Family businesses make up 80-90 percent of all enterprises in the world. They make up 64 percent of the United States’ GDP and employ 80 percent of U.S. workers.
While these businesses are clearly profitable endeavors, a number of unique challenges emerge when familial and professional relationships overlap. The UNC Kenan-Flagler Family Enterprise Center, which strives to prepare future family business leaders, tackled some of these issues in its webinar, “Considerations for the Next Generation of Family Business: Motivations, Best Practices, and Process during Succession.”
During the webinar, Thiago Penido (MBA ’09) shared his journey to leadership in his family’s enterprise, The Serveng Group in Sao Paulo, Brazil. After completing his studies at the Family Enterprise Center, he quickly climbed the ranks in his grandfather’s company, where he now serves as strategic planning director. Here are the top five lessons he learned along the way:
Find a healthy balance between personal life goals and obligations to the family business.
At the UNC Kenan-Flagler Family Enterprise Center, students map out a leadership life plan that helps them consider how to balance the family businesses with their own personal development. Finding a balance between the two has been crucial for his personal happiness and professional success, said Penido. Even with the stress of helping run a major enterprise that rakes in over one billion dollars in annual revenue, he has found ways to make time for his true passion, automotive racing
Don’t be afraid to delegate tasks.
When working in a family business, it can feel like every decision is deeply connected to the reputation of you and your family. But in order to find that healthy personal-professional balance, Penido had to learn to let other employees make decisions and handle important tasks.
“It’s been very helpful for me to learn to delegate,” said Penido. “That was probably one of the most important lessons I learned.”
Ultimately he says he that allowing others to bring in their additional perspectives has been good for both his sanity and the business.
Opt for persuasion and influence over making demands.
When Penido first entered the company after graduation, he was eager to incorporate all of the new things he learned at UNC Kenan-Flagler. But he quickly ran into conflict with family members who had been in the business longer and were not very receptive to new ideas, particularly when they were framed as criticism. Penido learned the importance of using persuasion and influence to “make them think that they came up with the idea.”
In family businesses the younger generations usually don’t yet have the same power and rank as their older counterparts, which means that the path to organizational change must be respectful and slow.
“Of course, we will have frustrations. You can never expect everything will work how you want,” said Penido. “We are at an age in our life where we want to change everything very quickly, but businesses have their own pace of change.”
Have a clear plan for succession.
When one generation is preparing to hand the company over to the next, it’s normal to focus on getting the new leaders ready, but the way the old CEO exists is just as important.
“Preparation is the key to successful succession, whether you are the one going in or coming out,” said Penido.
To ensure a smooth, conflict-free transition, the former head of the company needs to have a clearly defined role for himself after he steps down. Will he move into an ambassador role and represent the company to external audiences? Will he return to another role in the company, such as product development? How much assistance will he give during the transition?
Don’t forget the big picture.
Penido says he has learned that he can’t view the family business with any kind of personal agenda. He urged those going into family businesses to remember that the benefits of ownership come with very large responsibilities.
“Your employees, their families and the society around your company are all affected by your decisions,” he said. “At the end of the day, the business is much bigger than you and your family because it impacts so many people.”