Developing a Family Business that lasts
While many succeed in developing a successful family business, they struggle with managing the increasingly dispersed and diverse family group. As the family – and with it, the shareholder group – grows, it tends to grow apart: Family members become more distant over time, both geographically and emotionally. With many more relationships involved, some relationships naturally get more attention than others, diminishing the overall strength of family relationships over time. What is more, with every generation, the connection between individual family members and the business tends to get weaker, unless the family takes continuous and significant efforts to keep the family engaged and knowledgeable about the business
The success of any long-lived family business depends on the quality of decisions made by its leadership. On the business side, this might include the top management team, the board of directors, and in some cases, some influential shareholder. On the family side, decisions are made by family shareholders, and very often members of the extended family without ownership. Ownership competence means nothing more than having the ability to make decisions that benefit the longevity and prosperity of the family business.
Successful, long-lived family businesses rely on the ownership group’s intent to act as responsible and competent stewards of the family business. This includes owners’ ability to make timely, sound and well-informed decisions, and the capacity to remain a unified, aligned group even in the face of diverse interests and objectives.
The above is even more so applicable in a post covid world and unity is key also to maltese family businesses alike.
In order to have the right level of Family ownership competence the right knowledge, skills, and capabilities that enable family shareholders to successfully perform their role(s) as owners and stewards need to be in place. The competencies mainly fall into three broad categories:
- Business: Competencies related to one’s own family business (e.g., knowing about and making use of the family business ‘ history, key customers and suppliers, industry trends), as well as general business competence (e.g., finance, strategy)
- Family: Competencies related to nurturing a healthy and unified family (e.g., family dynamics, communication, conflict management)
- Individual: Competencies related to individual development and growth (e.g., boundary management, giving and receiving feedback, growth mindset)
Competence profiles differ depending on the role(s) a family member holds in the business and/or the family. For example, a family CEO or a family board chairperson ideally has strong competencies across all three dimensions: They intimately know their industry; they have a deep understanding for how family dynamics shape communication and conflict patterns; and they have a growth mindset that allows them to deal with feedback constructively.
(All factual and statistical information presented in this blog has been obtained from an extract of an article from the familybusiness.org ) Follow us on our Facebook page and Family Business Office website at www.familybusiness.org.mt
At the Family Business Office we can offer you assistance in dealing with family business succession planning issues through incentives supporting advisory and mediation services. Contact us today on firstname.lastname@example.org.