With a considered view of our reality, we can affirm that family businesses have already had their task cut out for them in a very complex environment. In this blog we have been talking for some time about the concept of the “Society of Change”, which characterizes a complex and dynamic environment resulting from the confluence of the effects of digitalization and globalization.
However, the situation has become even more difficult in recent months as a result of the tremendous impact of the global pandemic of Covid19 on the social and business environment. To this must be added the effects derived from this crisis, such as the scarcity and rising cost of raw materials, unprecedented increases in energy costs, inflationary pressure and geostrategic conflicts. If we add to this the political risks that are emerging in many of the countries around us, we are facing a context of maximum difficulty.
The response to these extraordinary challenges demands enormous maturity. The survival of many businesses is seriously compromised. Even in times of tension, such as these, family harmony is complicated as tensions flourish and can lead to severe conflicts. Even in pandemic winning businesses, the paradigm shifts are such that no responsible leader can relax and be carried away by the positive inertia of the past.
To illustrate reactions at the present time, I would like to rescue some reflections that have been shared with me in recent months by different leaders of family businesses which, for me, are a clear example of the path to follow:
“I assume that my brother has some qualities for leadership, which I lack, and I have not had the slightest inconvenience that he has assumed the role of CEO in recent years. Of course, we have developed a habit of very constructive communication. We have to continue to act in this way now that we intend to build a large multinational project.”
“The three brothers are very clear about our competencies. That’s why, even though I am the youngest, they felt it was up to me to take on the responsibility of CEO. Likewise, I lack the skills and experience to carry out the executive responsibilities that my brothers perform very well. The competitive environment ahead of us is extremely complex and we have to focus on giving the best of ourselves if we really want to consolidate a leading company.
“In the short term, as a business family, we have to focus on developing family assets that are not related to our business activity. This crisis has taught us that we have been taking extraordinary risks over the last few decades without a net.”
“We have spent the last few years prioritizing only operational tasks. However, we realize that we have neglected to improve our corporate governance and, above all, we have neglected the family dimension. We have a fourth generation that we have not paid attention to. It has a sense of urgency, as the third professional generation is on the family board and we will already give the next generation an entry.”
These reflections perfectly exemplify the responsibility with which family business leaders today must approach their task.
Competitiveness is a transcendental tool to consolidate family businesses, so it is inexcusable to address all measures conducive to this end, even if they generate controversy from an emotional point of view. It is also essential to create formal mechanisms to facilitate communication among family shareholders in order to create an environment where alignment prevails.
In short, the new normality of the family business will have to deal with periods of acute tensions that must be channeled through efficient governing bodies that will allow to deal rigorously with the issues of the strategic agenda of business and family, to give a sense of urgency to the management of these key issues and, especially, to facilitate inter-family communication.
Manuel Bermejo Sánchez
President and Founding Associate, The Family Advisory Board
Image by Tyler Nix