BY PROF. ENRIQUE SORIANO
WHY DO family-owning businesses need an experienced consultant?
The answer is simple: the seasoned family governance consultant always begins with the end in mind.
Their role is primarily to enable the family to embrace a transformative culture where the family will welcome change, relentlessly pursue its shared purpose, and understand that governance is a process that is deliberate, intentional, and curated according to what the family desires as they prepare for a future that is different from the present.
The specialist is also expected to know what to do, be highly focused, and set milestones for the family to accomplish its objectives. Regardless of the disruptions caused by emotional and hostile family members, the experienced consultant continues to drive ahead.
A good specialist’s role is also to inspire, encourage, and in many cases, assert his or her role that family members must be fair, transparent, and fully committed to investing their time and resources in pursuit of governance.
And finally, the consultant’s task is to amplify a very important message: that governance, succession, family harmony, and legacy go hand in hand. They are meant to instil how these powerful elements will be the platform to ensure continuity and embolden the family in its transition from being fragmented, divisive, and highly emotional with an informal perspective to a formal one replete with rules, roles, rights, responsibilities and real accountability.
A Bad Consultant
On the other hand, an inexperienced consultant tends to get intimidated and, in most cases, can get sidelined by too many disruptions (we are all very busy with work, we don’t have time to work on many rules, we don’t even have time to enforce what we agreed upon, we didn’t know that governance entails attending sessions, we have been used to a transactional mindset, what is the use of joining, whatever we suggest will lead to nothing, papa as the founder will always have the final say, etc.).
It is normal for the family to constantly engage in petty arguments aggravated by a string of egos clashing, notably coming from the adult children, founding generation, business owners, and other members of the clan. But when a major trigger like the death of the leader or a marital conflict happens, a novice consultant can unsurprisingly be rattled and eventually veer off course.
I should know because it happened to me and I struggled for years to find the right governance formula to manage family dynamics. My team had to go back to the basics to learn and relearn the very essence of governance. I literally travelled the world (in part thanks to the World Bank/IFC group) to study, research, deliver position papers, re-formulate other family models, and concoct authentic governance and succession models tailored to Asians, especially for family enterprises operating in ASEAN countries.
The Family Does it All
On top of all these multitudes of family dynamics at play, there are operational issues and external risks aggravated by global pressures that family enterprises and their owners are facing. All these can be quite daunting as the business transitions to the next generation.
In essence, consultants must understand that the “family must do it all” mindset is the core of their very existence and the compelling reason why they have survived and thrived throughout their existence. Paradoxically, it is the same mindset that will cause the downfall of the business as it is the very reason why conflicts are pervasive in many family-owned businesses. It is important that the family with a consultant start redefining their concept of the family business by instituting the 5 R’s (Rules, Roles, Rights, Responsibilities, and Real Accountability)./PN
