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 It’s not “business as usual” when family is involved. Business opportunities and challenges are often magnified in family-owned companies, where emotions, issues of fairness and self-worth, and familial politics play a unique role in both the family and the company. How these issues are addressed has ramifications that reach beyond the business and into the heart of the family.
The following statistics from the Mass Mutual Financial Group/Raymond Institute American Family Business Survey 2003 highlight the fact that these issues are prevalent in many family-owned companies:
- The number of family owned companies expecting management succession is unprecedented. Based on a recent survey, 39% of family owned businesses will change leadership within the next five years, as CEOs retire or semi-retire. More than half of the companies expect the CEO to retire within ten years. This expected turnover is dramatic because the average CEO tenure at a family-owned business can be six times longer than a typical non-family public company.
- 42% of the CEOs expected to retire or semi-retire within five years have not chosen a successor. The absence of a named successor is likely a risk factor for the future. Clearly these companies have great potential for disruption as preparation for transition is not actively managed.
- While the education level of the succeeding generation is not significantly different from the previous generation, more than a quarter of the chosen successors have no full-time work experience outside of the family business. In fact, most family businesses (71.7%) do not have a policy regarding the qualifications family members must meet in order to be full-time employees of the business.
- In addition to the usual pressures of
running a business, family businesses face the task of balancing
the business issues with the interests of family members. Many
families are facing significant differences among individual shareholders
and their differing objectives. When surveyed, less than
half of the current executives have confidence that the next generation
has the same level of commitment about long-term business ownership.
Family business consulting is not an event; it is a process you must work through with someone you trust. At Leadership Capital Group, we take the time to work closely with our clients so that we can best address the unique needs of both the family and the business. We understand that your business represents your dreams, aspirations, fears, and hopes – not just the bottom line. Regardless of what issues you face, Leadership Capital Group can provide unique insight and sensitivity to this critical part of your family, and advance your family’s business through people.
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