Family businesses are a fundamental pillar in the economy, contributing significantly to employment and economic growth. However, these companies face unique challenges that go beyond the common challenges of any business.
One of them is business succession and the continuity of the business from generation to generation. In this context, the family protocol emerges as a valuable tool to ensure a gradual transition and the maintenance of the company's legacy.
Therefore, in this article, we will explore the role of family protocol in business continuity and succession, and how London Consulting Group can help you in this crucial process.
The family protocol is a set of rules and guidelines established to regulate the relationship between the family and the company. It seeks to establish how important decisions will be made, how conflicts will be resolved and what are the expectations and responsibilities of each family member within the company.
On the other hand, business succession refers to the process of transferring ownership and management of a business from one generation to the next. This involves not only the transfer of assets but also the transfer of values, business culture, family legacy and leadership style.
The existence of a well-defined family protocol is essential for business continuity and succession.
Without a clear succession plan and family protocol, the business can face disruption of operations, conflict among family members, loss of business values and culture, inefficient decision-making, and even legal disagreements.
In essence, the absence of these elements can jeopardize the continuity and long-term success of the business or slow it down and result in monetary losses.
The family protocol plays a fundamental role in business continuity and succession, as it acts as a compass that guides the way in the transition process from one generation to the next, maintaining the balance between the interests of the family and those of the company.
Preserving the identity and core values of the business allows the continuity of the company to be maintained. By defining how the company's values and culture are incorporated into its day-to-day operations, it also helps ensure a smooth transition that respects the legacy of the company's founders and its long-term vision.
Likewise, in business succession, the family protocol ensures an orderly transfer of leadership and ownership of the company, as it defines who is suitable to assume leadership roles, how these successors are selected and prepared, and what the role of the outgoing leader will be after the transition.
Bad practices must also be identified in order to eliminate them and to have a better understanding of how to grow the cultural and corporate legacy generated.
This structured approach reduces uncertainty and the risk of conflicts that can arise during business succession.
In addition, it can help mitigate risks by establishing a clear decision-making mechanism, especially in times of crisis, coupled with effective strategic planning. This includes defining roles and responsibilities and creating a conflict resolution mechanism.
This ensures effective management in all circumstances.
The business succession process must be carefully planned and executed.
To begin with, it should start with the creation of the rules and guidelines for succession, i.e., details should be included on how assets and responsibilities will be transferred, how the business values and culture will be safeguarded, and how decisions will be made.
In addition, it is essential that family members are committed to the succession process and understand their roles and responsibilities. To this end, a suitable successor must be appointed and provided with the necessary training and support to take on the new role.
Some key steps in this process are:
The first step is to identify potential successors within the family.
Select individuals who share the company's values and vision, and who have the ability and desire to take on leadership roles.
Once successors are identified, appropriate training and development should be provided. This may include hands-on learning opportunities, such as working in different departments of the company, as well as formal training in business management and leadership.
The next step is to plan how the leadership transition will take place.
This includes defining a timeline for the transition, assigning roles and responsibilities, and determining how the assets and ownership of the company will be transferred.
This is the framework that will govern the relationship between the family and the company during and after the transition; therefore, it should be a consensus document that reflects the values and aspirations of all family members involved in the company.
Finally, succession planning must be effectively implemented and closely monitored to ensure that it is being carried out as planned.
This may involve periodically reviewing and updating the family protocol and succession plan as family and business circumstances change.
Business succession is a complex process that can take years to complete. However, with careful planning and proper guidance, it can be an opportunity to strengthen the business and preserve its legacy for future generations.
London Consulting Group has extensive experience supporting family businesses in a variety of sectors, especially in Latin America.
London and the People & Culture team act as catalysts for a successful family business succession plan, generating positive change by working with management, the family and a communication plan that helps the organization accept and embrace change.
The approach is based on a methodology that combines process optimization with the accompaniment of a coach to facilitate the creation of family protocols and succession plans.
Our goal is to preserve family unity and ensure long-term business success, which is why we are committed to helping entrepreneurs overcome the challenges associated with succession and business continuity, thus ensuring that the company they have seen grow and develop is in good hands for future generations.
If you need help to successfully initiate and complete this process, contact us today! We can design a roadmap and work plan to ensure that your company is in good hands for future generations.