essential factors for succession planning kevin au centre for family enterprising and business...
TRANSCRIPT
Essential Factors for Succession Planning
Kevin AuCentre for Family Enterprising and Business Advising
Asian Horological Trade and Industry Promotion Conference
October 2012
PUBLIC HEALTH CLIMATE
ENVIRONMENTPOLLUTION
POVERTY GAP
AIR POLLUTION DRUG ABUSE
Problem
• Consumption• Materialism• Globalization - Business• Capitalism but in its deformed way– Hegemony of market - Efficiency– Qualification, organs, uterus, sex, love…– Individualization
• Deterioration of social values, ethics, identity
Value differences
Business systems• Profits, revenue, efficiency• Impersonal, formal
procedures• Formal position in
organization• Conditional on performance,
fired if needed• Retirement, promotion,
departure• Short-term horizon
Family systems• Development and support• Personal, Informal
expectations• Family position, seniority• Rewarded for who they are,
unconditional on lover & support
• Death, divorce, or illness• Inter-generational; based on
identity to family
But, The Evidence Demonstrate A Lack Of Sustainability In Family Businesses
1st Generation
一代2nd Generation
二代3rd Generation
三代4th Generation
四代
Sale of the business
Loss of family interest
Unpredictable challenges
Industry changes
Missed opportunities
Family conflict
Succession problems
Mismanagement
100%
75%
50%
25%
0%
Culture & Philosophy Aligned To Sustainability
Primacy of sustainability
Clear sense of purpose & role
Etc.
Creativity Able to change Able to deal with
change
Development & Growth For Org & Individuals
Constantly upgrading & renewing skills & capabilities
Healthy & Prudent Consistent good
decision making Operational
efficiency Stable quality
income Strong people/
organization
The Key To Family Business Sustainability Is An Organizational / Cultural Strategy And Not So Much A
Business Strategy• Business strategies deal with business trend over the next 5-10 years• Business sustainability / Family business sustainability strategy deals with
how the organization can maintain internal and external alignment to successfully adapt to change over the long term it is an organizational strategy / an organizational culture strategy
In Order To Sustain Long Term, Organizations Need To Have:
Then The Organization & Its People Will Manifest:
Beliefs & Action That Are Guided And Directed
They Will Be Mindful & Disciplined
They Will Be Innovative & Strategic
They Will Be Competent & Able To Lead, To Manage, To Change / Adapt
The Tsao Family – IMC Family Business ModelA Potential Way To Address The Family Business Challenges
Family Trust
Business Trust
Family Charter
Business Mandate
Social Enterprise & Entrepreneur
ship
Learning Center
East West (Non-Profit)
Family Trust Board Business Trust Board
+
Reps Reps
The Family System The Business System
Family Business
Family Members Take Role In Biz Based On Merit
Separate Family Trust System And Business Trust System
Family Trust
Family Charter
Family Trust Board
The Family System
Family
Business Trust
Business MandateBusiness
Trust Board
The Business System
Business
Description: The Family will have it own Family Trust
�̶ Family Trust will be governed by the Family Charter and administered by the Family Trust Board & Family Office
�̶ Clear and transparent policies, expectations & standards for family members to access & benefit from the Family Trust
�̶ A safety-net for family and support for worthy initiatives by family members
The Business will have it own Business Trust
�̶ Business Trust governed by IMC Sustainability Business Mandate and administered by Business Trust Board
�̶ Transparent business re-investment, dividend & executive reward policies
Targeted Impact: Prevents the Family from being overly dependent
on the Business financially – removes the family’s financial motivation / conflicts of interest in leading the Business
Ensures Business will have adequate capital for grow and reinvestment
Family & Business Each Has Its Own Trust / Fund
1.
Joint / Cross Stewardship Of The Family And The Business
Family Trust Business Trust
Family Charter
Business Mandate
Family Trust Board Business Trust Board
Reps Reps
The Family System The Business System
Family Business
2.
Description: Family Trust administered by the Family Trust Board
comprised of representatives from the Family, the Business and outside experts as appropriate protect the Family Charter
Business Trust administered by the Business Trust Board comprised of representatives from the Family, the Business and outside experts as appropriate protect the IMC Business Sustainability Mandate
Only the willing and able will lead and steward with clear rules, clear processes, clear responsibilities
Cross-Joint governance allows close coordination / collaboration between Family and Business w/o formal control
Targeted Impact: Clear governance of the culture of Family & Business
guided by Family Charter & IMC Business Sustainability Mandate
Clear governance of expectations & performance for Family & Business Performance Mentality, help prevent Family Conflict from disrupting Business
Professionalization / Transparency / Meritocracy Diminish Family’s focus on control in favor of Stewardship, able to attract & retain outside talent
Sustained & positive Family-Business engagement
Senior Business leaders can continue to steward after retirement long-term management alignment
Joint / Cross Stewardship Of The Family And The Business
Family Trust
Business Trust
Family Charter
Business Mandate
Family Trust Board Business Trust Board
Reps Reps
The Family System The Business System
Family Business
2.
Family & Business Engage In Stewardship Of One Another
Family Participation In Business By Choice And By Merit
Family Trust
Business Trust
Family Charter
Business Mandate
Family Trust Board Business Trust Board
Reps Reps
The Family System The Business System
Family Business
Family Members Take Role In Biz Based On Merit
3.
Family Member Participation In Business By Choice And By Merit
East West Also Contains The Learning Center To Help Family & Business Members To Acquire The Awareness, Skills & Mindset To Lead And Contribute
Family Trust
Business Trust
Family Charter
Business Mandate
Social Enterprise & Entrepreneurship
Learning Center
East West (Non-Profit)
Family Trust Board Business Trust Board
+
Reps Reps
The Family System The Business System
Family Business
Family Members Take Role In Biz Based On Merit
4.
The Learning Center Provides Training & Coaching To Help Family & Business Members Enhance
Capabilities
齐家 治国
平天下
修身
Family Trust Business Trust
Family Charter Business Mandate
Social Enterprise & Entrepreneurship
Learning Center
East West (Non-Profit)
Family Trust Board Business Trust Board
+
Reps Reps
The Family System The Business System
Family Business
Family Members Take Role In Biz Based On Merit
Our job is to take on new challenges