Entrepreneur Series: Family Unity is the Pillar of Successful Succession Planning

Succession has the potential to unlock emotional and divisive issues. This is particularly the case in family businesses, where personal and professional disagreements can be highly detrimental to the company. Unity among all family business members is the foundation of successful enterprises, and is essential during the succession process.

“Putting in place an effective framework for family governance and collective decision-making, which recognises different members’ roles and responsibilities with the business, are crucial to maintaining family harmony and sustaining the business over the longer term,” explains Bernard Rennell, Senior Adviser to the CEO, Global Client Coverage and Global Head of Family Governance and Family Enterprise Succession at HSBC Private Bank. At the recent HSBC Private Bank Entrepreneurs Series, a multi-generation panel concurred that unity is the essential foundation of family businesses. In addition, the panel highlighted other matters important to the succession planning process.

Structure, ownership and management

Next generation leader Cristalle Belo says that she has been suggesting in recent years that her mother, Dr Vicki Belo, initiate a family business succession process for the Belo Medical Group, which runs a leading chain of skincare clinics in the Philippines. “I feel that a company is a living being,” she says. “In order to continuously keep the spirit of the founder alive, everything really has to be on paper.”

“There has to be a very clear line between what’s a management group, and what’s an ownership group. And there shouldn’t be any grey lines,” Belo notes. “Because a company that’s worth a billion pesos today, can be worth one peso tomorrow.”

Plan early

Stephen Sy, founder of high-end lifestyle store Focus Global, says that succession planning should not be sidestepped for long. “To have succession planning is important for a smooth transition from the owner to the next generation,” he says. “It is critical. And the approach we take starts with a family constitution.”

Rennell adds, “While the family constitution is a good starting point, drafting a family constitution can be complicated and take plenty time for the family members to reach consensus. Seeking sound third party advice can often be a good way to ensure neutrality and efficiency in the process.”

Ensure transparency

George Yang, President of Golden Arches Development Corporation (GADC), the family business which operates the McDonald’s fast food chain in the Philippines, says his family recently drafted its own constitution: “It took us almost two years, because it was hard to get everybody together.” His son Kenneth Yang, CEO of GADC, remarks, “Sometimes there are some topics which are sensitive in nature. But at least having that forum brings it out in the open, and we can talk about it quite objectively.”

Within the Yang family, it is also important that the elder generation continue to have the last say, in order to safeguard their legacy. Kenneth Yang explains that the roles of the second generation were clearly established by his father. “He’s given us empowerment, but at the same time, accountability. I think those two go hand in hand.”

To learn more about the importance of a united family in the succession planning process, watch George Yang and Kenneth Yang discuss their family’s journey.

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