Succession: The art of running a family business
Running a family business is not always easy, especially if relationships are already strained and communication isn’t a strong point.
Family businesses in Australia play an important role and represent 67% of all Australian businesses, provide 55% of private sector employment, 48% of total private sector wages paid and half of all gross industry value added in Australia. Given their huge representation in our economy, it’s even more important that these businesses succeed.
However, running a family business is not always easy, especially if relationships are already strained and communication isn’t a strong point. As co-CEO of COS, an Australian-owned private company offering products and solutions for the workplace, with my sister Amie we’ve implemented several strategies to successfully take over my father’s business of 45 years.
Strategies for successfully taking over a family business
Clearly define roles and responsibilities for all family members involved
This was key for COS and is essential for the smooth running of a family business. Firstly, it’s important to ensure there is a valid role that is required within the business. Consider skill sets and play to people’s strengths as you’re much more likely to be successful when family members are aligned with their strongest skills.
Develop a conflict resolution plan
Even the closest families can experience conflict in their business. It’s how you handle the conflict that is the important part. Being able to solve the problem in a healthy way will strengthen the bonds between family members and reduce stress and anxiety. At COS, we ensure no conflict is expressed in front of staff members. We use a safe word to signal when the discussion should be moved to a private location and have a separate space for these conversations to take place. It’s also important not to fall into childhood hierarchy when discussing business issues, remember your role in the company and handle conflict from that position.
Set boundaries around family time and business time
When your company is family-run, it’s hard not to talk about business most of the time, however, it’s important to keep family time and business time as separate as possible. Set boundaries around this and stick to them. We don’t discuss business on the weekend when other people are around or if we are at a family event. It’s also important to foster your family relationships separate from your business relationships. First and foremost, Amie is my sister and I carve out separate quality time that isn’t about the business.
Establish open communication
Families can have their way of communicating and it’s not always the best way. Open communication is key and should be at the centre of your business. At COS, we have a different way of communicating in the boardroom than in the dining room. We establish a professional way of communicating in our business and create separate spaces for boardroom discussions and family business discussions.
Plan for the future
Successful family businesses are always planning for the future, however, succession plans are not always linear and it’s not a one size fits all. It’s a journey that can take several years to finalise. When discussing succession plans it is often talked about the ‘chosen one’, the one family member that will take over the business, this often ends up being the eldest child. At COS, we had two tests to pass before being considered; do we have an interest in the business and do we have the capability to be CEO. This was tested over a 10-year period. In our case, Amie and I passed both tests, however, we wanted to co-CEO as we both felt this would be the best option for the business. This wasn’t a traditional succession model and we had to prove this would be the right decision for the business over a one-year period. We are now celebrating a successful year as co-CEOs.
