Managing Family Business

Family businesses are the cornerstone of many countries in Asia. Either started from migrant workers or the indigenous population of countries, many of such businesses have grown and flourished over the past century and into the current millennium.

Dr Hischam El-Agamy, an executive director of the Switzerland-based business school International Institute for Management Development (IMD), he feels it's time Asian family businesses cuddle the new norm of the global business world or risk fading away.

Grow Or Die
“Businesses only grow or die, they don't stand still,” El-Agamy told StarBiz. Family businesses would be swallowed either way with or without globalisation, if they were to stay stagnant.

Patriarchal Interference
Complacency and maintaining of the status quo of a business were problems most family businesses struggled with. Inteference and instructions given by the patriarchal family leader held firm and whose orders must be followed. Decision-making in a family business was usually faster than that of a large organisation but holding firm to the instructions of the elder person in a family could pose a problem at times when the decision might not be so favourable.

Business Governance
“There's a need for family businesses to establish governance. Governance is very important and this element may be lacking in some family firms compared with multinational companies (MNCs).

“In this case, the decision-making will be better and a family firm must also allow the younger generation to participate in the decision-making and not just by who leads the business,” he said, adding that there was no critical thinking as instructions given would usually be followed.

Explore Other Ideas
Apart from governance, he encouraged family members of Asian family firms to explore the world and called on the older generation to prepare the next generation to take over the business. “They have to go out and spend a year or two to learn. If they go out to learn, they can appreciate the complexity of an MNC (multinational corporation).

“Some Asian family businesses do not plan for succession because they assume the children will take over the business and that could be a problem,” he pointed out.
Another point he made was that a family business must also learn how to integrate non-family employees into the organisation.