FAMILY BUSINESS
What Ails Family
Business?
By. Dr. Mary Mugo (PhD, MMSK, MIHRM)
F
amily businesses and SMEs
contribute greatly to the economy
of any country including Kenya.
They must hence grow and thrive and
exist beyond their founders.
I have found that once a founder of a
family business dies, more often than not,
the children are left fighting. They take
each other to court and the process goes
on and on for years. Some dependants have
even lost their lives due to lack of finances
because accounts have been closed as the
matters are in Court. For those who don’t
go to Court, they squander the monies
very fast and bring the business down
almost immediately.
However, I have also observed we have
very successful family businesses in
Kenya, the likes of Mabati Rolling Mills
of the Chandaria family. The question is
therefore; what is it that family business
are doing or not doing to be in the
situation they are in?
There are a number of reasons contributing
to the situation facing family businesses
today. From research, one of the major
reasons that determines the continuity
of family business is succession planning.
Family businesses that take succession
planning seriously are likely to live
beyond their founders. Those that do not
are likely to die with the founder.
My book titled Growing A Business
Empire: How To Effectively Manage
Leadership Succession For Organizational
Growth, with a foreword by Dr. Manu
Chandaria gives details on how best to
manage succession planning among many
other important topics that if understood
and applied well would help any business
to grow and thrive over the long haul.
28 MAL33/19 ISSUE
It is important to understand that
succession planning is not just a function
for family businesses. Every leader should
carry out their succession planning within
their own outfits because one day they
will exit.
The question every leader should ask
themselves is whether once they exit, the
organization will continue uninterrupted
or with minimal interruption, or a huge
void will be created. A good leader who
plans well for their exit mentors and
coaches others to take their position once
they are gone.
Most leaders understand the necessity
for succession planning yet they don’t
seem to plan for it. Why is this? Most
of the leaders seem to suffer from the
founders’ syndrome. The passion and
charisma of the founder is important for
organizational growth but after sometime,
can be destructive and can limit the same
growth. An organization must be able to
grow beyond its founder. Founders have a
lot of influence and shape the culture of the
organization. Many organizations seem to
suffer from the founder’s syndrome and
this stifles growth of any organization and
delays succession planning.
How do you know an
organization that is
suffering from the founder’s
syndrome?
It is strongly identified with the person
or personality of the founder; The founder
makes all the decisions without input
from others; Decisions are made in a
crisis mode and forward planning does
not exist; Meetings are held to rally the
troops, get status reports and never for
strategic reasons; Little or no strategic
planning and agreement of objectives; Key
staffs are selected by the founder and are
mostly friends. Personal loyalty considered
in selection rather than skills, competence
or experience, and the role of the staff is to
support of the founder.
This goes on to a situation where board
members are under qualified and easily
intimidated by the founder, and when the
founder is challenged on any issue they
respond by either ignoring or ridiculing the
people. People stop working towards the
vision and mission of the organizational
and instead operate around the personality
of the founder
A successful founder must plan their
succession early if the organization has to
grow and live beyond them. They must be
willing to let go at the right time and to the
right person. They must also be willing to
identify, coach and mentor their successors
early. Succession will not fall into place, it
must be planned if you the founder wants
to leave a legacy and ensure continuity of
your business once you exit. And as they
say failure to plan is planning to fail.
Dr. Mary Mugo is a Senior
Lecturer and Dean Business
and Economics at Multimedia
University of Kenya. She is an
author, and Consultant in Strategic
Management,
Marketing,
Leadership, and Human Resource
Management: You can commune
with her on this or related matters
vide email at: Mugojemima@
gmail.com, or visit her website at:
www.marymugo.com.