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Sustaining Family Businesses

  Sep 15, 2017

Navigating Intergenerational Family Feuds, Governance Structures and Succession Management

Successfully operating family enterprises requires a blend of both strong family values and strategic management skills, to enable the business grow and transition from one generation to another. Establishing the structures to do so, requires an alignment of both informal and formal structures to propel the business forward, says Paul Ouma – Family Business Program Leader at Strathmore Business School.

The family business entrepreneurship forum engaged Dr. Mercy Waithera, Director Naivas Limited, Joseph Wanjui, Director Bawan Group of Companies, Hillpark and Peter Mwangi, Director Shepherds Group of Companies, in conversation on: Building and Creating Wealth and Legacy in Family Businesses.

Aligning simultaneous roles; for instance, the role of the Father and that of the Chairman; the Managing Director and that of the Son, are some of the unstructured but significant dynamics into the business operations, which may be troublesome if not properly handled.

“Working with siblings and parents, especially in the Africa context is quite a challenge. We are taught to respect our parents and hence, challenging some of their strategies could be a difficult task. However, families need to learn to separate family matters with business, especially since most of the issues could easily spill into the home or the boardroom,” said Dr. Mercy Waithera.

Founders of family businesses are often the carriers of the vision. However, some of these great visions hardly meet the light of day. Succession, as most strategies would point out is very crucial in the longevity of any enterprise. Most crucial in this discussion is; the optimal time for the founder to exit or to let go of the day to day running of the business.

“My father and I have very similar personalities, which meant that we conflicted quite often than any other family member. I exited the family business soon after I had joined and after a year, he called me back and he welcomed me to the business. His retirement time had come to pass. I believe that the appreciation of different leadership styles and the acknowledgement that we all had the best interests of the business at heart, gave the family the confidence that the business would successfully transition from the founder to the rest of the family. I must say that establishing a corporate governance body – an Executive Board was the best move for both our family relations and the business functions,” said Peter Mwangi.

Succession and conflict management in the running of a family business may be crucial, but talent, competency and the correct skills set in human resource management is pivotal, remarked Joseph Wanjui of Hillpark Hotels.

 “Our family business kicked off in the hospitality industry. I had no experience of the businesses, as my professional background is in banking. I had to take time to learn the ropes of the business before I could take on any strategic role of the business. I strongly believe that family members should earn their dues on merit. Talent development like in any other type of business is the heart of its operations. Any business with the vision of succeeding in their respective industry must consider its employee’s talent,” said Joseph Wanjui

Sometimes, raising an heir to carry on the family legacy can be quite daunting, especially if the heir to be has no interest in the family enterprise. Concluding the session, Mercy, a 3rd generation into their family enterprise encouraged parents who would like to groom their children into the business to do so at an early age. Most importantly; to align the interests of the children with that of the business.

About the Family Business Entrepreneurship Forum

The family business entrepreneurs breakfast forum was held on 7th September 2017, through the sponsorship of Standard Chartered bank.

The Family Business Program draws together a cross-cultural team of lecturers and practitioners, focusing on the African context of Family Businesses with best practice insights from world renowned family business societies and countries. The program is reserved exclusively for family business founders, 2nd, 3rd and successive generation family members who are currently executive directors, non-executive directors and board members of their respective family businesses. Click here to read more.

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