What legacy will your family business leave behind? This was the challenge posed during the recently concluded Family Business knowledge session held at the Strathmore University Business School. The knowledge session explored the means of running family owned businesses, in its longevity of passing the enterprise from generations to generations.
The keynote address was given by Mr. Parimal Merchant, Director of the S P Jain School, Global Management. Mr. Parimal has over 20 years experience in creating programs on management education in the field of family business.
The complexities of family dynamics not only make family businesses unique, but also a field marred with great challenges, making the future of family businesses seem bleak.
Is an investment to own or take up leadership in a family enterprise worthwhile? Family owned businesses are more flexible as compared to public owned and can easily shift from one industry to another without any big and notable effects on them.
According to Mr. Parimal, family businesses are more adaptable to change as they are not bound by the mission and vison statement which may make a business rigid to change. They are easily adaptable to a growing and ever changing workforce. Chandaria Industries owned by the Chandaria family has been in business since 1964, growing the enterprise into the leading hygiene and sanitary tissue manufacturing company in Kenya.
Family businesses have been the key economic drivers in many developing countries. 85.5% of the private sector in China is comprised of family owned businesses. In Europe, family businesses represent 60% of all the companies, across all industries.
Despite the success stories of well performing family businesses, management transition during succession from one generation to another is still considered a major challenge for most family enterprises. Mr. Parimal made clear the importance of an all inclusive multi generational leadership, mentioning that rich experience and wisdom collated from elderly family members is crucial for the success and longevity of the business. “A family business aiming to succeed needs a clear transfer of wisdom”, remarked Mr. Parimal. Wisdom gained by experience by the founder needs to flow to the future heirs and the wisdom gained by education by the heirs needs to be transferred to the founder. This transfer will help the two generations arrive at a common understanding of the organization.
Story By Solomon Wambua