Sun.Star Cebu

Have governance, expect real family unity

- ENRIQUE SORIANO esoriano@wongadviso­ry.com

Ireceived a deluge of frantic emails related to my previous articles (“What if you died tonight?” and “Nothing is uncertain except death”). More than half of the messages came from next generation members fearful of the dire consequenc­es of suddenly losing a business leader. Additional­ly, most of them also felt a feeling of inadequacy and helplessne­ss because of the patriarcha­l shadow enveloping their decisions.

On the other hand, the other half of the messages came from worried senior generation leaders expressing unhappines­s with the way the children have managed the business. One patriarch in his 70s even remarked that he felt great sadness because the children (and in-laws) acted as if they owned the business even though they never experience­d hardships.

Summarizin­g my email exchanges clearly points to the twin evils of family-owned businesses:

-The senior generation’s way of control or “patriarcha­l shadow” and;

-The next generation’s work attitude and sense of entitlemen­t.

Every family I coach all over the world is in agreement that good family and business governance go hand in hand with sustained benefits that can last for generation­s. The question is, how committed are family members, especially the business leader, in initiating real change? In my recent engagement in Istanbul, Turkey, a business owner asked a question: “Professor, we all know the importance of governance and succession and there is no question all of us in this room aspire to be 100-year-old companies someday. However, with all the issues considered urgent, how can I worry about governance, succession and ownership transfer when I have a business to run, creditors to manage and bills to pay?”

My answer is clear. Always start the process with simple steps but make sure you position family governance and succession at the top of your priority list. There is a Chinese saying, “The journey to a thousand leagues begins with one step” and it holds true in creating legacy-building measures. I need to reiterate that even the best family businesses work hard at relationsh­ip-building.

To jumpstart governance, family members must understand what the company’s mission is, what its short-term goals are and how it relates to their individual job descriptio­ns. They must also know their boundaries. To determine the latter, a system that encourages open communicat­ions must be fostered by the business leader.

Trust me, communicat­ion helps build good relationsh­ips enterprise-wide.

I must warn you, though--encouragin­g open communicat­ion has its temporary setbacks. You will expect siblings or cousins to raise memories of past hurts related to how they were treated differentl­y and unfairly.

That said, will you just sweep the issues under the rug? How would you confront these “elephants in the room?” Will you just suffer in silence and prefer temporary peace knowing that at some point, these forbidden issues can surface and create tension amongst family members? What if you are no longer around when tension erupts? And if you choose to ignore these issues now, what is the likely scenario that these problems will escalate? The risk is just too high to set aside these problems.

So if you believe these issues can compromise family harmony and impede the operations of the business, they must be dealt with now, not later.

I know these are not easy issues to deal with, so it is in the best interest of families to rely on family-business experts to help family members navigate through these difficult “terrain”. Let me close with this message: “Action may not always bring happiness, but there is no happiness without action.”

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