Stewardship Vs Ownership

By Prof. Enrique Soriano

 

2020 is now behind us. Yet despite the bleak and gloomy year that challenged all of us, I witnessed a wonderful change of leadership and power between the founder and his next generation successor-son a few weeks ago. The latter was not the eldest but he was the most qualified. The generational transition was a culmination of more than five years of hard work reinforced with a lot of handholding process. It all started with the founder and the family members driving stewardship. Resisting the change and refusing to embrace the concept of governance comes with it. It took the family a little more than two years to finally sign off on the family code of conduct, the constitution and the ownership agreement. And almost in sync, we also went all out in transitioning the business from the old to the new culture.

 

I must say it was quite challenging given that our team of consultants from other countries struggled in effecting change. I led the governance and succession process and the other consultants cover other functional and operating roles (OD, Sales, Finance, Operations) in this collaboration. Admittedly there were tense moments especially when some family members were on the verge of giving up. They realized that the signing of the constitution triggered a change process that carried with it the curtailment of many privileges. Even if they understood that the changes were meant for the greater good, some were confused and unprepared to let go of their old practices. When the leadership succession program became fully operational, we knew that the family, especially the founder, was determined to push forward.

 

One of the most difficult challenges was getting the founder to share power and we saw that the best governance tool was using the family council to enforce what was agreed upon in the Constitution. Thankfully we got it activated on year three after several months of inaction tied to procrastination. When the children became empowered and started producing results, the founder realized that it was time to step back. This acknowledgement by the founder that the time for a transition has come happened in year four. Officially, we have slated the handover to the successor a year from now on January 2022. That way the turnover process can take its natural course.

 

To assuage the founder, we made sure that his oversight role was very clear. The family council members were all in agreement that sensitive decisions covering expansions, joint ventures, capital raising including major capex decisions will require the blessings of the founder. We also documented the journey and I am sharing this touching acceptance letter the successor presented during our virtual town hall meeting cum Christmas gathering.

 

“My father is a serial entrepreneur and I give him credit for instilling the same spirit in me. He has shown me that with enough determination and joy in what you do you can create something out of nothing. We all grew up in a family business that was started by Papa in 1982. As siblings we worked alongside our father until we finished college. Mama also helped out during the startup years but decided to take care of us. When we got our degrees, mama encouraged us to work for a few years outside the family business. She says the experience working in a corporate environment will humble us. We didn’t know what she meant then. We know now. It made us into better persons and molded our characters. We also learned the value of money.

 

We are thankful our parents did not force us to join the family business. Many, many parents I know fall into the trap of forcing their children to follow the family tradition. Our parents presented it to us as an opportunity, not as an obligation.

 

To be continued…