CHANGING HANDS:
A Succession Planning Workshop for Founders of Family Business & their
Successors
by: Anna Cristina L. Rojas
Anna Cristina L. Rojas is a part-time Lecturer with the Leadership & Strategy Department of the John Gokongwei School of Management. She may be reached at via email for any comments or queries.
The Ateneo de Manila John Gokongwei School of Management held last February 17 & 18, 2006 a major Family Business Round Table Workshop dubbed Changing Hands: A 2-day Succession Planning Workshop for Founder of Family Businesses and their Successors, at the Escaler Hall of the Loyola Schools campus.
The keynote speaker for the conference was visiting professor, Dennis T. Jaffe, PhD. of the Saybrook Graduate School, and the San Francisco State University. He is also author of the book, Working with the Ones You Love. Dr. Jaffe has over 35 years worth of experience as advisor to various family businesses all over the world.
Issues confronting business founders were the focus of the first day of talks. Dr. Jaffe expounded on some of the reasons why it may be difficult for business originators to entrust their businesses to the next generation. On the second day, issues confronting business successors were presented, especially those pertaining to what keeps the next generation from readily accepting the task of continuing the family business for the future.
As part of the conference, several other speakers were invited to give their reactions to Dr. Jaffe's talks. Among them were the following:
Day 1:
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Mr. Roberto E. Aboitiz, Chairman, Aboitiz Equity Ventures. Mr. Aboitiz shared his family's experiences in transitioning their business through five generations, and working with about 17 family members at present. Foremost among his tips to the participants was to acknowledge the need for change and to address issues in a timely manner to achieve a healthy balance between ownership, management and family roles and responsibilities. He also mentioned crafting a family constitution for their family made the transitions "less painful".
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Mr. Antonio B. Herbosa, Principal, Corporate Finance Division, Punongbayan & Araullo. Mr. Herbosa shared some ways in which family businesses may professionalize their enterprises. Their family is one of the leading independent audit and consulting companies in the Philippines today with an esteemed team of professional employees such as accountants, tax managers, consultants, etc.
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Dr. Queena Lee-Chua, Associate Professor, Department of Mathematics, ADMU. Dr. Chua shared the results of her research studies on how Eastern versus Western families are able to evolve their enterprises into successful family businesses, including the nuances of (1) individuation (2) power (3) sibling relationships (4) in-law relations and (5) ways of professionalizing the business.
Day 2:
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Mrs. Josefine Gotianun-Yap, President, Filinvest Development Corporation. Mrs. Gotianun-Yap shared her personal journey as a business successor. She talked about how well her parents raised their children, through the practice of discipline and fairness, such that it was not too difficult for her 3 brothers to accept the fact that she was the one chosen to lead the family business.
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Mr. Ricardo H. Mercado, Professorial Lecturer, JGSOM, ADMU. Mr. Mercado encouraged business successors to reflect on some questions that will enable them to empathize with their respective business founders, and in turn allow them to transition the family business with lesser issues or difficulties.
Over 120 participants from various industries, including company Presidents/CEOs, General Managers, Vice Presidents, Chief Operating Officers, Treasurers and Line Managers, attended the 2-day workshop. All of the participants had the chance to share and learn from each other's personal stories in the workshop discussions.
On one hand, the top issues raised by business founders were: (1) there is no succession plan at all for the business; (2) it is difficult to adopt changes; (3) it is difficult to "let go" (of their positions or roles in the family business) (4) the children cannot maintain the vision of the founders, plus there can be "in-laws issues" (5) there is fear in letting outsiders into the business; (6) children perceive inadequate compensation incentives for family members to be involved in the business; (7) there is need to balance the role of running a business and raising a family; (8) there is need to balance the expectations of respect from children, with the need to adopt changes for the business; (9) there is difficulty in choosing the best offspring to lead the business in view of sibling rivalries; and (10) the offsprings may lack the motivation or passion to succeed in the business.
On the other hand, the top issues of business successors were: (1) there is a lack of understanding of the succession plan envisioned by the founders (2) the shoes of the founders are too big too fill; their success track record can be intimidating (3) successors are overwhelmed by the magnitude or diversity of the family business (4) the personal growth goals of successors may not be aligned with the family business goals (5) there is not enough compensation/incentives to join the family business (6) there is a need to professionalize the family business with the help of outsiders (7) there is a need to manage expectations and define roles among siblings and other relatives involved in the business, and (8) there is need to determine how to balance role as family member and as a member of the family business.
By the end of the 2-day workshop, the business founders and business successors were open to working together towards the following initial "action steps":
To address succession plan issue:
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Look at specific models from successful families who have had successful succession planning such as Aboitiz, Gotianun, Ayala families
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Create environment to develop succession planning and/or strategic planning
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Determine, and have a common understanding of, the needs of the family versus the business enterprise
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Articulate the vision and mission of the business; share the passion/inspiration not only with the family members but the entire enterprise (win the hearts & minds of family members and employees)
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Get "outside help" especially to begin the process
To address the need to professionalize the business:
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Benchmark against other companies in the industry
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Create the systems to define roles and responsibilities between family members and professionals, especially in assigning authority with the responsibilities
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Assess needs for outside help especially if there will be a leadership vacuum due to very young heirs or disinterested heirs
To address need to resolve family vs business dynamics and relationships:
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Create family councils, board of directors for business
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Craft family charter or constitution
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Engage consultants and family counselors
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Take the initiative to introspect/reflect on how you can change instead of passing blame on others
Given the above, the John Gokongwei School of Management is planning more conferences, workshops and for a in the near future to continue serving the Family Business Community.
Watch out for future events!