FB Newsletter Issue 03

7/25/2019 FB Newsletter Issue 03

1/9

Family businesses are often faced with situations wherethey would have to take an important decision that

affects the direction of the company, but at

the same time, have a direct impact on the

family integrity.

CLUB

Newsletter

Issue 03: Family Business Club12thFeb 2016

Inside

How Will The Future Unfold?

! MOVING ON:

Harilela Family

Group Case study

! Succession Talks

!Agency In Family

Business

! Cartoons & Jokes

! Word Search

!Video Skit

Family

Business

The Harilela family Group comprises a vast holdings in

hotels, restaurants, healthcare, food and beverage, real

estate, trading, travel agencies, stock brokerage,telecommunications, watch manufacturing and retail

stores. Back in 1922, Naroomal Harilela created a legacy

that was then passed through his eight sons, who would be

in charged on expanding and diversifying the activities of

the Group.. and whether they should bring non-family

members to top managerial positions.

Follow me to Page


2/9

Lorem Ipsum Dolor [Issue] :: [Date]

Integer metus.

Lorem.When a family run business comes to crossroad where they have

to decide on carrying on, selling or transferring the business, it

certainly helps if businesses have the following measures in place

from an early onset.

!Address Ownership

!Address Management Succession

!Have a written strategic Plan

!Clarified Goals along side the family Mission Statement

!Define Values

!Formulate Philosophies

Top Tips for Successful Business Transition

Im pretty sure daddy meant left the bulk of the business to me.

I was born 2 minutes earlier than you.

Everything the light touches is

yours

Everything the light

touches is yours


touches is yours


touches is yours

To Kid

1:

To Kid

2:

To Kid

3:

To Kid

4:


3/9

Lorem Ipsum Dolor Issue [#] :: [Date]

Stability: Family position typically

determineswho leads the business and as a result thereis usually longevity in leadership, which

results in overall stability within theorganization. Leaders usually stay in theposition for many years, until a life event suchas illness, retirement, or death results inchange.

Commitment: Since the needs of the familyare at stake, there is a greater sense ofcommitment and accountability. This level ofcommitment is almost impossible to generatein non-family firms. This long- term

commitment leads to additional benefits, suchas a better understanding of the industry,organization and job, stronger customerrelationships and more effective sales andmarketing.

Flexibility:You wont hear, Sorry, but thatsnot in my job description in a family business.Family members are willing to wear severaldifferent hats and to take on tasks outside oftheir formal jobs in order to ensure the

success of the company.

Long-term Outlook: Non-family firms think

about hitting goals this quarter, while familyfirms think years, and sometimes decades,ahead.

Family Conflict:Conflict is bound to happenat any firm, but add in long histories, familyrelationships, and the kind of contempt that

comes with familiarity, and the ante has justbeen upped.

Unstructured Governance: Governanceissues such as internal hierarchies and rules,as well as the ability to follow and adhere toexternal corporate laws, tend to be taken lessseriously at family businesses, because of thelevel of trust inherent at family firms.

Succession Planning:Many family firms lack

succession plans, either because the leaderdoesnt have the desire to admit that he orshe will, one day, need to step down, orbecause there is too much trust in the familyto work this out when it becomes necessary.

Nepotism: Some family businesses arereluctant to let relatives into the top tier, andthe result is that people are given jobs forwhich they lack the skills, education, or

experience.


4/9


Find some words that belong to the family business class

Can you do it in 60 seconds?


5/9

Lorem Ipsum Dolor Issue [#] :: [Date]

1. Harilela and his family

should stay in businessand sell all the other small

hotels.

v

Continued from page 1

The dilemma arises when the decision taken would benefit the

company, but undermine the family integrity, or in the other

hand, when a decision was based completely regarding only the

family interests and benefits could have a positive effect in the

short-term but a negative effect in the long-term.

For instance, during succession, the fathers concern would be to

let the company into the management of his oldest son or tobring a non-family member who knows how to manage the

business into a managerial position.

Our family business club here at Regents University engaged in a

mini-MICA activity, which analysed the dilemma faced by the

Harilela Group.

Students were asked to assemble into groups of four. They were

to come up with five reasons to keep the company and fivereasons to sell. Three out of the four groups wanted to keep it in

the family because it was viewed to be profitable.

Many thought that the next generation needed to reorganize andmake a formal structure of management. Also, bringing inoutside agents to help run the company was proposed.

The dilemma the Harilela family faces lies in the fact that all

the Harilelas involved in the business are already in a

retirement age, and still have an uncertain future for the

ownership and management

of the company. Although

Aron, one of Naroomals

grandson, has been involvedfor many years, the family

still disagree on the future of

the company, whether it should be put on sale or go public

and increase the activities of the group.

Possible Scenarios

1

2

3

Harilela and his family

could stay in business

with their current

structure and hope it

continues working

smoothly between

family members when

Harilela passes away.

Instead of selling the

business they could go

public and raise money

from it. They should also

appoint agents for the

business so that the

business runs smoothly.

Every individual can start

their own business from

the public proceeds or

they can keep it within

themselves.

Everyone should split

up amicably and do

different businesses to

avoid conflict that may

harm the family itself

4 If two individuals are

starting the same

business, there should

be clear rules about the

region in which one

may operate to avoid

conflict.


6/9


The burning question now begins: When

exactly is the best time to start having

SUCCESSIONTALKSwithin family members to achieve longer

life of the business without extreme family

drama getting in the way?

The cold truth is that nobody is invincible

and not talking about plans after

death is a big elephant in the room.

Succession Planning should start

with the two most critical pieces ofany organization's overall being:

Its Vision and its Values.

The peace of mind that comes with

Succession Planning is worth the time it

takes to institute these systems. Once the

systems are in place, updating them is

typically an easy task.

It is the gathering of this information in the

first place, and making sure theorganization is, to the greatest extent

possible, relying on systems rather than

individuals, that will make those

employee transitions less stressful.

Operational pieces like

What do you do? ,

Current job description,

Where is everything? ,

Calendar,

Critical relationships,

Rainmaking,

Redundancy,

Monitoringand asking the board for their

views and inputs are vital in order to set up

a system that works in the event that the

succession elephant in the room talk

never happens before the exit of a key

member of a family business organization.

(Continued)

So? Who best fills the

shoes?

This activity allowed students to explore

and understand what various problems

are facing family businesses both

successful and unsuccessful.

Even where there seems to be

harmony as in the case of Harilela

group, there can be fresh

unanticipated conflicts between

individuals of the family when a

tragic occurrence like the death of

the founder occurs. Lossis an example of

emotional trigger that could generate all

kinds of conflict that no one dared to

voice out before due to the presence of

the founder who was there all of his

working life keeping things together.

Questions like how theshares

should bedistributed among the family members

will need to be addressed.Also when there is loss of the Karta i.e

founder, underlying personality traitstend to surface and thus adversely affects

the relationship in the family andultimately the business.

As part of the third week topic in the

Family Business club:Agency

Resource-Based and Systems

Theory Perspective, a group of

students performed a Skit that

allowed the group to identify the

importance of decision-making

within family-owned businesses in a

real life situation, as well as to

analyse benefits and disadvantage of

altruism and agency in a family

business.


7/9

Lorem Ipsum Dolor Issue [#] :: [Date]Cartoons

SCENE

1

SCENE

2

SCENE3

2

1

3


8/9

Lorem Ipsum Dolor [Issue] :: [Date]Cartoons

Possibilities when an agency is not employed in

Famil Business

Possibility1

Possibility2


9/9

We hope you

enjoyed reading this

article. Thank you

Produced by the Family business Club

for Regents University PRContent and Design by Week 3 Newsletter team:

Amara Kanu, Kirill Polyanskiy, Alex Schupp and

Devyani Pawar.

European Business School London

Date:12 Feb 2016

Click on the

YouTube linkbelow for

highlights from our

class performance

and dont forget to

give us thumbs up

if you like what you

see. Happy

viewing!https://youtu.be/tXDgKwUN4gk

Documents

FB Newsletter Issue 03