For family businesses to generate value and innovation, it is crucial to help them transcend over time, since overall 22% of these companies reach the second generation and only 6% reach the third generation.
Considering that family businesses represent 22% of the Gross Domestic Product (GDP) in Latin America, it is crucial that they grow in an orderly and successful manner so that they prevail over time and continue generating jobs and value .
One of the most complex issues in this type of organization is leadership succession. “This is where many companies fail. Even though this step may seem simple, it is extremely complex and requires a thorough analysis of the alternatives: leaving the reins of the business in the hands of a family member or hiring external talent to plan the future of the company,” said Milton Rosario, senior partner and co-founder of Grupo Consultor OD .
Rosario defines that in both cases there are risks , either due to the lack of preparation of the heir or due to the clash of decisions and/or strategies between the founder and his family with the general management. Therefore, there must be a robust succession plan, based on the professionalization of the leaders, considering that the management is in agreement with the growth objectives of the company and not only with the opinion of the family members.
The specialist stated that for a family business to be sustainable over time, there are key elements: firstly, it is necessary to have a clear vision and values, that is, the purpose of the company , but the most important thing is that this is communicated to all the company’s collaborators so that they are aligned.
And fundamentally, the transition towards corporate governance should be considered in the company’s plans . At this point, it is advisable to hire an advisor who will help the organization to be more competitive and generate value based on clear strategies.
“The first question that family businesses should ask themselves when hiring a consultant is to be clear about why they are needed and in what area they are required. Based on this, they look for the right specialist who has the skills they are looking for,” Rosario explained.
Another element that is added to the equation is family protocols . It is important that roles are defined and respected. Let us not forget that the development and preparation of family members in their area of influence also plays a preponderant role.
And finally, effective communication and conflict resolution skills. Rosario defines that this is the area where the focus should be, because it is often the weakest link.
