fb newsletter issue 03
TRANSCRIPT
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Family businesses are often faced with situations wherethey would have to take an important decision that
affects the direction of the company, but at
the same time, have a direct impact on the
family integrity.
CLUB
Newsletter
Issue 03: Family Business Club12thFeb 2016
Inside
How Will The Future Unfold?
! MOVING ON:
Harilela Family
Group Case study
! Succession Talks
!Agency In Family
Business
! Cartoons & Jokes
! Word Search
!Video Skit
Family
Business
The Harilela family Group comprises a vast holdings in
hotels, restaurants, healthcare, food and beverage, real
estate, trading, travel agencies, stock brokerage,telecommunications, watch manufacturing and retail
stores. Back in 1922, Naroomal Harilela created a legacy
that was then passed through his eight sons, who would be
in charged on expanding and diversifying the activities of
the Group.. and whether they should bring non-family
members to top managerial positions.
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Lorem Ipsum Dolor [Issue] :: [Date]
Integer metus.
Lorem.When a family run business comes to crossroad where they have
to decide on carrying on, selling or transferring the business, it
certainly helps if businesses have the following measures in place
from an early onset.
!Address Ownership
!Address Management Succession
!Have a written strategic Plan
!Clarified Goals along side the family Mission Statement
!Define Values
!Formulate Philosophies
Top Tips for Successful Business Transition
Im pretty sure daddy meant left the bulk of the business to me.
I was born 2 minutes earlier than you.
Everything the light touches is
yours
Everything the light
touches is yours
Everything the light
touches is yours
Everything the light
touches is yours
To Kid
1:
To Kid
2:
To Kid
3:
To Kid
4:
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Stability: Family position typically
determineswho leads the business and as a result thereis usually longevity in leadership, which
results in overall stability within theorganization. Leaders usually stay in theposition for many years, until a life event suchas illness, retirement, or death results inchange.
Commitment: Since the needs of the familyare at stake, there is a greater sense ofcommitment and accountability. This level ofcommitment is almost impossible to generatein non-family firms. This long- term
commitment leads to additional benefits, suchas a better understanding of the industry,organization and job, stronger customerrelationships and more effective sales andmarketing.
Flexibility:You wont hear, Sorry, but thatsnot in my job description in a family business.Family members are willing to wear severaldifferent hats and to take on tasks outside oftheir formal jobs in order to ensure the
success of the company.
Long-term Outlook: Non-family firms think
about hitting goals this quarter, while familyfirms think years, and sometimes decades,ahead.
Family Conflict:Conflict is bound to happenat any firm, but add in long histories, familyrelationships, and the kind of contempt that
comes with familiarity, and the ante has justbeen upped.
Unstructured Governance: Governanceissues such as internal hierarchies and rules,as well as the ability to follow and adhere toexternal corporate laws, tend to be taken lessseriously at family businesses, because of thelevel of trust inherent at family firms.
Succession Planning:Many family firms lack
succession plans, either because the leaderdoesnt have the desire to admit that he orshe will, one day, need to step down, orbecause there is too much trust in the familyto work this out when it becomes necessary.
Nepotism: Some family businesses arereluctant to let relatives into the top tier, andthe result is that people are given jobs forwhich they lack the skills, education, or
experience.
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Find some words that belong to the family business class
Can you do it in 60 seconds?
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1. Harilela and his family
should stay in businessand sell all the other small
hotels.
v
Continued from page 1
The dilemma arises when the decision taken would benefit the
company, but undermine the family integrity, or in the other
hand, when a decision was based completely regarding only the
family interests and benefits could have a positive effect in the
short-term but a negative effect in the long-term.
For instance, during succession, the fathers concern would be to
let the company into the management of his oldest son or tobring a non-family member who knows how to manage the
business into a managerial position.
Our family business club here at Regents University engaged in a
mini-MICA activity, which analysed the dilemma faced by the
Harilela Group.
Students were asked to assemble into groups of four. They were
to come up with five reasons to keep the company and fivereasons to sell. Three out of the four groups wanted to keep it in
the family because it was viewed to be profitable.
Many thought that the next generation needed to reorganize andmake a formal structure of management. Also, bringing inoutside agents to help run the company was proposed.
The dilemma the Harilela family faces lies in the fact that all
the Harilelas involved in the business are already in a
retirement age, and still have an uncertain future for the
ownership and management
of the company. Although
Aron, one of Naroomals
grandson, has been involvedfor many years, the family
still disagree on the future of
the company, whether it should be put on sale or go public
and increase the activities of the group.
Possible Scenarios
1
2
3
Harilela and his family
could stay in business
with their current
structure and hope it
continues working
smoothly between
family members when
Harilela passes away.
Instead of selling the
business they could go
public and raise money
from it. They should also
appoint agents for the
business so that the
business runs smoothly.
Every individual can start
their own business from
the public proceeds or
they can keep it within
themselves.
Everyone should split
up amicably and do
different businesses to
avoid conflict that may
harm the family itself
4 If two individuals are
starting the same
business, there should
be clear rules about the
region in which one
may operate to avoid
conflict.
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The burning question now begins: When
exactly is the best time to start having
SUCCESSIONTALKSwithin family members to achieve longer
life of the business without extreme family
drama getting in the way?
The cold truth is that nobody is invincible
and not talking about plans after
death is a big elephant in the room.
Succession Planning should start
with the two most critical pieces ofany organization's overall being:
Its Vision and its Values.
The peace of mind that comes with
Succession Planning is worth the time it
takes to institute these systems. Once the
systems are in place, updating them is
typically an easy task.
It is the gathering of this information in the
first place, and making sure theorganization is, to the greatest extent
possible, relying on systems rather than
individuals, that will make those
employee transitions less stressful.
Operational pieces like
What do you do? ,
Current job description,
Where is everything? ,
Calendar,
Critical relationships,
Rainmaking,
Redundancy,
Monitoringand asking the board for their
views and inputs are vital in order to set up
a system that works in the event that the
succession elephant in the room talk
never happens before the exit of a key
member of a family business organization.
(Continued)
So? Who best fills the
shoes?
This activity allowed students to explore
and understand what various problems
are facing family businesses both
successful and unsuccessful.
Even where there seems to be
harmony as in the case of Harilela
group, there can be fresh
unanticipated conflicts between
individuals of the family when a
tragic occurrence like the death of
the founder occurs. Lossis an example of
emotional trigger that could generate all
kinds of conflict that no one dared to
voice out before due to the presence of
the founder who was there all of his
working life keeping things together.
Questions like how theshares
should bedistributed among the family members
will need to be addressed.Also when there is loss of the Karta i.e
founder, underlying personality traitstend to surface and thus adversely affects
the relationship in the family andultimately the business.
As part of the third week topic in the
Family Business club:Agency
Resource-Based and Systems
Theory Perspective, a group of
students performed a Skit that
allowed the group to identify the
importance of decision-making
within family-owned businesses in a
real life situation, as well as to
analyse benefits and disadvantage of
altruism and agency in a family
business.
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SCENE
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Possibilities when an agency is not employed in
Famil Business
Possibility1
Possibility2
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We hope you
enjoyed reading this
article. Thank you
Produced by the Family business Club
for Regents University PRContent and Design by Week 3 Newsletter team:
Amara Kanu, Kirill Polyanskiy, Alex Schupp and
Devyani Pawar.
European Business School London
Date:12 Feb 2016
Click on the
YouTube linkbelow for
highlights from our
class performance
and dont forget to
give us thumbs up
if you like what you
see. Happy
viewing!https://youtu.be/tXDgKwUN4gk