Succession woes haunt family-run businesses

CEBU, Philippines - Issues on sustaining harmony have remained a major concern why most family-run businesses fail to progress on to the next generation.

A latest survey conducted by John Gokongwei School of Management of the Ateneo de Manila University revealed that family harmony is the obvious "poison" why a family-run business being pass on to next generation has difficulty to continue.

In a survey of 150 respondents, only 33 percent have vision-mission statements and only 45 percent have strategic plans.

The survey presented by the school's lecturer Ricardo H. Mercado, further revealed that succession in the family business, of which the family members will agree who will lead and take over the business, is the top problem faced by family-run businesses in the Philippines today.

"Who takes over the business, becomes the poignant question which could not be answered by 87 percent of families surveyed," said Mercado.

According to the survey, family harmony is the number one concern of the family-owned businesses today, with growth and direction as the second most ranked concern.

Financial and other management issues such as management, marketing personnel ranked the lowest,

"This tells me that family harmony being number one concern is perhaps due to many families having no family council. This perhaps led to the no vision-mission, erroneous strategic plans, lack of commitment of family members which leads to the division and uncharted directions for the business, or worse, ignored individual aspirations which results in resentment of individual family members with their own family and their family business," said Mercado.

While the finding is "disturbing", Mercado said there is much needed to be done in helping family businesses in the Philippines move forward in a healthy fashion.

"In JGSOM, we have initiated to address not just the undergraduate course for students wanting to learn about family businesses, but also past generations," Mercado said.

In Cebu, a group called "Cebu Family Business Forum" was loosely formed late last year to serve as a support group to address the pressing concerns of family businesses amid tougher trade fight.

Led by Pages Holdings Inc., chairman Bunny Pages, the establishment of the informal group is aimed at helping the family businesses in Cebu sustain their competitive advantage while regional or global competition is becoming fiercer.

Family conflict in the family is mostly the common downfall among family businesses, thus a lot of family-owned businesses do not last after the founder is dead.

Global statistics posted that three out of 100 family businesses are likely to sustain and thrive in the second to third generation.

Locally, Pages said there are concrete examples of then successful family businesses that failed to survive after the founder or the family's patriarch or matriarch passed away. (FREEMAN)