Scorecard Transmission
what is the succession scorecard?
1. the incumbent leader finds a new role
2. a competent and well-motivated successor becomes the new leader
3. the relationship between the incumbent leader and the successor is good
4. good relations exist within the family
5. there is governance of the company and of the family
6. the successor forms a team with non-family members
7. all alternatives are thoroughly studied
8. the family business is professionally run
9. the succession leads to a proper arrangement of the ownership succession
10. the succession is carefully planned
what is you score?
do you have any questions?
 
  jozef lievens

8. the family business is professionally run
For a variety of reasons it is important for a smooth succession arrangement that the family business be professionally run. For the incumbent leader, this offers the security that the family business will continue to perform well after his departure. And for the successor as well it is important that he finds himself in a professional environment.

Obviously, excellently-performing family businesses have a strong business concept (product and market combinations), an ambitious vision and mission and a well-balanced strategy. One major advantage of family businesses is that, with a small group of owners, they can work out a truly long-term strategy.

Secondly, a family business - just like a non-family business - needs resources, especially on the human and financial levels. When the family does not have adequate financial resources to finance growth, it will either stagnate or one will have to go looking for outside capital. This option is not always without its dangers, since outside capital providers generally demand a higher return, intervene in the management, protect themselves against dilution and generally want a put-option, under which they force themselves to be bought out after a certain period. This can gradually hollow out the family character of the business.

Timely professionalisation in the areas of operating and management systems and business processes is important for the family business.

Just like non-family businesses, family businesses must therefore professionalise in the areas of administration, accounting, sales, marketing, production, IT, transport, planning, structures, budgeting, performance measurement, communication, decision-making and so on. This is sometimes hindered by the founder´s vision. Family businesses are frequently set up by strong personalities. Their logic is integrated into all of the processes, procedures, rules and habits. Over time this strength becomes a weakness, because it stands in the way of professionalisation.

Equally important in a family business as in a non-family business is the culture of the company. On this level as well there is an interaction between the family and the company, since the culture of the family business is partly defined by the culture of the family. Values and habits which prevail in a family are transplanted into the company. This can be positive when the family culture is characterised by flexibility, openness, innovation and creativity. But here too the problematic of the founder´s vision threatens. If the founder is paternalistically oriented, the culture can prove to be more of a handicap than an advantage.


Jozef LIEVENS is a lawyer and partner in the Eubelius law firm. He is managing director of the Institute for Family Business and FBNet Belgium. He teaches a family business course at the European University College Brussels (EHSAL). He is a Fellow of the American Family Firm Institute. His website is: www.familiebedrijf.be
  top
 
  © 2006 all rights reserved indiegroup