Family Business
Resources

A next generation perspective on ownership and stewardship

Length

6 min

AppID

VIMEO-84700945

Description

Listen to Navin Amarasuriya, Executive Director of B.P. de Silva, based in Singapore, as he speaks about communication among generations, the inclusion of in-laws and newcomers, the role of women, prosperity of the family and its enterprises, dealing with conflict and the essence of a family constitution.

Industry

Other

Language

English
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Transcript

In family business, there is a tendency with the majority shareholders to kind of impose their view of how things should be done. The majority shareholders, or the people that feel their views have more validity for whatever reason, push their view through without proper discussion and that could create fissures within the family. I really believe that in some ways it is impossible for an external individual to prescribe any kind of solution to a family from the outside. My view on how issues should be addressed really is from the family members trying to understand all the different kinds of structures and configurations and governance policies that other families have, and try and look at their own family and find out what the best fit is. Families in Asia have a certain cultural context that they would have to be sensitive to. This is a very intangible set ... View More of, I guess, set of operating principles, methods of interaction between family members that they would have to understand.

The outlaw is someone who marries into the family and will obviously have an impact on the dynamics of the business side of the family. I mean, anyone moving into a family will obviously change, you know, the pool they enter. The positives really depend on the way the family and the business they represent see the people coming in. In my culture, the people that would end up marrying into the family would very much be separate from the family in the business sense. Now, this creates a problem when the business and the family are intrinsically tied together because there could be the perception that they are being left out. It would be very positive in any culture if a person who married into the family tried to look at the family as objectively as possible to analyze problems without wanting to get too involved with the dynamic.

I think some families have issues even without new people coming in. It further complicates a situation because they have not really been able to find a structure that works for them if they hold resentment; they have a lot of issues with other members of the family. With the kids getting married off it brings even more complication without the core issues being resolved that could deepen those divisions.

It is so cliché but the communication between generations is something that might be difficult for some families, just even parents being able to see their children as the people ultimately inheriting these shares and this ownership and the responsibilities that go with that. I know my dad will always see me as, you know, the kid that crashed his bicycle onto his car, that will never change. So, the question is now, how do you sort of acknowledge that these individuals will never be your equal, but you need to have discussions on that level to ensure, you know, an understanding of the dynamic, not just of the business but how the family would work together.

In families, not talking to each other about their expectations and what they see for the future creates real issues between them and these conversations only come out when they are talking to another party, which is a shame because they really should be talking to each other. In the family business that I am a part of, we are five generations old and we have been around for quite a long time, so one of the things that I suppose was learned earlier on was that if issues are not discussed then it could, you know, really could lead to problems down the road.

One of the primary risks would be that the ownership does not have a clear agreement, whether formal or informal, on the direction of the business, and also on the leadership for the company going forward. And because of that it could create a whole host of problems for the people involved in the business. If there is some communication and there is some discussion on creative solutions, then at least there is a small victory within the family, which allows to maybe move onto bigger challenges.

People might find it difficult to approach a family problem, particularly between a next generation and a patriarch directly. So finding indirect routes may allow the same message be conveyed in a way that might be taken more seriously, although without that direct line of communication there could be miscommunication possibly. Different generations will really have to make more accommodations for finding out ways to communicate with each other and it has to be mutual and fairly equal in terms of effort.

It is much simpler for siblings to get down and talk to each other because ultimately the age gap and the generational differences are much less. So it could be possible for a family to establish rules between siblings and then potentially as a group discuss with the previous generation how they want to interact.

If there is a disagreement on a larger issue, perhaps there is a smaller project that everyone could come to some agreement on and work together and essentially establish the relationships between each other to then go on and take on bigger challenges. A lot of families have foundations, which actually serve this purpose to not just imbue the values of the founder or the values of the family, but to also provide a forum outside of the business where they can work together and collaborate and hopefully understand each other better.

It comes down to, I guess, managing the family and managing the business. Laying down some basic ground rules, making sure that the different parties understand how to engage with each other on a familial level. Hopefully they then bring some of that civility into the business side when they do discuss issues of ownership, issues of future strategy, of direction, of succession. That could be the way to just start it all off.