Formal or scholastic education
Formal or scholastic education refers to the institutionalized, chronologically graduated and hierarchically structured educational system that begins from primary school and continues until university.
Education represents perhaps the main reference regarding the degree of evolution of a society, much of the achievements of societies are possible thanks to this important item, which has been the fundamental support of a community.
Furthermore, by its very nature, education makes the individual grow and allows him to transcend his natural state and undertake a process of evolution that ends only with his death.
The empirical results allow us to suggest, in harmony with theoretical approaches, that education means salary advantage for individuals. In general terms, the best income is received by those with higher levels of education.
Likewise, as the jobs grow in complexity, the demands of employers for their occupation increase simultaneously.
Through the school education that the person has received, it is possible to infer the degree of socialization that he has achieved, his values, beliefs and his conception of the world. In the case of manager-owners, their educational background is an important indicator of both the class and the amount of knowledge with which they arrive at their positions.
The formal or scholastic education that the manager-owners have received strongly influences the quality of managerial action of those who work as administrators.
Thanks to a higher school or formal education, the person acquires greater reasoning skills, while increasing his conceptual or cognitive base, having managers with high school levels is highly beneficial for the development of companies.
Another issue related to the training of the successor is the moment of his incorporation into the company, that is, if he must take over the command of the business from the beginning or, on the contrary, he must first rely on other people who guide him.
In this way, it is preferable that the founder is not in charge but that people outside the organization advise and support the successor in the first years at the head of the family business.
With this appreciation, this first stage of the succession process can be divided into two: a first, where a non-family manager advises and is in charge; a second, where power rests entirely with the member of the next generation.
To finish with the training of successors, a final question to be addressed is whether a functional specialization is reached within the company or if, on the contrary, a more general vision of it is acquired. Thus, the trainee must take into account that the second option entails an increase in responsibility on their part and in the relationship with the rest of the people involved in the organization, in such a way that they must choose whether or not to specialize in the business.
Before ending the succession, we must briefly comment on one of the instruments proposed above as a solution to the problem of the confusion of assets, which help the entrepreneur not only to manage the company but can be very useful when the time of succession arrives. In this way, we can use this tool, which, although it does not solve the problem, can help simplify it, being a means through which such a solution can be reached.
Family succession plan
The instrument in question is the “family succession plan”, the name by which the agreement signed by the family members of the same company in order to regulate the organization and management of the same, as well as the economic and professional relations between family, property and business.
This instrument is linked to succession since its use is intended to give it continuity in an effective and successful way through the next family generations.
In this sense, we will highlight that the fundamental aspect that is included in the succession plan is that it tries to ensure cohesion between the different family members and the continuity of the company, from generation to generation, not being considered as an event, nor as an action, but rather a long-lasting process involving family members, employees, and the business itself.
Among others, we will list the main points included in these succession plans:
- The philosophy of the company, in terms of relations between family members and in terms of the definition of said company. The rights acquired by members due to the status of partners, both economic rights and rights to information. The advantages that partners will obtain of the company based on their work in the same. The transmission system, which must subsequently be noted in the company's Statutes. The sanctions for inappropriate behavior within the company. And, the rules of succession and retirement process of the person who leaves power.
Regarding this, to point out that the "succession plan" is considered, for the continuity of the company, as one of the key instruments, although only a small percentage of firms have it. However, it should be noted that said succession plan has currently been legalized and can be registered in the Mercantile Registry, as well as the Statutes, to be used against third parties if conflicts arise.
Another problem discussed above arises when the time of succession arrives.
In this case, the heirs of the property may not meet the necessary conditions for the management of the company, since these capacities are not transmitted from the founder to the children and, therefore, it is considered that the management is in the hands of professionals outside the family.
Thus, in succession planning, the founder must propose how the ownership and management of the company is distributed among the various descendants.
Professionalization
Thus, by professionalization we understand the analysis of training needs and planning, including both family and non-family managers.
Therefore, it should be borne in mind that this professionalization of the business is very important especially when the company reaches a considerable size. The valuation in these firms of people outside the family can bring advantages (Donnelley, 1964), since the professionalization of the company takes a decisive step in order to manage the potential conflicts between the values and goals of the family and the company (Leach, 1993).
With this professionalization, we limit the overlap of previously viewed systems, the family system and the business system. Summarizing what we have just mentioned, there are three reasons why the family business professionalizes its business (Dyer, 1989). A first may be the absence within the family of talent for business management. Over time, as the family business grows, especially considering the complexity of the environment, skills in finance, accounting, marketing, etc. must be acquired, such skills are difficult to be present in each and every family member and Therefore, the need for external personnel in the company becomes evident.
A second is that the business is also professionalized when professional management can change the rules and values of the operations business. In this sense, the presence of these external professionals is necessary if family values create business conflicts affecting the profitability and efficiency of the family business.
The third of the reasons why the company is considering professionalization is for choosing the leader who will direct the company once the generational transfer has successfully passed. It is in this case when it may happen that said non-family professional enters the firm with two purposes: the first would be to help in the transition to the future leader, who will occupy the position of the founder, and the second, occupy the position of said founder if the latter believes that there is no family member in the company who can carry out the functions he performed.
Phases of professionalization
Thus, the professionalization of the business goes through three phases:
1. Adequate training of successors.
2. The identification and training of non-family managers.
3. Proper management of the overlap of business and family systems.
From the first of the phases, the training of successors, professionalization begins in the first years with family education, which will be conditioned by business, intense university training and incorporation into the company. This training has already been discussed previously and, therefore, we will not elaborate further on this matter.
Regarding the incorporation of non-family managers, they must be properly chosen and entered into the firm taking into account that in order to achieve the loyalty and permanence of said professionals, the possibility of professional growth must be offered, accessing positions of managerial responsibility, and sharing family values (Gallo, 2002).
If the above is not fulfilled, it is possible that the operation of the company with said managers is not the most optimal and even that these managers do not remain long in the firm.
Finally, regarding the third of the points, we could say that this professionalization also helps in the specific problems of this type of business since it formalizes the company-family subsystems and tries to delimit them in order to reduce said conflict as much as possible.
It is here where we would frame the succession plan, which will reinforce the role of these non-family professionals in this third course of action.
Conclusions:
Undoubtedly, the school training of managers / owners of family businesses plays an important role for the operation and succession in this type of business, the professionalization of these managers allows the company to take a decisive step to achieve its development and manage conflicts that may arise between family members.
In addition, it contributes to succession, by doing it in a planned way the following advantages are obtained: The future of the company is planned, family conflicts are avoided, the bases for future successions are established and the bases are built to institutionalize the company.
Bibliography
Donnelley, Robert. (1964): The Family Business. Harvard Business Review Vol. 4 No. 2 pp: 149-
Dyer, WG (1986): Culture Change in Family Firms: Anticiping and Managing Business.
Gallo, MA (2002): "Evolution towards a family and multinational company". Seminar given at the University of Alicante, Department of Business Organization. Family Transitions.
Leach, P. (1993): The Family Business. Ediciones Granica, Barcelona.Jossey-Bass Inc., Publishers. 160.
