Drivers of success in family-owned enterprises

Family-run enterprises are faced with striking a delicate balance between upholding traditional values and embracing modern practices. This balance is not only crucial for the success and longevity of a business but also for its ability to adapt and thrive in a rapidly changing corporate landscape.

Succession is bound to happen by retirement/death/promotion/ demotion. The success of the succession is also dependent on so many other factors which need to be tackled. These issues require more deliberation.

Informed decision-making: Business decisions should not be overly reliant on consensus. Instead, it should be informed and thoughtful, considering the broader implications of each decision. For example, a CEO’s decision to cut costs by converting permanent staff to contract roles might seem fiscally prudent, but it overlooks the impact on loyal, long-standing employees. In such instances, the chairman’s decision to veto, motivated by a sense of responsibility towards these employees, serves as a reminder that business decisions should be compassionate and considerate of all stakeholders.

Evolving traditions with sensitivity: Traditions in business, similar to family traditions, need to evolve to remain relevant. However, this evolution should be handled with sensitivity. The transition of a family business’s Sunday lunch meetings to brunch to accommodate the younger generation is a prime example of this.

Personal expenses and ethical boundaries: Maintaining clear boundaries between personal expenses and business costs is essential for upholding ethical standards in any business, especially in family-run enterprises. Implementing rules that restrict family members’ business expenditures to their roles and responsibilities within the company can help prevent conflicts and maintain professional integrity.

Compassion in professionalisation: For instance, supporting a long-term supplier to improve their quality standards, rather than abruptly ending the business relationship, illustrates a blend of professional rigour and empathetic understanding. This approach not only fosters long-term business relationships but also underscores the importance of loyalty.

Constructive Conflict: Engaging in hard conversations and debates is essential for the progress and growth of any business. However, it’s crucial to approach these discussions constructively, without letting disagreements affect personal relationships or the overall morale of the company. For instance, the decision to relocate a plant for strategic benefits might spark heated debates, but it’s important to unite post-discussion and work collectively.

Professional competencies in family dynamics: Integrating family members into the business is a unique challenge. It’s important to encourage them to gain external education and experience before joining the family business. This approach not only ensures that they bring valuable skills and fresh perspectives.

The writer is a coach and leadership search partner