadership in the first place -- both at home and in the office, where they focused on building enduring companies.

In the process, those mothers exemplified a new paradigm for their daughters, demonstrating how to put their values to work and build on the legacies they inherited.

 

 

As an EY global survey of the world's largest family businesses, Women in leadership: The family business advantage showed, the presence of women in family-business leadership roles makes it easier for all of the company's women -- family and non-family alike -- to see themselves as leaders.

The study, conducted by an independent research institute, surveyed 525 of the world's largest family businesses across multiple industries. The responses represented 25 of the largest family businesses in each of the top 21 global markets.

 

 

More recent data, to be released from EY's Global Family Business Survey 2018, showed that 60 percent of the world's largest family businesses were considering having a woman as their next CEO. In addition, 82 percent of these companies already had women in their C-Suites. Those that did averaged a leadership roster of nearly six women in these roles, up 20 percent in the just three years since EY's earlier survey.

Clearly, then, companies are increasing their numbers of women in leadership roles. The experiences of the following three leaders support these findings that show family businesses excel at advancing women.

 

 

Teach yourself to be brave.

Jayne Millard, chairman and CEO of global electrical and industrial distributor Turtle & Hughes, credits her mother Suzanne Millard, the company chair, with preparing her to lead the 900-employee business.

As a young woman, Jayne Millard recalled being impressed by her mother's fearlessness. "She never stopped to think, 'Maybe I shouldn't have this conversation, or make this ask,'" Millard told me in an interview.

 

 

The company, founded in 1923 by Millard's great-grandfather M. Berry Turtle and his business partner Bill Hughes, has had a history of leadership by women. After Turtle's death, his wife Ethel, who provided the funds to start the business, stepped in and ran it from 1942 to 1965. Her son, Jayne's grandfather, was in charge for just three years before he died.

 

Jayne's mother then took control and made big changes, moving the company from New York City to Linden, N.J., where it is headquartered today, and creating an employee stock ownership trust, which she used to buy out her sisters, who wanted to sell the business.

"My mother is the only reason we didn't sell this company," Millard said. While she admired her mother's sense of mission, she did not always envision following her into the family business, she said. Instead, early in her career, she worked in marketing for the Martha Graham Center for Modern Dance. Only later did she decide to earn an MBA as a tool to inform her role as a Turtle & Hughes board member.

 

 

 

Then, in 1991, at her mother's request, Millard joined the business, in the marketing department. She rose through the company, becoming CEO in 2008. In every role, she said, she benefited from her mother's influence. "My mother showed me that you have to teach yourself to be brave," she said. That means you may have to "fill in the blanks and fake it a little as you learn on the job," she added.

It's a lesson her great-grandmother and mother both lived by before her as they assumed roles that were especially untraditional for women of their time.

 

 

Just keep going.

Kris Kowalski Christiansen, CEO of Kowalski's Markets, a 1,500-employee company headquartered in Woodbury, Minn., grew up hearing stories from her mother, Mary Anne Kowalski, the company's owner.

But those stories were hardly children's fairytales. While the grocery industry remains male-dominated today, it was even more so in 1983 when Mary Anne and her husband, James, who died in 2013, founded the business. Kowalski recalled being dismissed frequently by men who were not used to working with a woman.

 

 

"Everything came in addressed to 'James Kowalski, Owner,'" she told me. When she answered the phone, it was a challenge to get vendors and suppliers to understand that, yes, she could handle their business -- there was no need to wait for a response from her husband.

During a trucking strike, Kowalski was particularly upset by sexist jeers from the truckers, though, she said, that didn't stop her from climbing into a truck and driving it across the strike line.

Over the years, she said, she would tell her daughter and only child, Kris, all of this. Kris was 16 when her parents started the business. By telling Kris her stories, Kowalski said, she hoped to prepare her daughter to navigate similar situations. "I wanted her to be aware both for herself and for other women at the company," the mother said. "I think, at times, I made her nervous -- she saw me get pretty angry."

 

 

For Kris Christiansen, who started working at the company in 1990 and became CEO in 2017, the takeaway was to know her worth and continue to do her job. "Even though I saw my mother's anger and disappointment, in me it manifested as, 'You just keep going,'" she said.

Christiansen said she also benefited from her mother's mentoring abilities. Due partly to hearing of Kowalski's early experiences, Christiansen said she recognized the importance of mentoring women, and diverse employees more generally, to assume leadership roles throughout the company.

 

She said she shares that priority with her own daughter, who's 13, though it's too early to tell whether that young girl will follow her mother and grandmother into the business.

 

 

Make it personal.

Diana Nelson succeeded her mother, Marilyn Carlson Nelson, as board chair of global travel and hospitality company Carlson in 2012. Curt Carlson, Diana's grandfather, founded the Minneapolis-based business in 1938, and took an autocratic approach to leadership that prioritized the chain of command.

When his daughter, Marilyn, who also served as CEO, assumed leadership following his death in 1998, she transformed the corporate culture, aligning it more with her personality and sensibilities.

 

 

"The workforce was demoralized by [Curt's] top-down rule," Marilyn Nelson told Family Business magazine. "I wanted to lead with love and create a collaborative environment that was less linear." A working parent herself, Nelson also structured the work environment to be more consistent with employees' family lives. The company, which was later honored as one of the "100 best companies for working mothers," was among the first companies to offer paid paternity leave. During Marilyn Nelson's tenure, Carlson's revenues doubled.

 

Enter the third generation: "My mother was a profound teacher," Diana Nelson told Family Business. "Everything she did reflected her personal ethics. She showed us that businesses could be profitable and good citizens."

 

It's a mindset that's particularly common among these women-led family businesses. Considering the women who came before her, Jayne Millard said, "The biggest gift they gave me was to create a culture that recognizes the company isn't ours to sell, it's ours to rebuild for the next generation."

 

 

 

 

 

Source:https://www.entrepreneur.com/article/313152

 
Your Family Business Won't Survive If You Don't Plan for the Leadership Transition
Sunday, 20 May 2018 21:03

The artice below is based on a topic that we here at Family Business Ireland are passionate about. Approximately 70% of Family Businesses in ireland have not successfuly continued on to the next generation. The main reason for this is that they had not thought about their succession plan. Please have a read at the article below and should you wish to enquire on Succession planning, please do not hesitate to contact us here at Famly Business Ireland.

 

 

 

--> When advising family business owners, one of the biggest challenges I see clients grapple with is the transition from being "power players" who dominate every aspect of the company, to "people builders" who cultivate the next generation.

 

 

Take the example of "Terry," who had successfully led his manufacturing company for almost three decades. At age 68, he just didn't have the energy that he'd had even 10 years ago. What he did have was a wealth of institutional knowledge, which was part of his company's success. Terry was still the public face of the company, known throughout the community and by his customers and distributors as an astute businessperson with a big heart. Unfortunately, all of Terry's secrets to success were locked in his brain, so when his two sons stepped up to take a leadership role, they had no relationships with key stakeholders, such as the advisory board, the bank, the local community, customers and suppliers. Their style of leadership also was different than Dad's. Key customers were leery of the impending change and suddenly became more interested in re-negotiating contracts.

 

Much of this difficult transition could have been averted if Terry had included his sons in key business meetings and relationship-building opportunities early in their leadership training. Terry had a lot to share, but he just didn't know how.

 

 

 

Family business challenges

Terry isn't alone. There are approximately 5.5 million family businesses in the U.S. According to Tharawat Magazine, these businesses are estimated to account for more than half of the U.S. GDP and employ more than 60 percent of the workforce. Yet, despite their outsized impact on our economy, many family businesses haven't planned properly -- or at all -- for a transition in business ownership. One study by MassMutual found that more than 40 percent of respondents expected to retire within 10 years. However, fewer than half of those expecting to retire in five years and less than one-third of those expecting to retire between six and 11 years reported that they had a chosen successor.

 

There are three main challenges that family business owners typically face:

 

  • How can they pass on the institutional knowledge gained through years of experience so that the next generation can keep the business going in the right direction?
  • Do they want to pass on their business culture and values, such as a connection to the community or concern for employees, to the next generation?
  • Most importantly, how can the business be strong and sustainable without them?

 

 

 

Understanding the business lifecycle

 

To address these challenges, an owner must first understand the three key stages of the business lifecycle and what must be done to progress to the stage where ownership can be successfully transitioned.

Stage one: Entrepreneurial. The founder/owner runs the show; the long-term vision is in his or her head. Rarely is there a written strategic plan. While the owner may have the support of key personnel, they are expected to execute while the owner makes the ultimate decisions.

 

Stage two: Durability. In this stage, an owner is surrounded by other leaders who have the responsibility and authority to make decisions. The business follows something of a shared vision and also has more formalized operating processes; performance metrics; and a semi-independent board, which is either fiduciary or advisory.

 

Stage three: Legacy building. Here, the owner and other company leaders have done a really good job of capturing knowledge and disseminating it throughout the organization. Businesses in this stage have done a solid job of building the leadership bench and making succession planning an orderly process.

 

Few family businesses actually progress to stage three. To get there, owners need to envision what their lives might look like 10 years down the road.

Answering questions regarding successor readiness helps owners clarify what would give them confidence as the transition evolves. The transitioning leader might gain clarity on the current state by asking: "What is working today?" This can be followed by imagining the desired future state once they have fully transitioned into the next phase of their life. However, to get from the current to the future state, most owners need to develop several interim phases that allow for making incremental changes in their role as they become more comfortable with their changing responsibilities.

 

Embracing a new role helps many business leaders to both add value, due to their vast experience, and to learn new skills that will benefit both the company and the next generation. However, this is not always easy. Owners are generally engaged and entrepreneurial people, and it is difficult to step away from the heady days of making all of the important decisions. This is why we encourage a step-by-step process that has a clear goal in mind and helps the owner to take baby steps as he or she becomes more comfortable with a new role. It also helps to be transparent with other leaders in the company about what the owner is trying to achieve and what help or support is needed to get there. Some owners choose to include their transition objectives as part of the strategic plan and may begin to introduce new organizational practices, such as an advisory board or a family council, to help to achieve those objectives.

 

 

 

Once Terry was aware of the value and importance of his years of experience, we were able to develop a plan for gradually transitioning his role and systematically sharing his wealth of knowledge. Terry began by identifying his most important strategic relationships, detailing how he formed and maintained those relationships, and introducing his sons to his many advisors, clients and business colleagues. Next, we worked together to develop a training plan that incorporated the opportunity to learn directly from Terry and other leaders in the organization. Finally, Terry and his sons developed a clear agreement, outlining the process for transitioning their roles and responsibilities over a three-year period.

 

 

Because a business transition may not come naturally to the owner, it is crucial to create a formalized process, like Terry's, that includes well-defined goals, open communication and frequent feedback. Through this process, the owner gains the ability to move from the power player position to that of a people builder.

 

 

 

 

 

Source:https://www.entrepreneur.com/article/312807

 
3 Secrets of Successful Family Businesses
Sunday, 20 May 2018 20:57

Running a business is hard work. Aside from wearing different hats to keep the company afloat, an executive also has to manage the entire team. When it comes to managing a family business, however, another layer of difficulty arises.

 

When it comes to managing a family business, separating work and personal relationships can be admittedly tricky.

It's not impossible; there's just another layer of difficulty. In fact, successful family businesses are a fairly common thing with more than two-thirds of all the companies in the world being family owned. Not only does this indicate that managing a family business can be done, but that it has a huge impact on the success of the business as well as on the global economy.

 

What are the secrets of these family businesses? Here are three. 

 

 

Secret No. 1: Family businesses practice minimalism.

 

In a world that values innovation, it's tempting to ride along every trend that takes the industry by storm. But successful family businesses have a common habit of practicing minimalism in running their business – that is, being more mindful of what they invest in and whether or not it adds value to the company in the long run.

That's why you’ll rarely see a family business with such a hip and trendy office a la Google or Apple. Instead, they'd rather focus their capital on building lean frameworks and hiring core employees so that when a recession hits, they're less likely to do any layoffs or lose money from unnecessary acquisitions.

 

 

The opportunity cost to this philosophy is that family businesses have fewer chances of "winning the jackpot" during good economic times. Hence, a smaller growth rate in the short term for the chance of a higher return on investment in the long term. 

 

 

Secret No. 2: Family businesses don't prioritize profit maximization.

Family businesses anticipate that they will stick around longer than the average startup, so they have a tendency to have a defensive business strategy.

 

 

As mentioned, family businesses are wary of joining the trend bandwagon. Cryptocurrency is one such example of a trend that may be seen by others as highly rewarding but is ultimately risky for the rest of us. Hence, you won't see many family businesses participating in such a business model.

That said, just because family businesses don't focus on maximizing profits doesn't mean they don't earn a profit. There are investments that may lose money in the short term but that prove to be a solid business model in the long run. Family businesses tend to spot these deals and build on them. Instead of earning profit for the sake of it, most family businesses do it the other way around: focusing on their product, their customers, and their employees, which consequentially leads to a higher profit in the long term. 

 

 

Secret No. 3: Family businesses draw clear lines to avoid conflict.

Unlike non-family businesses, one weakness of family-owned businesses is that there is an increased risk of conflicts when the professional and personal worlds collide. But a common secret in overcoming conflict among successful family businesses is the clear definition of roles of every member of the family.

This is how Jayco, an RV company in the U.S., continues to be the largest family-owned company in the industry 50 years after it was established.

 

 

Derald Bontrager, CEO of Jayco and son of founder Lloyd Bontrager, says one of their rules is that they don't allow conversations about work during family gatherings. They leave business at the office. 

 

 

Takeaway

You don't have to be a family business to apply these secrets to your organization. If you're having trouble running your business, then you could learn a thing or two from how family-run organizations maintain their momentum and stay successful in the long run.

 

 

 

 

 

 

 

Source:https://www.business.com/articles/successful-family-business-secrets/

 
'My father left the entire farm to my brother. What can I do?'
Tuesday, 09 January 2018 22:51

"Not being fully included in a will can be a matter of losing your life's Work"

 

 

Q. I am a farmer's son and am now in my fifties. Having farmed our 150 acre farm for over 20 years alongside my brother (since my father retired) I was expecting that I would inherit at least half of the farm when the time came for my father to pass it on in his will.

 

Although it was never discussed openly by the family, I have always presumed that one day, at least part of the farm would be mine. I have never been paid for the work that I have done on the farm and the profits have kept my parents in their old age. I was shocked to learn that my father has left the entire farm to my brother and I will inherit a site.

Is there anything that I can do?

 

A. These circumstances are always difficult by virtue of the inevitable damage that they cause to family relationships. It is essential that when it comes to succession planning, much thought is given to the consequences of the distribution of assets for all of the affected parties before the will is made.

Most people are aware that once they enter a contract or agreement, the terms and conditions of that contract will generally be enforceable.

For a contract to be enforceable it normally requires that there be a promise, for example to do or sell something, in return for some form of consideration or payment by the other party.

 

 

 

There are, however, limited circumstances in which a contract or agreement, which is not written, can be enforceable even when there is no consideration or payment involved. It is a remedy used by the courts to prevent a person from going back on their word in circumstances where another person has acted or relied on that word to their detriment.

It is not enough that a person has made a promise or representation, the other party must actually have acted to their detriment in some way as a result of the promise. For example, if a father promises his son that he will leave him the family farm in his will and as a result the same son works without pay on the farm and improves the farm then, if his father does not in fact leave him the farm, he could bring an action before the court seeking to enforce his father's promise.

 

 

 

In asking the court to recognise that you have an interest in a piece of property in these circumstances, you will need to pass three tests:

 

1. That a clear promise or representation was made to you in respect of the property. This could be a promise, for example, by a land owner to a nephew that "those three fields will be yours when I'm gone". This clear promise must have led to an expectation or belief on your part that you would receive the land.

If you can present evidence, for example a witness, to the promise, you would be in a stronger position to make the claim.

 

2. You must have acted to your detriment on the basis of this promise. This could involve the spending of money on the property or the passing up of a career off farm or the working on a farm for free for years or the payment of bills or mortgage on behalf of your uncle or the suffering of some other detriment as a result of the promise.

 

It used to be the case that you would need to have shown the expenditure of money on the lands but as case law has evolved, this is no longer an absolute requirement.

 

3. You must show that the ­detrimental acts performed by you were performed in reliance on the belief or expectation. This means that the actions which were taken to your ­detriment were done because of the promise made, and otherwise would not have been done.

 

 

 

The relief which would be sought from the court is called proprietary estoppel and is an equitable relief/remedy. Equitable remedies are concerned with "equity" or fairness.

Therefore, they are based upon righting a wrong where the conduct complained of is deemed by the court to be "unconscionable".

 

 

The court has wide discretion as to how it will give effect to the "equity" which has arisen. This can range from ordering a transfer of the land to the person who claims the equitable interest to a simple negative right preventing the person from being ejected from the land by the registered legal owner.

It is essential to bear in mind that these type of cases are considered on a case-to-case basis by the courts and the outcome is often difficult to predict. There is considerable risk with high legal costs; however, for some it is a matter of losing their life's work.

 

 

The importance of estate planning cannot be overlooked in the context of preventing family disputes and possibly this type of claim after the lifetime of the land owner.

 

 

 

This article is intended as a general guide and you should seek legal advice in relation to individual circumstances.

 

 

Source:https://www.independent.ie/business/farming/legal-advice/my-father-left-the-entire-farm-to-my-brother-what-can-i-do-34967286.html

 
Problem Solver: How do I get my father to let go after handing over reins?
Tuesday, 09 January 2018 22:41

Fergal Quinn gives his advice below to a successor on the common struggle of a famiy business Handover.

 

 

Q. I am 33 and have been given the reins of the business by my father... in theory. He remains involved in the business and overrides many of the decisions I make. I badly need some advice.

 

A. When we filmed the 'Retail Therapy' TV programme, the story line was very similar to this. A family business that the parents were encouraging one of their children to take over, but the parents were struggling to let go. From your father's perspective, this has been a lifetime and he may be finding it quite difficult to let go.

 

I doubt if he is deliberately going out of his way to interfere. It is probably more a habitual thing, or even an effort to protect you.

You must however, deal with this and deal with it quickly as it will undermine your authority and perhaps dampen your enthusiasm and energy.

 

My experience of family businesses has been that very often things that should be spoken about are not for fear of upsetting someone in the family. Think about what you want to say in a constructive manner.

Consider getting your father out of the business for a day, perhaps while traveling around Dublin or some other centre of retailing, to have a look at competitors. Use this opportunity to have a frank and open discussion about roles and responsibilities and say how you actually feel when these situations arise.

 

Your father, I am sure, will be sympathetic - however that won't help the situation unless you can bring about some change. Perhaps it's time he cut back his hours so he is not physically present all of the time. Taking extended holidays would be another way to naturally allow you to take an enhanced role.

 

I doubt you will meet any major resistance, and you could well find that his motivation is driven by a desire to ensure that you succeed.

 

You now have to convince him that success will come through him taking a back seat and allowing you to drive the business forward.

I have no doubt that you will want to enlist his advice and help going forward and it might be a good idea to hold a monthly management meeting with your dad so you can keep him updated on what is happening in the business and also use him as a sounding board where some big decisions need to be made.

 

With our 'Retail Therapy' programme family, we had a fantastic outcome, with the parents deciding to take some time out of the business and their daughter blossoming in her management skills with her new-found freedom.

Q. We operate a business in a competitive sector and we are in the middle of formulating a strategy in the business to help secure our future. Our focus will be 'to be the best in our sector', and I just wanted your opinion on this broad direction.

 

A. Far too often businesses don't stand back and take stock of where they are at, and then formulate a strategy. Well done on taking the initiative!

 

I meet many companies who have a strategy of 'being the best' and I am not entirely sure that it is the best focus for their business. It implies that you become obsessive about your competitors and spend all your time watching what they are doing in order to outdo them. Watching your competitors carefully is an important part of the business, but trying to better them probably is not a strong enough strategic positioning.

 

Strategy is more about being unique in everything you do and trying to create a unique consumer proposition regardless of what others are doing in the marketplace. That shifts the focus entirely onto your own business and puts the customer centre stage in the strategy formation.

 

When I was leading the team in Superquinn we put a huge amount of effort in trying to be unique and offer the customer something really special. We took most of our direction from customers by listening carefully to what they had to say. We found reacting to feedback helped to make the shopping experience unique, which allowed us to stand out in food retail circles.

 

 

 

 

Source:https://www.independent.ie/business/in-the-workplace/problem-solver-how-do-i-get-my-father-to-let-go-after-handing-over-reins-36456487.html

 
7 Reasons for Enduring Power of Attorney
Tuesday, 09 January 2018 00:00

An Enduring Power of Attorney is a document in which you appoint who should look after your personal and your financial affairs in the event that you are unlucky enough, through accident or illness, to lose your mental capacity.It is only ever intended to become effective IF you lose your mental capacity at some future point in time.

 

7 Reasons Why You Should Make An Enduring Power of Attorney


1. You decide who is to look after your personal needs, if required


2. You can also have your assets or business affairs taken care of in a structured way


3. You give yourself peace of mind , knowing these arrangements are in place


4. You can ensure there is no undue financial strain imposed on family due to your illness or disability


5. While a Will covers things after death , this document governs the period from mental disability to death


6. It does not activate until something profound happens to you


7. You can change it or revoke it at any time up to it’s activation, if you wish

 

Kindly submitted by Neil Butler of NEIL J. BUTLER & CO. SOLICITORS, Friar St. Thurles.
Please call Neil or Siobhan now on 0504-24173 to find out more Or e-mail on This e-mail address is being protected from spambots. You need JavaScript enabled to view it
http://www.njbutler.ie 

 
Six simple steps for succession in family businesses
Tuesday, 09 January 2018 00:00

If you work in the family business sector, chances are you run into the same statistics over and over again:

 

The data is not pretty — although, as some critical thinkers have pointed out, survival statistics like these have to be put into context from time to time.

 

What is important to know is that the data does not imply that there is a 90% chance your business will fail before your grandchildren come of age. It is up to you whether you create a successful multigenerational family business. In other words, this is not a numbers game; it is a planning game.

 

The reason so few family businesses survive to the third generation is they lack planning and communication. Companies fail when they let family conflict and emotion drive change, rather than relying on proven strategies. Your business does not have to be like that. It can, and should, survive a long, long time.

 

Every family business is different, but the characteristics of good succession planning are universal. Here are six simple steps that your business should incorporate.

 

 

 

Step 1: Treat succession planning like it is urgent

A family business ignoring its succession plan is akin to a 30-year-old worker ignoring his retirement plan. Both events (succession and retirement) seem like they are a long way off, but the reality is that ignoring the early years can lead to major problems down the road.

 

Why do so many family businesses ignore or put off succession planning? I have noticed several reasons.

 

First, many people underestimate how extensive succession planning is. A proactive succession planning process allows organisations to reduce the impact of an owner or major team member, help buffer the company from dramatic changes in business circumstances, as well as prepare targeted individuals for future advancement.

 

One reason so many enterprises ignore succession planning is that it can be uncomfortable. Family conflicts occur even in the healthiest businesses, and the succession process is full of potential pitfalls and mental roadblocks unless you know what you are doing. As such, you will likely need someone to guide you through the complexities. Someone whose expertise and impartiality help build trust and smooth conflict between members.

 

 

 

Step 2: Plan for a process, not an event

Too many families treat succession like it is a long-off, lofty goal. They think “someday, the children will have to take over,” or “ideally, the business will operate smoothly enough for my son/daughter to grab the wheel”.

 

Such a mindset is unfortunate because it treats succession as an event, not a process. However, as Family Business Australia points out, the major influences on succession all require a lot of planning and preparation. Specifically, FBA shows that transitioning business owners are concerned about:

 

  • Generating adequate financial returns;
  • Having sufficient trust in potential successors; and
  • Receiving enough interest from potential successors to take over the business.
  •  

You also need time to figure out the legal and tax issues associated with succession and, if it is the right time for the founder, retirement. This means estate planning and equity transfers.

 

 

 

 

Step 3: Rally around your family values

Strong family businesses create a sense of shared values — the kinds of values that survive beyond one owner. As you sit down to prepare a succession plan, take note of the moral and governing philosophies that guide your enterprise.

 

Your family values are more than a slogan. During times of conflict or struggle, your leadership and family employees will rally around your family values, using them as a guidepost for making tough decisions. Do family unity and collective agreement matter more than generating extra revenue? Should younger family members be forced to work outside the business before they can assume control?

 

Think about your succession plan as an opportunity to create a compass that your family gets to carry from generation to generation.

 

 

 

Step 4: Hold meetings and discuss succession

A really good succession planning process boils down to involving and communicating with your family members no matter which generation they belong to or their immediate contributions to the firm.

 

Keep in mind — and this is very important — that it is not the role of the present leadership to micromanage the meeting process. You want every influential member of the firm and family to be able to speak openly and offer their opinion.

 

It is uncomfortable and unproductive whenever the current patriarch or matriarch runs an entire meeting only to find out later that many people wanted to offer constructive thoughts, except they did not feel comfortable doing so.

 

If you have an expert trusted adviser (or better still, a family business adviser) I strongly suggest you ask them to facilitate these meetings. Remember, for most members of the business, this will be the first time going through a succession. It is valuable to have an expert guide you and help build trust / settle conflict between members.

 

 

 

 

Step 5: Educate your family

I believe education is the foundation of a successful transition. Without training and learning, people struggle to contextualise what they need to do in the succession process.

 

Your family must be educated enough to perform the following tasks:

 

  • Handle conflict, whether for family or business reasons;
  • Accept positions of responsibility in the company;
  • Act as advocates for the business no matter their present responsibilities; and
  • See the family business as a living legacy, with an interconnected past and future.

 

 

 

 

Step 6: Develop a written family constitution

The best way to cement your succession plan is to construct it in conjunction with a written family constitution.

The constitution serves two functions:

 

  1. It acts as a governing document that promotes ongoing family business continuity. This means establishing an initial plan as well as identifying fall-back plans and means of settling conflicts or making difficult decisions; and
  2. It defines and emphasises family values. You must make clear your family values in concrete terms so that everyone — family, non-family employees and directors, and customers — knows what you believe and how you conduct your business.

 

 

 

David Harland is the managing director of FINH and works exclusively with multigenerational family businesses. He holds both national and international accreditation in the field of family advising and family wealth.

 

 

 

 

Source: http://www.smartcompany.com.au/business-advice/strategy/76476-six-simple-steps-succession-family-businesses/

 

 
Success and succession: Five characteristics of a good family business
Wednesday, 20 September 2017 20:06

Chances are high that seven out of 10 of the businesses you know are family owned. As defined by audit firm PricewaterhouseCoopers (PwC), a family-owned business is one where the majority of votes are held by the person who established the firm, or their direct descendants, with at least one family member involved in the company's management.

 

And if the company is listed, the persons who set up or bought the firm, or their family, hold at least 25 per cent of the right to vote through their share capital, with at least one family member on the board.

 

 

Patient capital

An estimated 70 to 80 per cent of businesses in Kenya, and around the world, are family owned. These businesses contribute more than 60 per cent of the jobs in Kenya, according to Peter Muga, a family business expert at the Institute for Family Business (IFFB). However, despite their potential, if not well-structured, family-owned businesses are more likely to fold than non-family-owned ones. Yet, family businesses are important, not just for individuals who want to start a company and have to rely on their relatives to raise capital or manage the firm, but also for the economy. "Unshackled from the quarter-to- quarter pressures of their listed peers, family firms can invest for the long term, and allow good ideas the time they need to prove themselves," PwC says in its latest family business survey, The 'Missing Middle':

Bridging the Strategy Gap in Family Firms. "It's a classic example of 'patient capital' and an invaluable counterbalance to the short-termism of many public companies." However, despite some family businesses showing extraordinary longevity, the average life-span in the sector is three generations, PwC's report, which interviewed senior executives in 50 countries, notes. "Typically, only 12 per cent make it that far, and the number getting past four generations falls to as low as 3 per cent." Shreya Shah, a manager at PwC Kenya, defines a family business as a commercial organisation in which decision making is influenced by multiple generations of a family that's related by blood or marriage. She notes that in such set-ups, balancing between roles within the family, ownership and business is complex and may involve conflicting values, goals and actions.

As a result, to be successful, family businesses must find a way to balance between the personal and the professional. This makes succession planning one of the most critical factors in attaining the company's long-term vision. As PwC's report notes: "The transition from one generation to the next is the fault-line in this business model. There's no point in having detailed plans for business continuity, if the single most significant risk to this is not addressed." With the proposed deal between two family firms, Nakumatt and Tuskys, occupying debate, Hustle looks at some of the characteristicsthat would help these sorts of businesses thrive for generations to come.

 

 

1. A clear goal and vision

The bedrock of any family business is the goal or value that is put in place by its founder. That goal has to be passed down from generation to generation, and adhered to by everyone. For example, Joram Kamau, the founder of Tuskys Supermarket, wanted his retail store to be guided by strong Christian values. Such values included not selling any alcohol or tobacco products. This value has continued to guide the retail chain years after Mr Kamau's demise. Paul Ouma, the course director of the family business programme at Strathmore Business School, says that as much as a founder might have had a vision, it must be understood and shared by everyone if it's to outlive him or her. Everyone has to toe the line.

 

 

2. A succession plan

We've already mentioned how important succession planning is for a family business' continuity, yet in the PwC survey, it was found that 45 per cent of family businesses interviewed had no succession plan in place for most senior roles. Failure to groom successors has resulted in the death of many family businesses once the founder dies. Micheal Mugasa, the leader of private company services at PwC Kenya, sees a problem in reconciling the worldviews of the founder generation and the next generation as far as succession planning goes. He notes that a survey his firm had conducted earlier, it was found that this next generation (NextGen) is "ambitious and talented and can help to drive the business forward. However, their ambitions do not always jive with the owner or founder generation, which can lead to conflict." The NextGen tends to do well in areas like digital strategy, or leveraging technology to inspire innovation. On the other hand, explains Michael, the owner generation tends to rely on experience and a more cautious approach. "Having an effective succession plan in place is one way of creating an environment in which the NextGen can thrive and effectively contribute to the business," he says.

 

 

3. Professional management

A good family business should not only have a clear succession plan, it should also be professionally run. There is the tendency to make operations of a family business a family affair. And while there is nothing wrong with having relatives in the company, sometimes those selected are simply unprofessional or unable to do the work required. A good family business puts in place proper operational structures, processes and systems that are efficient and well documented, and regularly reviewed for improvement, says Shreya. Fortunately, according to PwC's survey, 43 per cent of respondents are prioritising professionalism in their family businesses over the next five years. This is taking different forms in different firms, "including mechanisms such as shareholders' agreements, family councils and incapacity arrangements".

 

 

4. Proper governance structures

Good governance is important for every business, whether its family owned or otherwise. "Good governance includes transparency and a consistent framework to ensure business continuity. For family businesses in particular, governance often includes a focus on appropriate conflict resolution, policies (including recruitment and career progression) and succession planning," says Shreya. Subjecting a business to professional non-family governance does not require that one relinquishes the business. Unfortunately, most family businesses fear that this is the case, and refuse to seek professional help. Instead, they surround themselves with 'yes-men' – people who tell them the comfortable lie rather than the uncomfortable truth. IFFB's Peter acknowledges that it's not always easy to tell a family member a difficult truth, especially if that person is the business' founder. "It is very human to develop a certain level of emotional attachment to something you have started," he says, adding that this is one of the biggest strengths of family businesses, as founders end up working for the company with unrivalled passion. Unfortunately, most family businesses shun outside help, fearing that outsiders may not be able to truly understand and honour the family's vision for the business. But failure to allow for professional management and governance can lead to the premature death of a business.

This death is even faster for family businesses that operate in industries that are not subject to strict regulation, such as transport, retail or hospitality, says Strathmore's Paul. Here, unlike in sectors like banking or in listed companies, no one can tell a business owner that they cannot be the owner and CEO at the same time because it amounts to a conflict of interest. There are several businesses that have been hurt by a failure to put in place strong governance structures. The result has been the shutting down of such famous family businesses as Akamba Bus and Bookpoint bookshops. "Nakumatt, for example, became so big that for all practical reasons it needed other stakeholders. Once you become a multinational, you can't sit around a table over lunch and prudently make a decision for the business," Paul adds.

 

 

5. Diversification

plan Paul says one of the best ways for a family business to grow is through diversification, which is also a good way to manage family squabbles – an Achilles' heel for many businesses. However, few family-owned businesses are thinking about their growth in these terms. According to the PwC survey, while more than half of the respondents plan to launch new entrepreneurial ventures, "one in three family firms is still operating in only one sector and in only their home market. This can expose the family firm to risk, as the whole enterprise stands or falls on one dimension". Paul says one of the family businesses that has managed the process of growth through diversification well is Simba Corp, which is now better capitalised having gone into different industries. The family sold its stake at East Africa Building Societies to Nigerian investors and got more capital, which it used get into motor vehicles. It has also moved into hospitality, with a majority stake in Kempinski Hotel, and gone into mining through Acacia Mining.

 

 

 

 

Source:https://www.standardmedia.co.ke/business/article/2001255095/five-characteristics-of-a-good-family-business

 
How CEOs Can Work with an Active Board
Wednesday, 20 September 2017 19:47

At companies of almost all sizes, across all sectors, boards are undergoing a profound transformation. Largely as a result of intensifying shareholder intolerance of mediocre or poor corporate performance, the ceremonial boards of the past are being replaced by active boards that are more demanding of managers and more intrusive in their affairs.

 

This change can be daunting and frustrating for CEOs. However, based on our experience of advising CEOs, operating as CEOs, and sitting on boards, we have found that executives can be effective in the new environment by revamping their interactions with their boards. It consists of four approaches.

 

 

Work with board members individually as well as in the group — and selectively seek their help.

It’s remarkable how many CEOs focus mainly on formal boardroom relationships. Yet by investing the time in regular one-to-one informal interactions, a CEO will help address the new active board members’ sense of duty to get close to the business. Through a personal dialogue, the CEO can better enlist them in important initiatives and address issues before they become crises. In addition, by creating a personal bond with the individual directors, the CEO lessens the odds that they will undermine or blindside him.

 

It is especially important to create a bond with the lead director and/or the chair. As boards have become more active, the lead director and board chair hold the keys to setting productive agendas and managing issues with the total board or individual members. One of us served on an active board that included members who frequently threatened to derail agendas and process with counterproductive questions. The CEO quietly recruited the lead director and chair to restore order, which they did. As boards have become more active, the lead director and board chair hold the keys to setting productive agendas and managing issues with the total board or individual members.

 

CEOs should consider recruiting one board member as an informal advisor. This must be done with great care and an ear for political nuances. For example, as one CEO we know discovered, a prospective board advisor actually had his eye on the CEO role for himself — hardly the right confidant! By using already-scheduled one-on-ones to assess board members for this advisory role, the CEO can better identify an appropriate advisory board member. This board member can be of great value as a sounding board and a guide to working effectively with the rest of the board.

 

 

Communicate less formally, more intensively, more often.

Many CEOs and their teams still deliver traditional 80-slide PowerPoint summary presentations at board meetings. But given that today’s boards increasingly want a substantive dialogue, we advise replacing the presentation with a thoughtful, verbal review and Q&A around critical updates, challenges, and opportunities. (Further background can be provided in brief pre-reading material.)

 

This will show that the CEO is  using his or her face-to-face time with the board for serious discussion. It will focus board activism on topics where the CEO will benefit from directors’ insight and counsel. And by taking the lead in inviting the board to engage on business-critical matters, the CEO can better manage the process and avoid one of the biggest downsides of the active board: disruptive interference by board members in business operations.

 

It may seem obvious that CEOs should communicate with board members regularly and substantively between board meetings. But in reality, CEOs often communicate mainly when there is a problem. Many also have difficulty regularly addressing a balanced mix of important topics.

 

One very effective approach to this issue is regular CEO letters to the board. The management of this letter should be delegated to a top lieutenant such as the head of communications or the COO. A monthly rhythm has proven effective with many boards. To assure balanced, relevant content, the letter should routinely address a fixed set of regular topics (e.g., business-environment trends, business updates, people/talent news, and early warnings of potential upside and downside

 

 

Expose Level 3 and 4 managers to the board.

While boards in the past were typically focused on CEO succession planning and the talent among the CEO’s direct reports, active boards are also very interested in the levels below. They rightly see these executives as the future leaders and the operational leaders of today who should be driving performance. Active board members will therefore seek to get to know them.

 

Some CEOs feel this is overly intrusive or worry that the lower-level executives are not ready for board exposure. But, in fact, it’s positive to have board members engaging with deeper levels of talent. They learn more about the business and the next generation of the company’s leaders. Board members can also give the CEO valuable feedback about the people they meet and their view of the company’s overall bench strength. And for the executives, the right kind of exposure to board members is a great development opportunity.

 

The CEO should take the lead with the board in driving the engagement process, which will allow him or her to have greater influence over it. She can select the highest potential individuals for the interactions and organize the interactions so that they are most productive — for example, by holding them as one-to-ones over a breakfast or dinner. She can also brief the executives in advance on the style of the board member and potential question areas and brief the board members on the executives they will meet.

 
 
 

Handle strategic planning… strategically.

Older-style boards typically become involved only at the end of the strategic-planning process — typically in a board meeting devoted to review and approval of the strategy. By contrast, active boards often push to be involved from the start because the strategy is so important to the company’s performance.

 

The notion of involving the board in strategic planning can make CEOs anxious and defensive. They fear that the board may undermine the planning process due to insufficient knowledge about the business. They also worry that board involvement in strategic planning will be the thin edge of a wedge and lead to board interference in day-to-day management of the company.

 

The key to navigating this challenge is to keep strategic planning in the hands of management but to invite the board to provide advice and feedback from the beginning. One good way to do this is to involve the board early in deciding on the right, big-picture, strategic direction for the company, without getting into the details. The CEO and her team can develop and present to the board several options to the board, explaining why each has merit. Then the executives can solicit board input on each but not ask for a vote. In this way, the CEO and her team can gain valuable board perspective that will strengthen all the choices that are developed and obtain early board buy-in for both the options and the ultimate strategic plan that’s chosen.

 

The CEO can then provide periodic updates on the strategic-planning process through letters to the board and board meetings. This allows the board to stay engaged and provide input but keeps the control over the actual process with the executive team, where it belongs. Active boards are a corporate reality. How to work with them effectively should be one of the most important items on the CEO agenda. As we have outlined, the CEO has an opportunity not only to manage this new relationship but also to make the active board an asset in building long-term, high performance of the company.

 

 

 

 

Source:https://hbr.org/2017/08/how-ceos-can-work-with-an-active-board

 
<< Start < Prev 1 2 3 4 5 6 7 8 9 10 Next > End >>

Page 1 of 25