Family businesses need early succession plans: conference
Family-run businesses need to develop clear and early succession plans, a conference heard in HCM City on Wednesday.
Leadership transition is critical for family enterprises, they said.
The first generation takes time and effort to establish a business and hopes the business it has created would thrive through multiple generations of family ownership, they said.
Hoe Shin Koh, chief partnership distribution officer at Manulife Vietnam, said in Asian culture characterised by hierarchy and respect for elders, younger people sometimes do not dare speak out, and many family businesses thus do not have clear plans to prepare the next generation of leaders.
Family business leaders should discuss long-view issues not only at every management meeting but also at family meetings to create clear plans, he said.
Vu Kim Hanh, chairwoman of the High Quality Vietnamese Product Business Association, said in family businesses the first generation usually has the default thinking that their children should obey them.
This should change and the first generation should empower, listen to and motivate their children, she said.
Tran Uyen Phuong, deputy CEO of the Tan Hiep Phat Beverage Group, said from the perspective of the next generation of leaders at family enterprises, conflicts in business management thinking between the first and second generations are unavoidable, and they should ensure they listen to each other.
“Being born in a family business is a burden for the next generation. We need people to instruct us.”
Tran Phong Lan, president and general director of SeaCorp, said, “Establishing a business is hard, and keeping the business thriving through multiple generations is even harder.”
He said to reduce the burden on successors, there are two things the first generation should do: learn from multinational companies to build a strong, clear and transparent legal management foundation that stipulates clearly the role of each position, and establish the culture, business value chain and ethics of the family-run company.
And the successors need to maintain these values, he said.
Alain Goudsmet, founder and chairman of performance and leadership coaching corporation Mentally Fit Global, said the challenge for successors, for future leaders is finding the right leadership style.
The first generation was fully dedicated to the business but the second and third generations and millennials are looking more for work-life balance, he said.
In many organisations, second- and third-generation leaders are focusing too much on change management, but “we do not need to change every single thing,” he said.
They should clarify what needs to be changed and what needs to remain for future success, he added.
Nicole Scoble-Williams, leader of Deloitte’s Global Future of Work Centre of Excellence, said family businesses are known in general to have a long-term orientation yet fewer than 30 per cent of these businesses survive into the third generation of family ownership.
Leadership transition is one of the most pressing issues for business families, and the current generation should prepare the next generation over the years, and slowly expose them to challenges, management practices and traits of the business, she said.
Although family businesses traditionally rely on a loyal workforce, augmenting workers with artificial intelligence might add a dimension that could help companies reach new levels of efficiency and knowledge, she said.
To harness the full potential of artificial intelligence, a business may need to rethink fundamentally the way humans and machines interact in the work environment, she added.
The conference, titled Developing the Next Generations of Leaders - Best Practices of Worldwide Successful Family Businesses, was organised by Mentally Fit Global, Leading Business Club and the Business Studies and Assistance Centre.