The great dilemma for family business managers is deciding what should be changed and what should remain. In this type of decision there are usually confrontations between generations, since in general the older generation defends the traditional position and the younger one defends change. If the members of the family are capable of engaging in a good dialogue and analyzing the various positions, they will make good decisions, discarding what must be changed, incorporating what the new environment demands.
1. Introduction
Professionalization is a process of gradual transformation that involves a change of mentality in each of the elements of the organization.
(Belausteguigoitia, 2003). For this process to be effective, it must start with the commitment of those who find themselves in the highest hierarchical positions. As well as to obtain a certification (for example of ISO 9000) it is required that it be fully involved in the transformation process.
According to the Dictionary of the Royal Academy of the Spanish Language, a professional is a person who carries out his or her work with knowledge and application and for profit. Therefore, for any company, becoming a professional means a great challenge, but for family businesses, which tend to be carried away by inertia and find it more difficult to transform, this process is more complex. The long period that CEOs occupy in this type of organization is a factor that can inhibit the changes that professionalization requires.
There are a number of administrative traditions and practices that have worked well in the past, and so they are thought to be preserved. A very practical administrative principle states that there is no need to change what works, and in general this is true. However, given the changes in the environment, perhaps what happens is that what worked in the past could stop working, and it may be necessary to use new methods and paradigms.
The great dilemma for family business managers is deciding what should be changed and what should remain. In this type of decision there are usually confrontations between generations, since in general the older generation defends the traditional position and the younger one defends change. If the members of the family are capable of engaging in a good dialogue and analyzing the various positions, they will make good decisions, discarding what must be changed, incorporating what the new environment demands.
Professionalization is a process of gradual change that is better understood by knowing the various stages that organizations go through and, for this purpose, the family business towards professionalization must carry out the allocation of positions based on capabilities, taking elements from the As a new hiring option, job promotions must be achieved on the basis of good performance and take into account the formal education of family members, including that of the successor, and the roles of all staff must be clearly defined. defined.
2. The Family Business towards 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 norms 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 considers professionalization is for the choice of 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.the first would be to assist in the transition to the future leader, who will occupy the position of the founder, and the second, to 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 that he performed.the first would be to assist in the transition to the future leader, who will occupy the position of the founder, and the second, to 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 that he performed.
Thus, the professionalization of the business goes through three phases:
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.
3. Formal or scholastic education
One of the realities of our family businesses is that the founder does not have a succession plan established and therefore does not think about the importance of the person who occupies his post having a formal education, that is, having a profession to manage the business and give continuity to it.
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 her 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.
4. 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, regarding the relations between family members and regarding the definition of said company. The rights that members acquire due to the status of partners, both economic rights and rights to information. The advantages that the partners of the company will obtain based on their work in it. The transmission regime, which must subsequently be noted in the company's Statutes. 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.
As is known, traditional models of succession usually take the form of the sole figure of the owner-director, in the brotherly society and the cousin consortium. The challenges facing the company, in the face of an increasingly global and complex world, have led to the need for shareholders to examine the advisability of incorporating external professionals with experience in specific areas, to enrich and promote the goals sought by the company. business.
The survival of the family business is also subject to the level of commitment and loyalty that the family members themselves are able to maintain over time. To this end, one of the instruments that is producing visible and effective results is the family council.
Which represents a highly recommended figure as an indispensable tool that will allow the owner-owner to specify the investment plans of the benefits obtained by the company and also, especially useful in case of sale, to prevent the family from not giving the appropriate value to their assets by dividing the amount of the sale and, consequently, the possibility of creating a new family business against the aforementioned amount obtained from the sale, disappears.
4.1. Creation of the Family Council
In this sense, the creation of the family council prior to the moment in which the family business is in the delicate situation of selling is especially beneficial since, naturally, in such circumstances, the members of the family may feel significantly confused. We must not forget the important role that the psychological factor plays in these situations.
The growth of the company, to which I alluded before, as a requirement of its continuity, is what can trigger, if not achieved, the sale of the company. Therefore, if the family does not support the expansion and investment plans necessary for the aforementioned growth and the difficulty of finding a successor with sufficient skills that enjoys the confidence of the different family branches occurs, new initiatives will be opened, external to the family sphere, such as the entry of private equity companies.
The entry of venture capital may be the key to safeguarding the survival of the company, however it should be noted that its incorporation into the family business produces a culture shock that can be difficult for the family to fit in. In this sense, to insist once again that the creation of a family council prior to the adoption of said business decision is, without a doubt, highly recommended.
4.2. Succession and its keys to success
The problems of family businesses are very similar throughout the world and derive above all from succession, but also from conflicts with the in-laws and the difficulties of the founders to yield the baton. A limitation of family unity refers to the fragmentation of families into new families with separate identities across the three generations, the founder of the company, the founder's children and the children of the founder resulting in three generations
to designate the successor.
To address succession, it must be carried out through a diagnosis of the children's real capacities and training that includes, in addition to academic studies, a period of work or experience of three to five years outside the family business, to have a knowledge of the real functioning of the market and the administration of a company, and thus draw up a life and career plan.
This succession model, which streamlines family ties, is considered essential for the operation and survival of the family business. It is necessary not to separate the sense that the family has and invest time in it and that although it is a family business it is independently of the business, which is difficult to separate because it is a family business and does not lead to conflicts and even in the disintegration of the family.
In this way, it is feasible to maintain a balance in the organization chart in which each family member is positioned according to their level of competence, giving them real jobs and not fictitious positions, along with the essential existence of workers who do not belong to the family, to be able to correctly face the growth of the company and not end up in conflicts, stagnation in terms of growth, expansion and development of the same.
Once this is done, a life and career plan must be formally contemplated for family members and workers who do not belong to it.
In this type of company, the role of the owners-owners, bosses and directors will be relevant to help the family maintain unity and discipline, while confidence among its members and money in the family grows in a model of strategic operation based on unity, respect and adherence to family values rooted in the company.
5. Life and Career Plan
For family businesses the life and career plan that is used for any other company is applicable, the key is how the manager-owner, bosses and directors are going to carry it out, below is an outline:
The term “career” can be defined as a series of events in the professional life of an individual within an organization, but, nevertheless, “planning life” due to the magnitude of the responsibility that it implies, is a task of the which only with proper development can be successfully carried out. According to Edgar Schein, the race can be seen from two perspectives:
- The career seen as a series of attributes and experiences of the individual, who joins and moves through an organization. The career as defined by the organization: a series of expectations of the individuals within it.
French life and career planning is designed to empower people to focus on their career and life goals and how they can go about achieving it. Structured activities lead to career and life inventories; discussions of goals and objectives and determination of capacities, necessary additional training and strong and deficient areas.
5.1. The role of the manager
On the other hand, and according to the Dictionary of the Royal Spanish Academy, directing has, among others, the following meanings: to straighten out, to straightly take something towards a designated term or place; guide, showing the signs of a path; direct intentions and operations towards a certain end; govern, rule, give rules for the management of a dependency, company or claim. This meaning is applicable to traditional companies, since the managerial term is applied to the people located at the top of the same: the owners and managers. On the other hand, in modern thought, strictly speaking, all the members of the company or organization are managers because they all direct it towards the fulfillment of the respective vision and mission. (Arias, 2000)
The manager of the future will be increasingly required to put into play all his faculties and human potentials, as well as to foster the flourishing of those of his associates. This is one of his greatest challenges. Therefore, the intention in delineating the profile of the professional or manager of the future is to place the emphasis on such comprehensive training.
The theoretical and conceptual contents regarding occupational and professional knowledge cannot be ignored. However, they are not enough to successfully solve the tremendous challenges of the future (and the present). Rather, all human beings, especially professionals, are required to be able to bring forth all their faculties in order to make it more fruitful.
Such claim implies substantial modifications to the current way of working as well as teaching and learning. Participation methods will be required where workers and professionals learn equally the contents, skills and values linked to reality.
It is almost an unquestionable truth to affirm that the greatest challenge faced by the manager of the future, as well as by companies and organizations, will be precisely that of developing all the human faculties and potentials within the organization in order to make it more competitive. A company or organization that does not invest heavily in preparing and retaining its human talent cannot achieve this name.
5.2. Characteristics of the life and career plan
The characteristics of the life and career planning process, like all important administrative tasks, must have some basic characteristics:
- Starting from the strategic planning of the organization; that is, of the overall plan of the same in the short and long terms. Have the support and commitment of senior management. Be orderly, systematic and logical. Be continuous. That is not a flash, that is to say something of the moment, but a constant concern. Agree with the environment: idiosyncrasy of the human factor, technology used, markets, labor legislation, that is, the economic-social environment.
If we talk about the life and career planning process and that we will be developing the human factor to contribute to the success of the organization, we can say that the development of the administration is the planned experience, the predicted growth and the training opportunity that is given to the people who perform administrative functions; therefore, the career plan that a company establishes for its employees is part of the development of the administration.
Management development is, or should be, exactly what its name implies. Administration means planning, organizing, integrating, directing and controlling the elements that make up a company, and development will be represented by the planned opportunity to receive training, education, and directed and planned experience.
5.3. Life and career planning criteria
The criteria, which are considered to guide the life and career planning process of employees are as follows:
- Guide the way, personal and professional goals as employees within an organization. Reconcile and integrate personal and professional expectations with the expectations of the organization. Harmonize personal and professional development with the needs and demands of the socio-economic environment. Evaluate achievements and deficiencies, in light of the planning process. Permanently adapt the planning process to the changes and demands of the organizational and social environment.
5.4. Career routes
In the career planning process, 3 types of career paths can be distinguished, the use of which varies according to the size of the organization and the nature of the positions:
- Traditional route. An employee progresses vertically upward through a defined line of positions (promotion).Network path. When different positions require similar skills, form families of positions. The employee moves in horizontal and vertical directions alternately, as required. Dual. In which specialists choose to contribute their skills without sticking to the above routes and without necessarily being managers.
6. Conclusions
Undoubtedly, the professionalization, the life and career plan and the school education of the 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 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.
Establishing a life and career plan for family members and employees who work in the company is one of the first steps towards professionalization, which is important so that the company does not improvise and go aimlessly, since the bases of strategic planning, there is a clear vision that is shared by all family members and what is intended is that the management be objective and rational through the developed administrative process.
7. Bibliography
- Arias Galicia F. (2000) Human Resources Administration for high performance. Editorial Trillas, México.Belausteguigoitia, I. (2003): Family Businesses. Its dynamics, balance and consolidation. Editorial Mc Grawhill.Donnelley, R. (1964): The Family Business. Harvard Business Review Vol. 4 No. 2 Page 149Dyer, WG (1986): Culture Change in Family Firms: Anticiping and Managing BusinessGallo, 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. Granica Editions, Barcelona. Jossey-Bass Inc., Publishers. 160 Wendell L. French. Human Resources Administration Library, Volume I, II and III, Grupo Noriega Editores. P. 596.
