The Asia Pacific Centre for Family Business Excellence

As Asian family businesses continue to establish greater presence globally and grow to a certain size, they also face more intense competitive pressures, rising costs and the impact of global megatrends. Yet for any family business to take advantage of the opportunity to grow in today’s globalised world, the challenge is to identify ways in which to do that as effectively as they can. That will require families to become more professional in their business and personal approach, which many family businesses in high growth economies are increasingly keen to do. It may be about formalising roles in the business and putting more structure to the way decisions are being made. Either way, families will need to look into establishing greater formality in both the business as well as the family as their business expands.

“We are formalising parts of the business to prepare potential family or non-family members as they take over in the future.”

First generation family business leader, Singapore

Attracting and retaining talent continues to weigh on the minds of family owners as they compete for the right skills and a strong talent pool needed to drive their business. The next generation of leaders, be it family or non-family members, adopt a very different outlook and expectations of their careers today. How should the family business operate in a way that enables the next generation workforce to meaningfully demonstrate their strengths and for them to see a clear career path that will provide the opportunities to grow with the business? For non-family members, navigating the dynamics of family can be tough and sometimes poses a barrier for them to maximise their capabilities. As a family business professionalises, steps can be taken to ensure such occurrences are minimised.

“I have to attract the talent we need for the future. I’m very much aware that family businesses aren’t always as aggressive as they need to be in attracting talent from outside. But we wouldn’t be a half-billion-dollar company without constantly grooming our next generation of leaders.”

Third generation family business leader, Singapore

Only 34% of family businesses in Asia have their successor chosen, with 11% having a robust and documented succession plan. The urgency for a clear handover path as transition takes place is greater than in other parts of the world. As Asian family businesses are generally facing only their first or second transition, the process may be new to them. And for those taking over the family business, expectations and plans of the succession process can pose some worry – how will their parents adapt, how they will measure up and overall being able to manage the process successfully by ensuring their parents still feel involved and able to contribute.

“One of the biggest challenges that I faced was earning the respect of other people. A lot of people might think ‘You’re only here because your dad’s the boss’, and while that might be true in terms of getting the job in the first place, once you’re in the role you have to work three times harder than anybody else because the spotlight is always on you.”

Second generation family business leader, Australia

Conflict can stem from many areas within the business but it is particularly acute in a family business when the business grows, and the number of stakeholders increase but not enough is being done to address everyone’s needs and expectations. Between generations, there can be gaps in communication and credibility. The difference in objectives (short-term versus long-term) between owner-managers and professionals also gives rise to conflict. The collision of expectations and the lack of communication can be emotionally-charged but more importantly, harm relationships between key family members which eventually affects the business.

“When you have a business that involves family members, you are going to have conflicts sometimes within the family, but also with other colleagues. But disputes with colleagues are easier to resolve because your relationship is purely professional. But disputes between relations involve many different roles – father and son; mother and son; brothers and sisters; and on top of that you are also colleagues.”

Second generation family business leader, Hong Kong