Business Dynasties: The Challenge of power shift in Family Business

The power shift has always been a problematic discourse, especially concerning business. Family Dynasties are established with many sacrifices and hard work, entailing all the disputes that come with it. Of course, business is like a sapling that requires water and sunlight to nurture them into a more significant part of an economy; however, when it is family business, the power must keep changing to bring in newer perspectives.

 A business has too many parties involved, and the power transition has a distinct but probable influence on each of them. For Business-First Dynasties, training the coming generation to match the skill set and be part of the family business is above all. The entrepreneur or head of the family holds the reins stronger to educate every potential heir of the business technicalities and keep a strong head in the face of crisis.

While it seems like an extraordinary thing to transfer the burden to someone else, it isn’t so pleasing. It takes a lot of courage to finally bring another generation into the picture and hold them the business role, which is the breadwinner for the family. But can this power shift and conflict cause stagnation of a long-standing business?

The Challenge of Generation Management: Professional versus Family

According to Hawksford’s report, Europe and Asia are a hub to most surviving family businesses, with over ten generations successfully managing the company. Now that seems more like an exception because another report by Northern Trust highlights that less than 12% of family businesses have been able to stand the succession rule till the third generation.

Inspiring the up-and-coming generation to hold the reins of family business requires a method of meticulously understanding the perspectives and leadership qualities. No business can survive the test of time without a strong leader leading the team with strategies that only help in the booming growth of an enterprise. Additionally, the first or second generation must show the zeal to adapt to the changing economy.

Now, coming to the Harvard Business Review’s opinion on transferring power to family members in a business, experts find it more feasible to hire a professional workforce and an outside perspective to manage the business because growth tends to become a smoother process. Family politics and conflicts could be growth stagnating for an enterprise, plus as mentioned above, it influences more than one entity associated with the business.

Having said that, while there is nothing better than family heir managing and directing the business to heights, personal emotions collide with the business’s interest. Shareholders, Board of Directors, third Party clients, and so many other people are always at the stake of losing their profit. That’s why bringing the opinion of a professional outsider gives hope for a company to function better.

Settling the Succession Issue in Business Dynasties

Other factors challenge the growth of a business dynasty. There is no doubt that businesses began from families involved and working together to earn a living; however, things change with changing times. Family-owned companies are now surviving in digital space or a ‘mobile-first’ economy.

 The thought leadership of second to third generations is now dramatically influenced by achieving it independently and shifting the traditional operating models. So here is how the challenges could be subsided for the company’s betterment.

Making Plans to identify the Ideal Leader and Manager

When you have a huge family business, more family members are associated with it. Hence, there are more successors in line—finding that one perfect and the eligible member could be similar to hiring a manager for your company. Moreover, there are also expectations attached from different second-generation members regarding their sons and daughters who would be put in the power position, and that’s where the conflict lies.

As the head entrepreneur, utilize your scrutinizing power to identify the right person for succession, train them and mentor them. Understand whether their goals align with the family business’s goals. After all, it goes with the saying, one-for-all, and all-for-one.

Keep your Succession and Business Planning Parallel

You are bringing another line of heir into the business because it is now time to adapt to the changing world and business tactics. Your succession planning will work only when you have your business goals and objectives in line. With the changing trends, bringing in a younger generation’s expertise and qualification could shift the business dynamic.

When you choose the next generation to lead your business, it will also be inclined to start identifying and keeping sight of newer business opportunities that will be brought in the direction of a new business heir.

Make sure to eliminate hurdles not supporting Business Changes

Family Businesses have a retreat to communicate the goals and ideas. There is a discussion about r someone having an objection to a new heir being shifted on a power role. But with, older relatives who have problems and are adamant about not changing the policies and business operation must be excluded. The meeting must include the new responsibilities, business behavior with family members, stock ownership, training, and development for hired employees.

Several family businesses are thriving when they plan their heir succession successfully. It is essential to understand the challenges in every company, but handing over the power must not disrupt the company’s stability and growth. Hence, the hurdles must be eliminated with proper tactics.