f you are planning to hand over, what should you expect? What do your successors need to know? And how can you ensure an outcome that is good for the family, as well as for the business? Bernard Rennell, regional head of global private banking, Asia Pacifc and global head of family governance and family enterprise succession at HSBC Private Bank shares some reflections from his more than 20 years’ working with family businesses:
Company founders have often given their lives to their businesses. So naturally many feel protective and reluctant to step back.
A good handover is crucial for the business, but it can also have a big impact on relationships within the family. Where there are several children who wish to be involved, someone needs to decide who will take which role. There is always the risk that someone will feel left out.
The best succession plans are based on a cool-headed appraisal of the different strengths and preferences of the next generation of potential leaders. That might mean favouring younger siblings over elder siblings, skipping a generation or going outside the family.
Many younger people want to refocus the family’s existing community investments on one or two specific issues that really matter to them. Often they will look to take a more strategic approach to philanthropy and to measure the impact of their philanthropic “investments”.
Where the business has reached a certain size, the founder might decide it needs the leadership of a seasoned CEO from outside the family—potentially disappointing children who had hoped to take over. But with good planning the family can still be involved in other important ways. Ownership and management are two different things and offer different ways of contributing to the firm’s success. Family members can play an important role in the company’s success by being good owners, putting in place strong governance processes at the ownership level.
When family firms change hands there is always a risk of conflict. Calling in a neutral third party with experience of working with family businesses can provide key family members with a chance to talk about their individual views and aspirations. These discussions are sometimes emotional, and often uncomfortable— but almost always helpful in the end.