Strong and successful business legacies, particularly those that attract consistent and robust growth throughout generations, are firmly founded on united, resilient families that employ effective family governance structures.
This was the overarching theme of the discussions in the Family Business Governance conference organized by Icon Executive Asia and W+B Advisory Group entitled “The Power of Succession Planning” that was hosted and moderated by Icon Executive Asia’s Managing Director Patt Soyao last August 29, 2020.
Over 350+ high net worth business owners including their successors, whose companies consist of over 170,000 employees, attended the event and listened to the powerful speakers we had onboard.
Renowned subject matter experts Mr. Steve Legler, a Family Business Governance Advisor at TSI Heritage, Dr. Josh Baron, the Co-Founder and Partner at Banyan Global, Mr. Richard Eu, the Chairman of Eu Yan Sang International, and Prof. Eric Soriano, the Executive Director of W+B Advisory Group, discussed the unrelenting importance of family governance in helping families lead businesses in times of crisis and prepare for ownership transition.
Family governance and ownership
Legler introduced the basics of Family Governance by distinguishing family governance as a parallel pillar to corporate governance where processes are enforced to maintain order within the family. Governance can also aid in the transition from autocratic to democratic once the founder exits to properly equip the next generation.
With governance, the family must start slowly but with certainty. Every requirement must be met with intention, dedication, and regularity — whether it is family meetings or the creation of an authentic family constitution.
Dr. Baron’s presentation then shared that ownership brings a “tremendous amount of power to shape the business” and it affords five core rights: design, decide, value, inform, and transfer, which if applied and maximized can become the key to your organization’s multigenerational success.
Eu Yan Sang and succession planning
Mr. Eu then shared his personal experience as a fourth-generation successor of Eu Yan Sang International who had to experience its own fair share of challenges that threatened their survival.
It’s in the story of each generation that proved how important succession planning is. Mr. Eu narrated how the third generation disintegrated and ended up selling the business since not everyone who had power held any interest in managing the business. This led to the family losing control and it took the determination and consolidation of a handful of fourth generation cousins headed by Mr. Eu to reclaim the company.
This story perfectly complements the enlightening discussion led by Prof. Soriano who reiterated that succession will only become effective once the family takes charge. The family business must be prepared to face a lot of roadblocks in their pursuit of the right ownership transition. Understandably, while there are stumbling blocks that cannot be avoided or are out of their control, most issues can be dealt with when the family chooses to be aligned and to put the interest of the business first.
As Prof. Soriano emphatically shares, when you take care of the business, the business will take care of the family. Once the family decides to create a legacy, it must be an all-out effort as timing, commitment, and preparation are needed to succeed.
To officially close the conference, all the generous companies, associations, and media partners that have helped them make the event a success. Also, as a way of staying true to the path of helping organizations last for a hundred years, Icon and W+B have future events that will tackle strategic planning and corporate rehabilitation because when you decide to establish a century-long legacy, you need to plan.