Mentoring potential successors is crucial for the continuity of the family business – Experts
Maintaining family businesses at an optimal level, especially across generations, could be quite difficult. Perhaps a popular American aphorism of âshirt sleeves in three generationsâ – wealth gained in one generation will be lost by the third – affirms how difficult it can be to maintain family businesses.
About 70 percent of family businesses fail or are sold before the second generation has a chance to take over, according to Harvard Business Review, a general management magazine published by Harvard Business School in the United States.
But as grim as the situation may seem, family businesses can be kept afloat for years with the right management system and well-thought-out success plans. Some family businesses inside and outside Nigeria are already breaking down barriers.
Karla Trotman is one of the children taking up the torch of family businesses. As a child, she would spend hours after school hand cutting wires and reading blueprints for Electro Soft Inc., the Philadelphia-based electronics manufacturing company.
Trotman was deeply involved in the company and established professionally in other companies, occupying various roles in logistics and supply management, long before she took over the company, which started in 1986, from his parents.
The overtime experience was crucial in helping her realize that she had a future in her family’s business, she said in a recent interview with Bloomberg.
âSuccession is not based on blood; it is skills-based, âsaid economist and former Ernst and Young partner Bisi Sanda.
Sanda warned that there has to be a separation between running a family business and profit and that management needs to be professionalized.
“There is no problem with feeling or emotion,” he warned, noting that any founder who wanted to be replaced by his child would have to let the potential successor participate in the business and undergo effective training. to prepare him for leadership.
âIf that doesn’t happen, then he (the founder) will dig his own grave or that of the company if he imposes his offspring on the management of the company. They are going to take over the business and crash it, âSanda added.
He said random succession plans had been the bane of most family businesses, adding that the trend was changing for good in other parts of the world.
âThe discipline of ensuring that competent hands are running the business has to be there,â he advised.
A professor of business administration at the University of Abuja, Grace Nzelibe-Obeleagu, feared that many entrepreneurs had evaded the succession plan instead of thinking about it.
She said: âThat’s why when the contingency arises due to death, disability or retirement, you find out that the business will falter due to lack of succession. planned. Businesses don’t want an incompetent, careless person.
âBring your child near you and mentor them over the years. They can join the company after completing their studies. Even when they are students, they can be with you in the company when school is on vacation. You need to prepare the child for the intricacies and organizational structure of the business. This way they will know the business.
To develop their abilities, Obeleagu advised the children to be observers while learning the craft from their parents and to apply what they have learned.
By reading a lot, attending lectures, workshops, continuing education and public lectures, the business expert said a child could develop their ability to know “what other people are doing about similar businesses. And apply knowledge to drive the family business forward.
A professor of business administration and entrepreneurship at Babcock University, Ilishan-Remo, Ogun State, Olalekan Asikhia, said that a family business has unique characteristics, warning that the effectiveness of the founder / director general would not automatically translate into the competence of a child or parent taking over.
He said, âHowever, he (the founder) can prepare for future efficiency by ensuring that the person to take charge of him studies to learn about the workplace culture, the structure of the company and understand the capabilities and resources required within the business.
âThe current leader should note the gaps in the capabilities of his likely successor because he gives responsibility to the person. The successor should be his direct assistant. After identifying these gaps in the managerial skills of the person, he should make recommendations on training and development to fill the gaps. Identifying and filling in gaps as well as delegating tasks must be continuous throughout the life of the current leader.
âWith that, he could have filled the gaps in the managerial skills of the future leader. Because the future leader is already involved in the day-to-day management of the business, there will be no problem, having been taken care of in terms of training and development.
Asikhia also observed that the failure of most family businesses is inherent in poor succession plans, saying that more often than not successors have appeared unexpectedly following the sudden death of the current leader.
He said: âThe successor might not be able to fit in. To this extent, there will be issues in terms of business management, deliverables and performance. And ultimately, if not managed tactically, it can lead to the death of the business.
âTo manage it, who is the most senior in the company who must have under-studied the deceased manager? This person should be appointed as the primary personal assistant to the novice successor. This will eliminate the inefficiency that would have resulted from the sudden demise of the leader and help ensure continuity. The same problem and the same solution will suffice if the leader retires and the successor is a novice.
Besides the senior member of staff who worked closely with the retired or deceased founder, Asikhia said other members of the management team could help nurture an inexperienced CEO.
âHe will have to sit down with them and get as much knowledge as possible from them. Now is not the time to fire anyone. Even though there must be layoffs, knowledge sharing and acquisition must have taken place, âadded the donation.
For his part, the National President of the Small Business Owners Association of Nigeria, Dr Femi Egbesola, noted that more and more business owners are realizing the need for succession plans by ensuring that that at least one of their children has been active in the company from the start. to learn the ropes.
He urged children to be submissive and show the right attitude to learn the intricacies of business from their parents, in preparation for the exercise of leadership.
Egbseola said: âThe child must be submitted to a reasonable extent. You have to put your head down to learn, no matter what you learned in school. You must understand that the principle of business is different from the principle of books. The child must be ready to be submitted to the father and to learn. He must be prepared to take corrections into account.
âThese children should also be encouraged to take the necessary training. The father cannot teach them everything. They should participate in workshops, seminars and continuing education if necessary. They all have to go through all areas of the business – from accounting, human resources to manufacturing and sales so that they can have the full experience of the business.
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