At the heart of the definition of a Family Business lies the aspiration to keep it within the family.
It is not uncommon for these successful enterprises, which have faced and overcome various crises, to have a culture and operation firmly rooted in models forged over time.
However, the fact that they have been successful in the past does not necessarily imply a secure future. In fact, assuming such a premise would be extremely risky.
Technology in all its forms is the catalyst for profound transformations. Its development can make us outdated while simultaneously providing opportunities for new competitors to emerge unexpectedly. Ironically, this very technology can also serve as the means to sustain a competitive edge.
Markets, customers, regulations, logistics, and society itself are constantly changing, imposing a challenging operational environment. The organization and its personnel are affected by these changes; what was valid yesterday may be inadequate today and obsolete tomorrow.
Family dynamics also evolve over time. New generations may not be fully aligned with the original vision and may seek changes. Differences in experiences, education, and career paths among different generations become evident. Some may have business experience, while others may come from fields unrelated to the company.
Keeping the business in the hands of the family requires balancing its evolution over time with family interests. This balance requires strategic and precise intervention, leading to a new set of values: BUSINESS – FAMILY. This demands joint commitment and the definition of roles and positions that contribute to higher value.
Formally including the family dimension in the concept of the business, through instances such as the Family Council, is essential. This does not necessarily imply bureaucracy but rather the efficient incorporation of concepts.
Unless there is anticipation, suitable profiles, and preparation, it is preferable for their role to be exclusively linked to the realm of Corporate Governance. When considering the involvement of family members in the organization’s governance, certain competencies become crucial:
- Determining what information and knowledge are required.
- Recognizing one’s own knowledge limitations.
- Determining and shaping the culture and operational environment of the company.
- Visualizing the ideal structure for the company.
- Knowing how to ask the right questions.
- Understanding when and how to take action.
- Preparing and conducting meetings effectively.
- Leading from your position.
- Delegating effectively.
- And, crucially, identifying when it is appropriate to seek help.
A crucial role is mediating between investment for the future and shareholder returns in the present, with the ultimate goal of maintaining the balance between Business and Family.
In summary, the management of Family Businesses focuses on finding the balance between tradition and change, ensuring that the company thrives in an ever-evolving world while preserving the values and interests of the owning family.
Eng. Hugo Strachan
Former President of Hewlett Packard Argentina
Former Vice President of Akapol
Judge of the National Quality Award.
Leader of the Corporate Governance Think Tank of the IAQ (International Academy for Quality)
Photo: Tingey Injury Law Firm – Unsplash
Photo by Tingey Injury Law Firm on Unsplash
