Ver Angola

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Family businesses, complex and challenging management

Michel Pedro

Manager

Running a family business group is more complex than running just one business. It is also about managing emotions and personal relationships that, per se, can be problematic or complicated by disagreements in succession processes. Creating governance rules is a good start to ensure the longevity of these companies.

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BUILDING AND RUNNING the family assembly and protocol, managing the company's liquidity needs, preparing, managing, implementing and consolidating the family succession process are, among others, the challenges in managing family businesses in the age of knowledge.

Family business groups have a significant presence in all economies, Angola being no exception.

Family businesses are more aware that it is necessary to have well-structured governance rules, including for the succession process, always considering that management options can destabilize the climate and relationships with non-family employees. In this sense, it is recommended that the balance between family and business is always present in the management of family groups, highlighting the importance of making everything clear to all strategic audiences.

Regarding company longevity, a 2014 PricewatcherhouseCooper (PwC) study, which involved more than 2,000 companies from 42 countries, indicates that only 12 percent of family businesses reach the third generation and only 1 percent reach the third generation. Thursday.

The demographic movement during and after the war in Angola, the high birth rate in the country, which increases the size of Angolan families and, consequently, the number of heirs – which causes inheritance disputes – help to understand why the National family businesses have a short period of existence, as succession is never a simple process.

Cultural elements are another factor that strongly influences family businesses, as the leaders of business groups often make decisions based on these assumptions, limiting themselves, therefore, to acting in accordance with the greater proximity they have with a family member . Hence, in many cases, there is a lack of professionalism on the part of the heirs.

Despite the growing concern of companies to plan the succession in advance, this is still not a widespread practice in Angola. Research also indicates that the continuity of the company's goals is also a problem, as successors are not always passionate about the organization's current activity, ending up "diving" into other areas, with different results. The same surveys show that if, on the one hand, companies may experience problems during or after succession, on the other, during this period they can also prioritize innovation in structuring processes in society and in production itself.

But the main benefit is the durability of the business. With clearer decision-making power, companies have greater stability and lose less assets in legal disputes because of family disagreements.

The recommendation is that successors opt not only for incremental innovation, but for radical innovation, which implies doing something different: producing something completely different, finding new fields of intervention and rewriting the rules.

The causes for the structural risk of family businesses, summarizing them to the combination of the complexity of the family and the complexity of the business without proper monitoring of the integrated structure.

However, it is necessary to provoke reflections on successions in the leadership of family businesses. It is recommended to provoke those involved to find the necessary changes, recognizing that what works in one company will not always work in all. The recipe that works well in a company is one that is aligned with its mission, vision, principles and objectives, observing good corporate governance practices.

Opinion of
Michel Pedro