Empowering the Future of Family Business a Four-Part Article Series of Research-Based Practical Insights

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Empowering the future of family business A four-part article series of research-based practical insights

May 2021

home.kpmg/privateenterprise thestepproject.org Empowering the future 01 of family business

About the STEP 2019 Global 02 Family Business Survey

04 The courage to choose wisely

The power of women in 24 family business

Creating value through 42 good governance

The enduring legacy 64 of business families

Family business 78 profiles Table of 118 Methodology note contents 121 Acknowledgments Family Business 121 leaders

STEP Project Global 121 Consortium

122 Case study authors

KPMG Private Enterprise 123 member firms

About the STEP Project 124 Global Consortium

About the KPMG Global Center of 124 Excellence for Family Business

124 About KPMG Private Enterprise

125 Editorial board

A four-part article series of research-based practical insights

hether you are a first-generation founder One of the important factors we have identified is with a successor in the wings or a fifth- related to demographic changes that are influencing Wgeneration family enterprise, many the career opportunities and choices of many family important choices and decisions lie ahead for your members. Some have grown up in the family business and your family — and those businesses of business and it is part of their DNA. For them, joining every age and stage in between. the family business is a clear choice. For others, that path may not be so clear. What do your family members really want from the business? What aspects of your business should you We wanted to understand how the impact of keep and what should be changed or let go? What changing demographics may be influencing the are the skills that you will need to take the business steps that family businesses are taking to sustain in a potentially new direction and who has those their growth, vitality and competitiveness. Insights skills? How do you choose a successor who is right into this question were captured initially in the for today and for the foreseeable future? What are the STEP Project 2019 Global Family Business appropriate family governance structures that need to Survey. More than 1,800 family businesses be in place to sustain your business success across across the globe contributed to the survey. The generations? And how can you make sure that those data analysis was then complemented by candid leading the business will sustain the family’s values personal interviews with 37 business leaders from and sense of purpose to protect the family’s legacy? every region of the world, who described their firsthand experiences. The Successful Transgenerational Entrepreneurship Practices (STEP) Project Global We are pleased to share these experiences in the Consortium and KPMG Private Enterprise have four co-authored articles included in this collection. come together to showcase the experiences and Each article addresses the ways in which multiple actions of the leaders of all types of family businesses generations within families are having an influence on throughout the world, at different generational stages, critical decisions about succession, governance and who are addressing these and many other questions. sustaining the family’s legacy, as well as the changing Both of our organizations have bridged extensive role and impact that women are having in family family business research and active involvement with businesses. family businesses globally to deliver practical insights and guidance on the actions that many leaders are Here are a few highlights from each article to spark taking to empower the success of their businesses. your interest in reading further.

Andrea Calabrò Tom McGinness STEP Global Academic Director, Global Leader, Director, Family Business, IPAG Entrepreneurship & Family KPMG Private Enterprise, Business Center, Partner, IPAG Business School KPMG in the UK

Throughout this document ‘We/Us/Our’ means KPMG and the Successful Transgenerational Entrepreneurship Practices (STEP) Project Global Consortium. ‘KPMG’ refers to the global organization or to one or more of the member firms of KPMG International Limited (“KPMG International”), each of which is a separate legal entity. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. For more detail about our structure please visit home.kpmg/governance. © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. The views and opinions expressed herein are those of the interviewees and do not necessarily represent the views and opinions of KPMG.

Empowering the future of family business 1

2 About the STEP 2019 Global Family Business Survey

Encouraging studies have examined Family business leaders have emphasized Family business leaders emphasized that women’s changing roles over the years. that it was essential for them to have business and family legacies are not only However, studies that examine the future formal governance practices in place about looking back at what is valued from a of the role of women in family businesses as their companies grew and matured. business and family point of view, but also are sparse and fragmented. We have The time came when it was necessary about looking forward at what motivates found that changing demographics to create appropriate formal structures families to want to continue to build on are creating new roles and leadership to make sure that checks and balances that value through future generations. opportunities for women in family were in place for the business to scale businesses, demonstrating the value and up successfully. Likewise, good family Key takeaways influence that women are contributing. governance practices were a key factor • Connective tissue: Legacy is in fulfilling the family’s purpose and what binds the core purpose of the Key takeaways creating value for customers, employees, business, the family’s values and shareholders and their communities. • A fresh mindset: There is a need to meaningful achievements across change preconceived notions and multiple generations. Key takeaways outdated mindsets regarding the roles • Continuous improvement: When of women in the family business. • The need for alignment: Family legacy is leveraged as a means governance works hand-in-hand with • Resisting stereotypes: Women in to learn from the past, it creates corporate governance, but it has its family business are assuming key continuous improvements in own unique purpose and value. leadership roles, including those business processes, while also that would be in traditionally male- • Conflict esolution:r An effective strengthening the emotional dominated industries where these governance framework that includes connection between the family and women are succeeding communications protocol and conflict the business. and prospering. resolution processes is often used • Developing future successors: to provide a neutral mechanism for • Transforming leadership: Women Next-generation family members recognizing and resolving conflicts often have a transformational who consider preserving the and promoting family harmony. leadership style and a unique outlook family legacy as a moral obligation that makes them highly effective • A flexible framework: While are encouraged to be involved in holistic managers and leaders. governance rules may impose the business early, fuelling their restrictions on the actions of the intention to take on the business • Succession choices: As future business and the family, they need to reins in the future. generations become more involved be flexible enough to allow managers in the family business, succession • Gift or obligation: While the legacy and family members to pursue new decisions are increasingly being driven that is left for future generations is activities within the system. on merit, capability and willingness generally welcomed and accepted instead of gender or kinship. • Family first or business first: as a ‘gift’, it also comes with an Families that formulate family obligation to nurture, protect and employment policies illustrate grow it, which can be seen as a big what it means to be ‘family first’ responsibility for family members or ‘business first’. Fairness, who are expected to enter and lead transparency and consistent the business. execution are critical qualities of these policies.

We hope these highlights have aroused your interest in exploring the in-depth insights throughout the article series. We wish you great success in empowering the future of your own family business and look forward to receiving further insights and comments from your own experiences.

Empowering the future of family business 3

Why the succession decision may be a defining moment in your family business

Published: November 2020

n the midst of the hyper-accelerated reality we now face, planning for succession may not be top of mind. However, Ias you consider all the options for sustaining your business today and in the future, the succession process itself may be instrumental in sustaining the family business model for generations to come. It could, in fact, be one of the defining Tom McGinness Global Leader, moments in the history of your family business. Family Business, KPMG Private Enterprise, There is an indisputable power that lies within family businesses: Partner, an entrepreneurial mindset combined with the ability to master KPMG in the UK the speed of change. Rarely have these capabilities been more crucial than they are today, as the reality of COVID-19 makes it necessary to continue to expect the unexpected — to anticipate and prepare for the changes that undoubtedly lie ahead.

— Is your business fit for the future? — Do you have a successor in mind and at the ready? — Who could step in if needed? — And do they have the capabilities and interest in leading the way forward?

The power behind the family business 5

revious research has shown that can be embedded directly into your the transfer of ownership and contingency plans. P management control from one generation to another is one of the most Many family business leaders we spoke The important factors in the continuity of with echoed this view. As Mr. Alfonso company the family business and for preserving Urrea Martin, General Director of the functioned its family identity.1 The family business Tools Division of Mexico’s Grupo Urrea leaders we spoke with confirmed that told us, he was unable to manage his perfectly during conclusion. They told us that choosing business at the most critical moment my absence due the right leader at the right time will during the onset of COVID-19. Thanks to COVID-19, be one of the most critical decisions to the company’s well-established they can make to secure the continued governance structure and continuity thanks to the success of their business. plan, the right people were already structures and identified to step into his role, if it should governing bodies Rarely has contingency and continuity become necessary, and the systems planning been more important and were in place to make it happen. we had already family businesses have an enviable put in place at advantage based on a history of agility, “The company functioned perfectly during my absence due to COVID-19, the board level invention and resilience. Given the uncertainty every business is facing thanks to the structures and governing and among the today, we would suggest that this is bodies we had already put in place at the management precisely the right time to step back and board level and among the management committees. It is not clear that we committees. It is consider all the options for the future leadership and ownership of your family would have been able to continue so not clear that we business and how those questions smoothly otherwise.” would have been Alfonso Urrea Martin, Grupo Urrea, Mexico. able to continue so smoothly otherwise.

Alfonso Urrea Martin General Director, Grupo Urrea, Mexico

1 Kandade, K., Samara, G., Parada, M. J., & Dawson, A. (2020). From family successors to successful business leaders: A qualitative study of how high-quality relationships develop in family businesses. Journal of Family Business

6 Choosing the right leader — at the right time

hether it is created through There are certain situations in which the contingency planning or norms of national cultures can make W other succession methods, continuity planning and considerations a succession roadmap is an essential for an emergency succession difficult, I didn’t have guide for dealing with the unexpected. however. In many Eastern societies, for One family CEO told us, for example, example, it isn’t acceptable to talk about a choice. I had to that a dormant trust foundation has unexpected events that are related to run the business. been established in his family firm as an the health of the elderly. Since those umbrella over all the operational entities. topics are taboo, it is very difficult for I mean Sunday In the event that the family business family businesses to consider what was the funeral leader becomes incapacitated or passes will happen should an emergency away, the foundation will be activated. succession be necessary. and literally The members of the foundation fully Monday morning I understand that they will be responsible The insights we gained from family for ensuring that a new Chairman is leaders we spoke with made it clear, was at work… we appointed immediately to lead the however, that it only requires one case of could have been business forward. an unexpected succession such as this for the family to make sure it is prepared out of business Too often, however, family businesses to respond quickly in the future. in a month if I don’t have detailed contingency plans, with specific guidance as to who will That is not to say, however, that the wouldn’t have take control and keep the business choices are always easy or obvious in taken on the running. In fact, only 47 percent of the Eastern or Western societies. family leaders who took part in our study business. There had such plans. As a consequence, As Mr. George Vestey, CEO of the UK’s was really nobody the next generation often feels morally 125 year-old Vestey Holdings described obligated to take up the business reins, it, “Regardless of our intent, succession else to run it. even if they don’t want to or don’t have to the next generation is not a given. the skills and experience they may They have many choices outside the Family Business CEO need, they have no other choice but family enterprise and if they choose Scrap metal processing to be successful. One family business to succeed us, they will have to be as business, leader described his own unexpected interested and passionate about the United States succession situation poignantly. “I business as the four generations that didn’t have a choice. I had to run the have preceded them. More than ever, business. I mean Sunday was the however, we must make sure that we funeral and literally Monday morning I let our successors write their own was at work… we could have been out generational chapter if we want the of business in a month if I wouldn’t have family business legacy to survive.” taken on the business. There was really nobody else to run it.” Family business CEO, United States.

Preparing for the unexpected 7

any family CEOs concurred the Millennial perspective in this way, with Mr. Vestey’s “The generations coming behind us M comments, noting that have a different mindset — a different Millennial generation leaders are ecosystem — that isn’t right or wrong, having an increasingly important it’s just different. They are inspired by voice in the future direction of their different things, they are fast, machine family businesses and the choice of orientated and deeply involved in social a successor. They are being given media. To engage their interest in the more space at the management table family business and subsequently in to address increasingly complex leadership succession, there has to issues and opportunities, such as the be a psychological attachment. It’s accelerated digitization of business important for them to see that this is processes that are emerging globally. a business with a social impact and And when the intention is to keep the purpose and that’s what will continue business in the family, in some cases to motivate them.” next generation family members may be invited to join the business at an early As well, it is beginning to be age to begin grooming them for a future recognized that the emotional leadership role. attachment to the business may not be as deep for next-generation But many from the Millennial generation successors as it is with first- also come with a different outlook generation entrepreneurs whose life and business philosophy from their and business have often been deeply predecessors, as they seek greater intertwined. personal freedom and a better balance between life and work. In the view of Mr. Andy Wates, Director of Wates Group in the UK, the worst- Mr. Khalid Abunayyan, Chairman case scenario would be for a family of Abunayyan Holding Company in member to join the business and Saudi Arabia described his view of resent the family for ‘making them’

8 A new generational outlook for the road ahead

Khalid Abunayyan Chairman, Abunayyan Holding Company, Saudi Arabia

A new generational outlook for the road ahead 9

hese next generation be adopted in many non-Western successors can bring a fresh cultures. However, previous research T perspective that may transform shows that family firms experience some aspects of the family business higher post-succession performance and potentially uncover previously when they have the courage to unexplored opportunities that disregard primogeniture and make may redefine the identity of family their succession choices based on business down the road. It takes meritocracy. This is particularly true courage, then, to choose wisely when the business grows beyond the and remain receptive to new ways second generation.2 It takes courage to of thinking about the business make a different choice and we would — innovative ideas that could be suggest that this is due primarily to transformational and integrate the second- or later-born family leaders business mission with broader being less conformist and less inclined societal issues. to follow their parents’ business model of being more open to new experiences The policies and practices of different and tolerant of risk. nations can also play a major role in the selection process and, again, Even when family businesses break it takes courage to consider non- away from automatic primogeniture traditional alternatives. succession, it doesn’t necessarily mean that firstborn children aren’t able We were interested in hearing about to compete for leadership positions. some of the cultural differences It does suggest, however, that family described by our study participants decision-makers may need to create a in that regard. The use of the constructive competitive environment “primogeniture” rule for succession — a ‘horse race succession’ — among — choosing the first-born child to their potential successors on the path lead the family business — was one to identifying the best fit for the family of particular interest. In non-Western business’ needs and the successors’ collectivist cultures, such as that in personal needs. Peru, family CEOs confirmed that the primogeniture rule still holds. In the case of Chinese family businesses, many face a unique succession challenge In Western and individualist cultures, with only a daughter or a son to inherit the meritocracy is typically the main criteria business as a result of the one-child policy for choosing a successor. Where does programs. As ZHU Xuehao, the founder of nepotism end and protecting the family Hawk Filtration Technology (Shanghai) Co. legacy begin when primogeniture is the Ltd. in China has stated, he is fortunate guiding principle? since his only child is both willing and able to take over the family business. If that The survey results don’t conclude had not been the case, he would have whether or not primogeniture is been faced with having to train a non- good practice and it continues to

2 Calabrò, A., Minichilli, A., Amore, M. D., & Brogi, M. (2018). The courage to choose! Primogeniture and leadership succession in family firms.Strategic Management Journal, 39(7), 2014-2035.

1010 What is the wise choice?

We heard interesting points of view from family leaders regarding the factors that influence their succession intention and their choice of a successor, such as:

The potential lack of trust of parents in the childrens capacity to lead the family business family member to succeed him or to sell may decrease their intention the business outright. to pass the business to future In still other situations, there are family generations. CEOs who are not confident that their next generation family members have the capabilities or passion to drive the The next generation’s emotional business forward, despite the ideas and attachment to the business and energy they can offer. For example, a their own personal values and family business leader in Canada who goals will likely determine their is currently preparing for his retirement desire to be successors. told us he does not believe he will be succeeded by either of his sons. The youngest is actively pursuing a different career, while the eldest does not have, While primogeniture is not in his view, the ability to handle the necessarily the best practice, pressures of a management role. it is still widely adopted in non- “I think at the end of the day,” he said, Western cultures and less so in “the family succession will probably end Western cultures. with me.”

Andrea Calabrò STEP Global Academic Director, Director, IPAG Entrepreneurship & Family Business Center, IPAG Business School

What is the wise choice? 11

hile transgenerational succession intention may Wbe present within the older The generation’s plans, it might not necessarily coincide with the plans or abilities of company is the incoming generation. In that case, bigger than current leaders may choose a non-family successor to manage the business, us. We don’t while continuing to maintain the family’s want to stifle involvement through ownership. the company, As highlighted in a recent Wall Street Journal article, which cited the STEP so there will Project research,3 involving family probably be members in the business from one generation to the next is not always more outside a given. For any number of reasons, people coming children may not be as interested as their predecessors in picking up the in. reins. Both family business leaders and their potential successors have Michael Hoey important choices to make. Co-owner and Managing Director, For Michael and Gabriel Hoey, the Country Crest, current fourth generation co-owners and Ireland leaders of Ireland’s Country Crest, these choices lie ahead for them and for their successors. Country Crest is a leader in sustainable food production and the brothers would like to maintain ownership and management within the family, if that is the choice of their next-generation family members. While precise roles have not yet been defined, formal structures are already in place to ensure the continuity of the family’s sustainable farming practices. Those practices, combined with the family’s strong intergenerational values, are deeply embedded in the business and they will continue to be the foundation for Country Crest’s success for those who choose to lead it forward.

3 Wall Street Journal, ht t p s: / / w w w. wsj . co m/ art icle s/h ow-to-get-children-interested-in-the-family-business-11588986481

12 The freedom to choose

The family business leaders we met told us candidly about their own succession experiences and how the succession process can be improved for the next generation:

Next generation family members are learning from the past and are now setting up governance mechanisms to manage the succession process.

The use of trust funds is found to facilitate the succession process and to lead to more wealth accumulation.

Relying on an external party to manage the succession process is found to mitigate intra-family conflict in times of succession and to lead to a smooth succession process.

Tom McGinness Global Leader, Family Business, KPMG Private Enterprise, Partner, KPMG Private Enterprise in the UK

3 Wall Street Journal, ht t p s: / / w w w. wsj . co m/ art icle s/h ow-to-get-children-interested-in-the-family-business-11588986481

The freedom to choose 13

anding the family business Director of the Kuttukaran Group in over to a new leader, new India, told us that his family adopted a H management or a new owner family constitution in December 2015. is all-encompassing. It isn’t exclusively The following March, the Kuttukaran about the selection and development Family Trust was registered as part of of successors. It is equally about the succession plan to bring all the protecting the business brand and company shares under the trust. “In reputation, and retaining knowledge that way”, Mr. Paul said, “no individual to make sure that the business is family member holds shares that can be sustainable for years to come. It is also transferred at will. The intent is to help one of the most challenging experiences to bolster trust within the family and facing any leader, and most particularly enable future generations to develop an an entrepreneur who has built a family affinity for the Group and maintain the business from the ground up. Kuttukaran family legacy.”

Family businesses with well-established Families generally understand the contingency and succession plans importance of starting the succession take into account the readiness planning process early to get it right, and and developmental needs of family to view a good succession plan as the members who are the most likely first step in maintaining the business’ successors. Often this includes an strength and the family’s prosperity for educational foundation, complemented generations to come.4 by direct business experience gained at various ages and stages in the family However, while this type of disciplined members’ lives. planning is generally accepted, we gained a surprising insight from our To facilitate this process and minimize CEO conversations. It appears that, the intra-family conflicts that even when the selection of a successor sometimes arise during succession is considered to be important, family planning deliberations, family businesses that are led by members businesses are turning increasingly to of the silent generation (born between external parties to guide and manage 1925-1945) or the baby boomer the process and help to minimize generation (born between 1946-1964) potential intra-family conflicts. External have not yet devised a succession plan. parties provide an independent point of view to facilitate productive This is concerning. It is not only a discussions among family members potential impediment to the smooth and guide them through well-tested transition and continuity of the frameworks and processes to produce business; it is also a disservice to the a personalized succession solution. successor who is ultimately required to assume the leadership role. For example, in order to keep up with the demands of the business as well as As the current CEO of a family business the family, Mr. John K. Paul, Managing in the Netherlands explained to us,

4 KPMG, Succession in family business: start early. https://home.kpmg/au/en/home/insights/2017/02/succession- planning-family-business-start-early.html

14 The discipline of succession

To get succession right, we believe there are a few important considerations for transferring management, control, ownership and equity from one generation to the next, all of which are in the best interests of the business and the family.

Know what the business needs

Many family business owners assume succession planning centres on who will run the business his grandfather had difficulty giving up when they step down, but a broader perspective is control and preparing another family necessary. The founder and the board or advisors member to assume the leadership need to consider where the business is in its lifecycle of the business. This led to ongoing and what kind of leader or leaders it needs to progress. confusion throughout the family — as well as the business — as the structure of responsibility and decision-making Protect the brand remained unclear for several years. “When my father and his brother succeeded by grandfather, he says, Many family businesses are built around a personal “they really went through a terrible time brand and may even be named after the founder. It’s together. My grandfather could never important to retain the brand’s essence and evaluate completely let go of control. It really how well it fits with the current business model. held back the growth of the firm, but also the personal development of the successors in that period. My father told Maintain financial confidence me that he didn’t want me to have the same experience and that he needed to give me an opportunity to take a position When planning for the future, family enterprises as a senior business leader and make must decide who will be in charge from a financial room for me to develop myself.” perspective, as many investors and banks consider the individual behind a family business to be a critical factor Many current-generation successors when making decisions on current and future funding. have learned important lessons from They need to have confidence that there continues to experiences such as this, and they are making every effort to make sure that be strength in the business. proper succession processes are in place for the next generation in order to avoid repeating the mistakes of the past. Retain legacy knowledge

Mr. Andy Wates, Director of Wates Group in the UK, explained the The continuation of knowledge is as important as succession process in his family leadership and financial succession. That knowledge business. The Group retained external is often one of the business’s key competitive family governance advisers to assist in advantages and should be documented and planning the succession process from communicated throughout the business and the the third generation to the fourth. The family. plan was implemented 12 years ago, and third-generation family members continue to be active in the business. Document the plan For future successors, Mr. Wates suggested that it will be important for his business to establish a firm end-date Finally, when a succession plan is developed and for the transition to his own successor. agreed, it must be explicitly articulated and formally documented among family.

The discipline of succession 15

he succession plan is in place. house. I’m conscious of the fact that How, then, do family leaders we all have to prepare for that day and Tdecide when it’s the right time to the worst-case scenario would be to retire fully — or partially — or to assume Deciding have that decision forced upon you. For a new role in the family business? me, it is important to understand that when it is time for my role will change from the day-to-day me to retire is a very We were somewhat surprised to learn running of the business to becoming difficult question. The that 53 percent of the family business a coach to the next generation of our family business has leaders in our study do not have a family leaders who will keep alive the formal retirement plan, making the path been my life, it’s my legacy that was built by my father and uncertain for their potential successors later by my generation.” passion and I have and for the future of the family business. likely spent more One cautionary note with regarding hours in the office For those who do have a retirement plan, advisory roles, however. In some cases, than in my house. I’m the research tells us that family business although parents claim to have advisory leaders whose primary objective is to conscious of the fact roles and consider themselves to be enjoy life and achieve financial security only marginally involved in the business, that we all have to for the family plan to retire fully from next generation successors may not prepare for that day business management. Some even see it that way. They might perceive and the worst-case consider selling their businesses their parents’ involvement as controlling scenario would be outright.5 This insight is surprising, behavior and a lack of trust in their to have that decision because it is in stark contrast to the ability to run the business. The previous traditional thinking that family business forced upon you. For generation’s unwillingness to retire founders rarely leave their businesses without leaving the company business me, it is important to because they derive so much fulfillment completely often makes it difficult to understand that my and personal identity from it. truly delegate authority to the next role will change from leader and for new leaders to escape the day-to-day running From the same research, we find that from their predecessor’s shadow. leaders who continue to be passionate of the business to about their work rarely think of As a family CEO in France pointed out, “I becoming a coach to retirement and look for alternative ways am starting to realize that my presence the next generation to stay involved in the family business. in the company can be detrimental to my of our family leaders Some don’t have a planned retirement sons’ ability to make their own names. who will keep alive age at all or they remain partially They surely must think that, given the legacy that was involved in the business through board that father is in place, we should not membership or an advisory role. built by my father contradict him.” and later by my As Mr. Khalid Abunayyan, Chairman Indeed, having little or no autonomy generation. of Abunayyan Holding Company says to make strategic decisions for the “Deciding when it is time for me to company, they may be concerned retire is a very difficult question. The Khalid Abunayyan about not being able to escape their family business has been my life, it’s Chairman, father’s shadow. my passion and I have likely spent Abunayyan Holding more hours in the office than in my Company, Saudi Arabia 5 Akhter, N., Sieger, P., & Chirico, F. (2016). If we can’t have it, then no one should: Shutting down versus selling in family business portfolios. Strategic Entrepreneurship Journal, 10(4), 371-394.

1616 When is it time to pass the baton?

Family business leaders discussed their retirement plans and told us their decision would be influenced by several personal and family factors. These are some of the themes that are behind their decisions:

Leaders who continue to be As we look down the road and consider passionate about their work in the retirement plans of millennial leaders, we may uncover a different the family business often aren’t picture of retirement altogether. actively making retirement NextGen business leaders are highly plans. educated and they’re motivated to deliver, however, they are not likely Family business leaders whose going to lead in the same way as their predecessors. They are more focused primary objective is to enjoy life on achieving work/life balance, for one and achieve financial security thing, and they plan to retire prior to their for the family are more likely 50th birthday — not their 70th, 80th or 90th. to retire from their business One of our family business leaders completely and may even explained this well: “I am not going to work until I am 90 years old just as consider selling the business my father did. I think about taking a outright if it provides the family Sabbatical year, in opening my mind with the financial support they towards other things, other investments, because being all day in the company may need. does not let you see the world. One has to go out and see what is happening Millennials may plan to retire with other companies. I want to let the much earlier than previous new generation do the day-to-day work generations if they perceive here. They are very good at it.” Mr. José Manuel Suso Dominguez, CEO, Arrocera that their work in the family la Esmeralda, Colombia. business is stressful or is

We even encountered a 33-year old making them miss out on life. family business owner who is already contemplating his retirement. It has nothing to do with his age, but by the amount of stress he experiences in his Andrea Calabrò work and a desire to pursue a personal STEP Global Academic Director, dream away from the business. Director, IPAG Entrepreneurship & Family Business When considering the future Center, leadership of the family business, IPAG Business School understanding the likely timespan for this next generation of leaders will be as important as their needs and expectations. If millennial leaders are planning to retire much earlier than those before them, early succession planning will become even more critical.

When is it time to pass the baton? 17

he research literature defines an reflection of the principle that having exit as the process by which the children can increase a leader’s desire T founders of family firms leave the to pursue ‘socioemotional wealth’ for business that they have established by the family — the emotional value that giving up some or all of their ownership the family derives from owning and and decision-making power.6 managing a business.9

The theory of self-determination7 A decision to sell the business is suggests that a leader’s underlying also affected by the expectation of motivation will affect their willingness the potential conflicts that might to continue working and remain occur among family members when committed to the business. According the business moves to the cousin to this theory, the level of trust in the consortium stage. In cases when the next generation’s capacity to lead the business reins could be handed to a business is essential for their leadership third generation that includes several development8 and whether or not they cousins who are responsible for the are motivated to assume control. management and operations of the business, a “pruning of the family The next generation’s interest and tree” might be necessary. In cases capability also has a direct effect on such as this, the business is often the current leader’s decision to keep bought out and owned by a single or sell the business. Family business nuclear family — as opposed to the leaders recognize the significance and extended family of cousins — or it’s importance of the next generation’s sold to an external party. willingness to take the business forward and to be committed to its Without children, the desire for success. Many have stood in those socioemotional wealth is diminished same shoes earlier in life. They also and the current leader is generally less recognize that an exit strategy may committed and attached to maintaining be the best option if willingness and the family ownership of the business. commitment are missing. Whether forced or planned, family Our research suggests that the desire businesses are not always able to to keep the business within the family pass the leadership or ownership of is highest when the current leader their business from one generation to has offspring. Without children, the next or to other members of the family CEOs are more inclined to sell family. Succession planning presents the business and enjoy the financial a different array of choices for the rewards of their exit. This may be a transition in these cases, including:

6 DeTienne, D. R. (2010). Entrepreneurial exit as a critical component of the entrepreneurial process: Theoretical development. Journal of Business Venturing, 25(2), 203-215. 7 Deci, E. L., Olafsen, A. H., & Ryan, R. M. (2017). Self-determination theory in work organizations: The state of a science. Annual Review of Organizational Psychology and Organizational Behavior, 4, 19-43. 8 Kandade, K., Samara, G., Parada, M. J., & Dawson, A. (2020). From family successors to successful business leaders: A qualitative study of how high-quality relationships develop in family businesses. Journal of Family Business Strategy. 9 Gómez-Mejía, L. R., Haynes, K. T., Núñez-Nickel, M., Jacobson, K. J., & Moyano-Fuentes, J. (2007). Socioemotional wealth and business risks in family-controlled firms: Evidence from Spanish olive oil mills.Administrative Science Quarterly, 52(1), 106-137.

18 Knowing when to exit

The business leaders we met told us that it is not always possible to achieve a transgenerational succession and other options — even exit strategies in some cases — have to be explored. Here are some of the reasons why:

The desire to exit the business — Remaining as the owner but giving tends to increase when current leadership and management roles to family business leaders do not a non-family member. have children. — Relinquishing ownership through a third-party trade sale or private equity investment or buyout. Lack of trust in the capacity of — Raising capital through an IPO. the offspring to lead the family business or the willingness and — Relinquishing all or partial ownership through a management buyout. motivation of the next generation to continue to take it forward. Family business CEOs who choose any of these exit strategies do not do so lightly. The anticipated conflict between family members at the time of succession when the family business reaches the cousin consortium stage will be positively associated with the decision to exit the business.

Tom McGinness Global Leader, Family Business, KPMG Private Enterprise, Partner, KPMG Private Enterprise in the UK

Knowing when to exit 19

hen a family business leader fails to engage successfully W with the next generation, In the ‘old or if the right successor cannot be found, or if the family council is unable days’, the successor to be organized effectively, a pragmatic got a tap on the decision is often made to recruit the shoulder. Today’s best non-family executive possible, while maintaining the interactive generation, and the connections between the business next, won’t buy into and the family. This might require that. If upcoming strengthening the capability and participation of the ownership group to generations are reflect the ‘familiness’ of the business impressed by our alongside a non-family executive who family businesses, shares the family’s values. if they see a role where they can have an impact and get personal Who will succeed satisfaction and enjoyment from the you? work we do, THEN they will be able to see themselves he family business leaders in playing a role in its our study told us that choosing future. The approach T the right successor will, indeed, be their most important legacy and for getting them a moment of personal pride. It will to that destination be built upon an important historical won’t be a tap on foundation, deep family values, a passion for what the business does the shoulder. and what it stands for and the impact it has on people and society. George Vestey CEO, The continuity of the family business Vestey Holdings, and preserving its family identity United Kingdom depends on it.

20 Looking beyond the family

e learned a great deal from the family business are becoming our CEO conversations. We increasingly diverse. From the family’s W believe there is an evolution role in managing the core business, taking place in the world of succession to ownership of company shares, Our business that is aligning the overall purpose of the membership on the board and active is a process-driven family business with the motivation and roles in the philanthropic activities of a machine. For the next beliefs of NextGen leaders. family foundation — all are meaningful generation, different considerations for succession planning. Wates Group Director, Mr. Andy Wates, platforms will be Perhaps this the beginning of a newly described it this way: “Our business defined reality of what “family business required to give them is a process-driven machine. For the succession” looks like? as many options as next generation, different platforms possible, especially will be required to give them as many We hope you have enjoyed this first for those who have a options as possible, especially for those article in our series, focusing on family strong entrepreneurial who have a strong entrepreneurial business succession. In what could become a defining moment for your orientation. Next orientation. Next generation family members are being encouraged to be family business, we hope we have generation family involved in the activities of the Wates reinforced and provoked your thinking members are being Family Enterprise Trust, for example, regarding succession questions you encouraged to which provides an opportunity for may be contemplating: be involved in the them to get their feet under the family — Being prepared to expect the activities of the Wates business table and become directly unexpected by weaving succession Family Enterprise involved in deciding how, as “good plans into the fabric of your business owners”, the money from the Trust is contingency planning. Trust, for example, allocated for societal impact.” which provides an — Understanding that the next opportunity for them to A similar view was echoed by Mr. Filipe generation’s outlook may not be the get their feet under the de Botton, Chairman of Logoplaste in same as yours — not good, or bad, Portugal, who described the family’s just different. family business table progression from a family enterprise to — Recognizing that future generations and become directly a high-functioning enterprising family. may be looking for an enhanced of involved in deciding He described family members who purpose in the work of the family how, as “good owners”, are engaged in the firm’s philanthropic and of the business. the money from the projects, running the Family Office, Trust is allocated for board membership and diversification — Having the courage to choose wisely in business endeavors that are by selecting the right successor at societal impact. well outside the parameters of the the company’s original core business. right time. Andy Wates — Considering succession options Director, This suggests that efforts to engage beyond the family. Wates Group, next-generation family members in United Kingdom

22 The evolution of the family enterprise

Family businesses have a wealth of experience and unique insights to share and we encourage you to learn more about some of the families who contributed to our study and helped to bring these insights to life. You can explore the stories behind the families on the KPMG Private Enterprise website.

The next three articles in our series will take a close-up look at the impact of changing demographics on societal impact, professionalization of the business, including entrepreneurial orientation and finally, legacy. And, as always, we welcome your feedback on this information and invite you to share your own perspectives and experiences with us and for the benefit of family businesses across the globe.

The evolution of the family enterprise 2323

A generational shift in purpose and influence

Published: November 2020

Yashodhara Basuthakur o begin, we believe it is important to acknowledge that Research Associate, the increasing number of women in the workforce Thomas Schmidheiny Centre for has been one of the most significant changes in Family Enterprise, T Indian School of Business economies throughout the world in the last 40 years. Women have assumed leadership roles in industries as far-ranging as automobile manufacturing, mining, construction and advanced technologies.

Currently, 18 percent of family business leaders globally are women, with the highest percentage belonging to family businesses in Europe and Central Asia. And while Andrea Calabrò the numbers are generally lowest in North America, recent STEP Global Academic Director, statistics compiled by National Bank of Canada12 show that Director, 13 percent of the 38 companies in its 2020 Canadian Family IPAG Entrepreneurship & Family index are led by a female chief executive versus five percent Business Center, IPAG Business School among S&P/TSX composite-listed companies.

In some cases, women have traditionally played a somewhat ‘invisible’ role in their family businesses, working behind the scenes in administrative duties, as informal advisors and moderators or focusing exclusively on managing their households.

Mary Jo Fedy No one said it would be easy to break away from those National Private Enterprise Leader, traditional responsibilities. The very nature of the family KPMG in Canada business culture and the multiple roles that female family members typically play has helped to keep the glass ceiling intact for some women who continue to have these dual roles, doubling their efforts in the business as well as in the family.

Kim Schoepflin, CEO of Kwatani in South Africa describes it this way: “You are expected to dedicate yourself to the Karmen Yeung National Private Enterprise Leader, business, be a perfect mother and caretaker, be home early KPMG China and still finish the job. My father used to say, ‘you’d better leave the office by 5:00 because I don’t want you going home late’. He was concerned about the care of his grandchildren, but you still have to finish the job. Behave like a mother, but make sure the business is being well run.”

Even as cofounders and co-owners of the family business, women were often found on the sidelines, facing similar Tom McGinness challenges related to gender discrimination and stereotyping Global Leader, Family Business, KPMG Private Enterprise, Partner, 12 National Bank of Canada, “The Family Advantage — Fall 2020” h t t p s : //w ww. b nc. c a / c ontent/dam/ KPMG in the UK bnc/a-propos-de-nous/salle-de-pr es se/2020/study-the-family-advantage-national-bank-2020.pdf

Emerging from the shadows 25

© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. © 20202021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. to those found in the broader corporate we are husband and wife. We even use world. Though they may have some different family names so that we are not involvement — and certainly an interest positioned as ‘husband and wife’ inside — in the family business, women’s efforts the company. Otherwise, employees and My and contributions have not always been customers talk to me differently — as the husband and I recognized or acknowledged in an official CEO’s wife and not someone who has the run this company position or with monetary benefits. Often, ability to help solve their serious technical they assumed less visible roles as informal issues.” Female family business co-owner, together and we advisors or performing accounting or Chemical processing, Russia. do not promote administrative work. the fact that we Family business women have an Many women interviewed shared the opportunity to step up and change this are husband and view that unconscious bias continues to mindset by shifting their own mental wife. We even use lie beneath the surface in some areas of framework when they enter the business. different family modern society. And because people are In the view of Margaret Hirsch, Cofounder not able to see bias, it is imperative to and Executive Director of Hirsch’s in South names so that we call it out. Africa, are not positioned “Too often, women want everyone to as ‘husband The women family business leaders like them and they go into their business we spoke with generally agreed that or a workplace with that attitude. At the and wife’ inside legislation and mandatory quotas are not end of the day, they’re taken advantage the company. the answer, however. While they believe of because of that attitude. It’s difficult Otherwise, that quotas create greater awareness to stand your ground when you want to of bias and stereotypes and can be a be nice — even when you know it’s the employees and starting point in countries where gender wrong thing to do. That’s where doing the customers talk to equality is not yet a cultural norm, none right thing and doing things right comes in. me differently — of the women we spoke with are in You have to stop and ask yourself, ‘what favor of forcing rules and programs onto is the right thing?’ As women, we have to as the CEO’s wife companies. resist the need to constantly nurture and and not someone say ‘this is a business and what is the right who has the ability Previous research has shown that gender thing to say or do?” stereotyping is often reflected in the to help solve their roles and decision-making tasks that are Many also believe that raising awareness serious technical handled by each partner in the business. is a good starting point to encourage more issues. Even when their credentials are equal to, participation of women on corporate or better than, those of their husbands’, it boards.14 There is recognition that society isn’t uncommon for women to discover is changing, as is education and children’s Female family business that other businesspeople bypass upbringing. As Jodi Bloomer, the Millennial co-owner them and look to their spouses for final generation Cofounder and Chief Business Chemical processing decisions.13 Sometimes, this is based on Development Officer of Canadian Fiber business, the misconception by the outside world Optics Corp. explains, the goal of her Russia that women hold positions in the family young company is to create a culture business only because they are married to where everyone can ‘do what they do, be — or related to — the ‘boss’. who they are and do it well.’ “This goal was at the center of my own upbringing,” she In some cases, this phenomenon has said. “This is how my parents raised me even led women to disassociate their and my sister. They weren’t training us to identity from that of their husband in join the business but they did everything order to claim authority and establish possible to make sure we could achieve themselves as business leaders. As one our full potential by doing things well and female co-owner and an active member of in an authentic way by being who we are. her family’s business described to us, “My What we chose to do was completely up husband and I run this company together to us.” and we do not promote the fact that

13 Cole, P. M. (1997). Women in family business. Family Business Review, 10(4), 353-371. Equal Measures 2030. (2019). 2019 EM2030 SDG Gender Index. Surrey, United Kingdom. Retrieved from h t t p s:/ / d ata. e m2030. org/ em2030-sdg- gender-index/ on July 24, 2020 14 Samara, G., Jamali, D., & Lapeira, M. (2019). Why and how should SHE make her way into the family business boardroom?. Business Horizons, 62(1), 105-115.

26 Emerging from the shadows

Some of the key insights from the research demonstrate that women Too often, women and men have an opportunity want everyone to like to work together to remove them and they go into their stereotypes and engender greater business or a workplace diversity in family business. with that attitude. At the Both men and women end of the day, they’re taken contribute to gender advantage of because of stereotyping and they need to that attitude. It’s difficult to work together to clearly define stand your ground when their roles and responsibilities you want to be nice — even and communicate them to all when you know it’s the stakeholders. wrong thing to do. That’s where doing the right thing Families should actively socialize and doing things right both women and men from an comes in. You have to stop early age to garner know-how and ask yourself, ‘what is of the business and pursue the required education and training the right thing?’ As women, to prepare them for a career in we have to resist the need the family business. to constantly nurture and say ‘this is a business and what is the right thing to say While quotas are not the answer for achieving greater gender or do? diversity, they can be a starting point for creating new female Margaret Hirsch role models. Cofounder and Executive Director, Hirsch’s, South Africa Organizational practices and policies are required that promote fairness and minimize bias.

Dr. Nupur Pavan Bang Associate Director, Thomas Schmidheiny Centre for Family Enterprise, Indian School of Business

Emerging from the shadows 2727

ue to the influence of societal firm and to the family with sensitivity bias and cultural or family to individuals’ needs and a decision- D traditions in some areas of the making process that is based on My mother world, women may be consciously or instinct, intuition and evidence. In inadvertently consigned to the role an interview with the members of a was the guiding of ‘chief emotional officer’. In this traditionally patriarchal family business principle for the hidden ‘CEO’ role, they take care of in Canada, for example, they noted family and the the emotional needs of the family, that one of the key roles of the co- keeping the family together and owner and wife of the CEO is to make entire company. perpetuating the family’s values and customers and other outside parties She was the traditions to the next generation.15 feel as if they are part of the family. mother of the In the words of one family business leader, “My mother was the guiding As a mother, aunt and daughter, company, not principle for the family and the entire Margaret Hirsch believes that women just our mother, company. She was the mother of play all of those roles in their families and everyone the company, not just our mother, and take nuggets of wisdom from and everyone was clear that as long each of them to feed into the business. was clear that as as she was there, everything would “Those nuggets help you learn how to long as she was continue to run and we didn’t need think on your feet,” she says, “and to there, everything to worry.” Family Business CEO, handle a whole range of business and Mechanical engineering, Germany. personal situations all at the same time. would continue to The multiple family and business roles run and we didn’t The segregation of roles based on complement each other and generally need to worry. gender — both at home and in business make women more flexible and adept — can be traced back to the industrial at handling a wide-ranging number of revolution. While men were associated different situations.” Family Business CEO with traits such as independence, Mechanical engineering, autonomy, success and achievement, It also means that women can be Germany women were generally classified as faced with role conflicts and dilemmas nurturing and caring. Some of this in which they must balance their gender bias continues today, even when obligations at work and at home. While it isn’t conscious. this is clearly challenging, we heard an interesting point of view from several Traditionally feminine characteristics, of our interviewees who told us that, such as loyalty, concern, sensitivity to based on their family experiences, the needs of others, problem-solving they have learned the ability to juggle and conflict resolution genuinely many things at the same; that having reflect a holistic leadership style for multiple roles in their business and women and men. It is a constructive their family has brought out the skill to approach for any business and can be concentrate on details while not losing a potential competitive advantage. the big picture; that they can make quick In a family business, these unique decisions when needed, be disciplined characteristics and management style in making tough decisions and have are assets to both the family and the learned not to take things personally. business, combining loyalty to the

15 Lyman, 1988; Salganicoff, 1990

2828 The ‘hidden CEO’

Margaret Hirsch Cofounder and Executive Director, Hirsch’s, South Africa

The ‘hidden CEO’ 2929

n industries that have traditionally would be considered non-traditional been dominated by men, women female occupations, particularly in male- I are encouraged to go into dominated industries, such as heavy traditional ‘women’s jobs’ and there manufacturing, an increasing number of I know we can be confusion with respect to their highly competent women leaders are are interviewing a perceived ability to lead these types standing confidently in the limelight. woman for a finance of businesses. As the CEO of a scrap metal family business in the U.S. We were introduced to women who role right now who described to us, his industry is portrayed were founders and cofounders of could become our as a dirty and manly job, which does companies in industries that would CFO in the next not attract a lot of female candidates. historically be called ‘men’s work’, “I know we are interviewing a woman including steel and scrap-metal 2 to 3 years. She for a finance role right now, who could processing, cement manufacturing and would obviously become our CFO in the next 2 to 3 the production of hardware products. have to get along years. She would obviously have to get They agreed there should not be a bias along with the family, but I’ve always toward women or men; that diversity with the family, but found women to be more competent generally adds value to a team, making I’ve always found than men in a lot of areas because they it more interesting and conducive to women to be more have to be. Would I go out and try to different ways of thinking. recruit a female CEO to take my place? competent than I don’t know. I don’t know if I would or Kwatani CEO Kim Schoepflin, for men in a lot of areas not. I just don’t know yet.” example, is a successful leader in a because they have highly male-dominated industry that Despite a conventional view of produces large-scale mining equipment. to be. Would I go ‘women’s work’ in some parts of the The business was founded by her out and try to recruit world and certain industries, a brighter father and through her leadership, a female CEO to light is shining through the glass ceiling she has started to push forward the of many family businesses. In what growth of the business backed by a take my place? I don’t know. I don’t know if I would or not. I just don’t know yet.

Family Business CEO Scrap metal processing business, United States

3030 How women are redefining ‘women’s work’

How women are redefining ‘women’s work’ 3131

t is generally held that women, firm performance due to superior by their nature, demand more governance and effectiveness.16 A recent I collaboration and consultation than study among Swedish family firms17 their male counterparts. The women provides even more evidence of the It is not we spoke with agreed. Through many powerful impact that women leaders possible to grow a generations, they have been raised have on their firm’s performance when family business today to be more sensitive to the needs of they hold the role of CEO, along with others and more social as mother, board membership and ownership. if the leadership peacekeeper and caretaker. It is difficult team is made up of to get it out of women’s nature, they As an earlier study on gender only women or only told us, and it isn’t natural when women interactions within family firms pointed try too hard to turn off that instinct. out, the greatest improvements in a men. True leadership family firm’s profitability occur when begins with letting Nevertheless, they pointed out that the CEO is a female family member go of your ego and women who are expected to have this with family and non-family female naturally enhanced level of sensitivity directors. The potential explanation opening yourself face the danger of being pigeon-holed for this is that the presence of women up to a diversity of as the chief emotional officer of the directors enhances the self-esteem and opinion, mindset and family business — and nothing more. If confidence of the female CEO, raising this is the case, they likely haven’t been a female-friendly corporate culture that experience, and it’s socialized and groomed to internalize encourages cooperation and knowledge faulty to assume that the business values and practices to sharing among its members.18 This does women have higher the same extent as their male family not mean that the presence of females, members. And, by not being given in and of itself, leads to better corporate levels of emotional the same opportunities to actively performance. However, the presence intelligence than participate in the business and build of qualified and supportive individuals, men. Family their own successful careers, they regardless of gender, can significantly risk being left out of opportunities to enhance the company’s performance. businesses have a assume leadership positions. responsibility to lead Ms. Ramia El Agamy, the CEO of Orbis by example to help This is likely why the representation Terra Media in Switzerland is quick of women in key leadership and to challenge stereotypes. “It is not shape this broader management positions in some family possible to grow a family business perspective. businesses remains elusive, despite today if the leadership team is made up several studies that have proven of only women or only men,” she says. Ramia El Agamy that having women in management “True leadership begins with letting go CEO, and board positions leads to better of your ego and opening yourself up Orbis Terra Media, Switzerland

16 Terjesen, Couto, & Francisco, 2016 17 Bjuggren, Nordström, & Palmberg, 2018 18 Amore, M. D., Garofalo, O., & Minichilli, A. (2014). Gender interactions within the family firm. Management Science, 60(5), 1083-1097.

3232 The transformational power of women

The research shows that some women in family business continue to challenge role stereotypes while also having unique leadership skills to contribute.

The innate characteristics of women as nurturers and caregivers translates to a role as “chief emotional officer”, a factor in the success and perpetuity of to a diversity of opinion, mindset and experience. It’s faulty to assume that the family business. Their women have higher levels of emotional presence brings additional intelligence than men or that men are resources that the family more capable to deal with hard business business can capitalize on. issues than women. This only leads to further stereotyping. Family businesses have a responsibility to lead by example Women have unique and to help shape a broader perspective on transformational leadership the capabilities of all family members whether they be male or female.” styles and skill, judgment and a unique outlook that makes them Family businesses led by female holistic managers and leaders. CEOs generally have a distinct transformational and less autocratic approach to leadership, as we observed Women in family businesses in the transformational leadership style are continuing to work on role of many of the family business leaders conflicts to pave their own path with whom we spoke. The evidence generally shows that women tend to in the business and the family encourage individuals and teams to and resist being designated only pursue new business opportunities, as the family caregiver. identify opportunities for change and make decisions on their own. It is not possible to grow In theory, there is less conflict and a family business with a greater diversity when women are leadership team that is made up directly involved in the business and the STEP 2019 Global Family Business exclusively of men or women. Survey showed that the less autocratic style of female family business leaders appears to be strongest in Europe and Mary Jo Fedy Central Asia. As we continue to break National Private Enterprise Leader, apart the stereotypes, however, it’s KPMG in Canada worth noting that the STEP study also showed that as business leaders age, female leaders actually become more autocratic than their male counterparts.

The transformational power of women 3333

s was highlighted in the opportunities as their male siblings first article in this series for career growth in their respective A regarding family business family businesses when primogeniture Now I succession, “The courage to choose is adopted. We do believe, however, wisely”, traditional family firms have that change is in the wind in many believe I can be often followed the implicit rule of countries across the globe. the ‘daughter’ in primogeniture in matters of succession given situations and inheritance, transferring the Interviews with family business business from the father to the leaders have shown that even though while also first-born child and, often, the first- primogeniture is still the norm for having a role and born son. To prepare them for their succession in many countries, as well responsibilities as future roles, sons have often been as in individual family businesses, socialized around the family business new rules in certain countries are a director and a during dinner table conversations at opening up leadership opportunities C-suite executive home and some early involvement for women in family firms. One in a business in the activities of the business. important example is China, where the gender equality movement has that the family is Sons and daughters can have different raised the social status of women deeply invested in experiences in this socialization and the one-child policy has given emotionally and process, however. In particular, women equal access to resources. daughters can be often influenced by financially. the family’s traditional gender roles, As ZHU Naifeng, General Manager of which are formed at a young age during Hawk Filtration Technology (Shanghai) Jodi Bloomer regular interactions with the family. Co., Ltd. told us, he will be more Cofounder, These experiences can lead female inclined to use “meritocracy” in Canadian Fiber Optics family members to be more concerned choosing the most competent person — Corp., about the family and its needs than the male or female — as his own successor Canada needs of the family firm.19 as a direct result of these significant social changes. Similarly, if primogeniture is followed within the family business, daughters We believe that further change is on are clearly aware that the likelihood the horizon. With improved access to of them being the successor to the higher levels of education, coupled with family business is very low, even if they shrinking family-size, the STEP 2019 happen to be the first born. As a result, Global Family Business Survey shows even when they are exposed to the that the role of women is continuing to family business, research has shown progress. Some research has looked that the emotional commitment of at the effect of succession and gender daughters to the firm is noticeably lower and suggested that father-to-daughter than that of sons.20 succession is more harmonious and creates less conflict around issues of As a consequence, some women do not leadership and power. consider that they can have the same

19 Decker, R. A., Haltiwanger, J., Jarmin, R. S., & Miranda, J. (2017). Declining dynamism, allocative efficiency, and the productivity slowdown. American Economic Review, 107(5), 322–326. 20 Calabrò, A., Minichilli, A., Amore, M. D., & Brogi, M. (2018). The courage to choose! Primogeniture and leadership succession in family firms. Strategic Management Journal, 39(7), 2014–2035. h t t p s : //d oi.o r g/ 10.1002/ smj.2760

3434 Succession by merit

While family traditions and social norms often impact the choice of women as successors, the research suggests that next generation leaders will increasingly choose their successors based purely on merit.

There is a gender-based pattern to succession. When the current Ms. Bloomer of Canadian Fiber Optics CEO is a woman, there is a Corp. had been working outside her higher chance that the next CEO family’s business for several years when will also be a woman. she made the decision to contribute to the next phase of the business led by her father. In expressing her desire When family business to join the family firm, she felt it was important to make it clear that she was succession is traditionally based there to add value to the business and on the primogeniture model, not with her hand out as ‘the daughter’. women may be less inclined to She believes the father/daughter consider a professional career in dynamic changed at that point as she their family businesses. and her parents had the experience of working together through an intense period of time in the family and a great As future generations become deal of change in their business. more involved in the business, Through this process, Ms. Bloomer family firms’ decisions on believes that her role in the family has succession are increasingly evolved. “Now I believe I can be the being driven on merit, capability ‘daughter’ in given situations while and willingness instead of also having a role and responsibilities gender or kinship. as a director and a C-suite executive in a business that the family is deeply invested in emotionally and financially.” Yashodhara Basuthakur Research Associate, Thomas Schmidheiny Centre for Family Enterprise, Indian School of Business

Succession by merit 3535

o respond to the mounting The family business of Grupo Urrea, need to address the issue a hardware manufacturer in Mexico, T of under-representation of is another good example of how the women in top management positions, participation of women in the company I know a new national and cultural norms and its corporate governance bodies woman in charge that advance the roles of women has paralleled changing social norms. In of a company that in family business are emerging. the early days of the business, bringing daughters into the company was not makes locks may As an example, in the last 2 decades, a consideration since there wasn’t a look a bit strange women’s visibility in Venezuelan family ‘women’s work’ option. However, by the because we are firms has been favorably influenced time the fourth generation of the family by their greater involvement in the business reached working age, those used to seeing her labor market. Many young women social norms had changed dramatically in more feminine successors to Venezuelan family and the two eldest female cousins were settings. All this is businesses have shown that they can the first to join the company. take charge of their businesses just as the product of my effectively as their male counterparts. In the current generation, the role of dad’s work and we Such is the case in the Visani family, women in the business family Urrea all ended up falling owners of Venezuela’s Inversora is comparable to that of the men. Lockey, where the founder included his Thus, among the cousins of the fifth in love with it. This daughters in the family business from generation, are three prominent female is what we prepare an early age, even though the family’s entrepreneurs who have fully integrated for: taking over the companies operated in traditionally a successful fashion and art company male-oriented industries. supported by their parents. business. We multitask, we do many As second-generation Claudia While the women we spoke with things at once. In Visani, Inversora Lockey’s CEO and do not support broad government- Board member from 2007 until 2019 mandated social changes or quotas, the midst of this describes, “I know a woman in charge there is evidence in some jurisdictions situation, women of a company that makes locks may look around the world that these measures have come forward a bit strange because we are used to have been successful in opening the seeing her in more feminine settings. doors to women. without fearing the All this is the product of my dad’s work challenges we face and we all ended up falling in love with In India, for example, the amendment daily. it. This is what we prepare for: taking to the Hindu Succession Act in 2005 over the business. We multi-task, we do conferred property rights to daughters many things at once. In the midst of this — whether married or unmarried — Claudia Visani situation, women have come forward and granted them rights equal to those CEO, without fearing the challenges we face available to sons. A subsequent legal Inversora Lockey, daily”. mandate prompted family firms in India Venezuela

3636 The impact of societal change on family business leadership

In another example, Norway was Recent social changes, whether Society the first country to mandate a 40 mandated or voluntary, have had a has changed and percent gender quota for women profound effect on life in general and on we are definitely on the boards of publicly-listed family businesses specifically. In Saudi companies in 2005. Since then, Arabia, the government’s support for fine with having more countries in Europe, Asia, Latin the empowerment of women in the a female CEO. America, North America, Middle workplace has changed the landscape Before, it wasn’t East and Africa have recommended of the public and private sectors. In voluntary targets for women directors the case of family businesses, women simply that the on the boards of listed firms. were typically included in the ownership families weren’t structure under Sharia Law, especially comfortable with The immediate effect of these after the departure of the founder, quotas has been an upsurge in the though they were not generally included the CEO being representation of women in key on the management team. Their a woman. The positions globally. A new gender exclusion was not attributed simply to reality was that she diversity milestone was reached in family preferences and social norms, 2019 when none of the S&P 500 list of but to the challenges women faced wouldn’t have been companies reported a male-only board. because of broader gender segregation able to function. And women’s share of S&P 500 board in the workplace. New social norms She couldn’t go seats reached a new high of 28 percent in Saudi Arabia have transformed that in the spring of 2020.21 situation and increased the involvement to the ministries of women in family firms. and meetings Promoting gender balance at the board were very hard level opens the door for more exciting As the CEO of a general trading opportunities for family businesses company in Saudi Arabia described, to get. Things to increase female representation “Society has changed and we are have changed throughout their companies. definitely fine with having a female significantly and all Appointing women in senior roles CEO. Before, it wasn’t simply that can create a “trickle-down effect”, the families weren’t comfortable with of that is meaning that more gender diversity the CEO being a woman. The reality normal today! at the executive level will translate was that she wouldn’t have been able into more gender diversity across the to function. She couldn’t go to the Family Business CEO 22 organization. This may be the lever ministries and meetings were very hard General trading company, that family business leaders need to to get. Things have changed significantly Saudi Arabia make more female appointments in and all of that is normal today!”

21 Bloomberg News. https://www.bloomberg.com/news/articles/2020-05-15/female-board-participation-rises-in-s-p- 500-index-in-april 22 Gould, J. A., Kulik, C. T., & Sardeshmukh, S. R. (2018). Trickle-down effect: The impact of female board members on executive gender diversity. Human Resource Management, 57(4), 931-945.

The impact of societal change on family business leadership 3737

lthough the family business The female leaders we spoke with legacy may be handed down are emphatic that they have an Ato them, many w omen around obligation to empower other women the world still shoulder the primary and to be aware of the baggage responsibility as caregivers of their that other women are carrying after families and households. They also being surrounded by outdated beliefs continue to face the complexity and actions. At the same time, they of skeptical parents, siblings or recognize that women still seem to feel hostile employees to prove their that they have to work harder and do mettle and succeed in managing more. The danger is that this can come and leading their business. across in completely the wrong way in an organization that just wants women As with women in non-family at the table because they’re talented businesses, women in family firms and bring their own perspective. require strong networks that are not dominated by family influence, as well When we asked whether the need for as mentoring and guidance to orient people to legitimize themselves is based them successfully toward management on gender or on an established mindset, and leadership roles. the women who joined our discussions concluded that gender is the primary Women in family businesses are factor based on a mindset that has strategically placed to manage this been embedded among women dilemma and bring about the change in themselves. “What is it that we have their organizations and society at large inside of us,” they asked, “that tells us by becoming role models and mentors we have to work harder and do more?” for younger women who will contribute to the future talent pool. The guidance we heard from them is that women need to believe that they As one female family business CEO have a choice — to work harder and pointed out, women have some do more — or not. The end result may unique challenges when it comes not be the same, they said. However, to networking. Men, she said, have the outcome is fundamentally different traditionally gone golfing or for drinks when a person makes a choice rather after work to stay connected. That isn’t than acting from a position of fear or a a natural phenomenon for women, belief that they are somehow lacking. who are usually rushing home to take care of the children and prepare dinner. They also told us that in the ‘old Networking is more difficult for women days’, women tended to be jealous and it often isn’t working very well. of one another and they didn’t celebrate each other’s successes.

3838 A challenge to outdated mindsets

Women in family businesses face opportunities and challenges in overseeing business issues as well as those of the family. In fact, from the business side, they can bring different skills and perspectives and there is a need for a new leadership mindset for women in family business. The tide is changing and the need for women to feel that they have to The unique disadvantages for compete is going out with the tide. women in family businesses include the blurred line between For young female family leaders, acknowledging and celebrating the work and life, expectations efforts of generations of women that you will dedicate your who have preceded them is viewed life to the business and family as important. Women supporting dinners that become business women is more prevalent in the next discussions and make it generations because of this mindset difficult to ‘switch off’. shift and a stronger commitment for women to empower each other.

If this is the way things should be for Women often feel invisible. women in business, we were reminded They need skills, tools and of the importance of acknowledging that opportunities to increase this level of support isn’t the way it has their visibility and break the always been. It’s due to the hard work of stereotypes so they can’t be countless numbers of women and men overlooked. who have come before and helped to open the doors. Legislative mandates and corporate governance measures are a starting point for creating new female role models and developing the pipeline for future women leaders.

Karmen Yeung National Private Enterprise Leader, KPMG China

A challenge to outdated mindsets 3939

omen and men have an outdated, narrative regarding the roles opportunity to strengthen that women play in family businesses W their family businesses by and the competitive advantage that they embracing their differences and not can contribute in the future. fighting against them. The good news is that women in A diversity of views and approaches family businesses are strategically has tremendous power in helping to placed to bring about this change in move family businesses toward more their own companies and in society at interesting and prosperous futures. large as role models and guides for the Greater diversity also harnesses the next generation of women who will resilience and adaptability that are the contribute to the future talent pool. hallmarks of family businesses and their abiity to be leading voices at the Family businesses have shared a wealth forefront of change. of their experience and unique insights on how they are strengthening their Family businesses that are committed business by embracing fresh gender to empowering women might start by and generational perspectives. We evaluating their beliefs and perceptions encourage you to learn more about and encouraging open discussions of the families who contributed to our everyone’s viewpoints within the family study and helped to bring their insights — especially those among different to life on the impact of changing generations and genders even if those demographics and the influence of conversations may be uncomfortable women in family businesses. You will at first. The courage to be candid and find profiles of these prominent family open to a new perspective has the business leaders on the KPMG Private power to change an existing, and likely Enterprise website.

4040 Gaining a fresh perspective on family business leadership

How to balance what is right for the business and for the family

Published: December 2020

hoosing the right governance practices in a family business is a Luis Díaz-Matajira critical ingredient for its long-term sustainability. While business Assistant Professor, School of Management Cgovernance is essential for effective business processes and Universidad de los Andes, establishing control mechanisms, family governance processes and Bogota, Colombia structures serve a different purpose. Not only do they help to support a strong communication environment among family members, but they also help to define who the family is as a group and what they want to achieve.

As revealed in the STEP 2019 Global Family Business Survey, 88 percent of family CEOs around the world reported having a medium- to-high level of family identification with their firms. Our findings Andrea Calabrò have shown that the level of family governance development is STEP Global Academic Director, linked to how strongly family members identify with their firm.23 Director, IPAG Entrepreneurship & Family What is the value of good governance in the family business environment? Business Center, IPAG Business School We typically describe governance as a system of interconnected philosophies, mechanisms, structures and practices that support good decision-making and communication among individuals. In a family business, these individuals have shared interests and goals as well as multiple roles as shareholders, operators of the business and members of the family. Jesus Luna A strong family governance system that might include tools such National Private Enterprise Leader, Partner, as family councils, assemblies and constitutions provides clear KPMG in Mexico guidance as to how decisions will be made by the family (both for the family and for the business) and it helps to create a unified voice both inside and outside the family. All of this contributes to the professionalization of the business and cohesion within the family itself.

About 40 years ago, the “three-circle model of the family business system”24 was introduced as an organizing framework for understanding family business systems. In simple terms, this model presents the Miguel Ángel Faura Borruey National Private Enterprise Leader, three interdependent and overlapping groups that comprise a family Partner, business: family, business and ownership. While overlapping in KPMG in Spain some spheres, each group has its own goals, priorities and dynamics and the long-term success of family business systems depends on how well each group functions and supports the others.

The framework for family governance must support the decision- making processes, communications and cohesiveness of all of these groups as owners and operators of the business Tom McGinness and as contributing members of the family itself. Global Leader, Family Business, KPMG Private Enterprise, 23 STEP 2019 Global Family Business Survey — “The impact of changing demographics on family Partner, business succession planning and governance.” KPMG in the UK 24 Tagiuri R, & Davis J. (1996). Bivalent attributes of the family firm.Family Business Review, 9(2),199-208.

The family governance value proposition 43

y its very definition, the Family leaders such as these are often controlling family in a family looking for the ‘best structure’ and B business is a driving force for advice on governance ‘best practices.’ deciding how the business chooses The concept of a ‘best practice’ in to operate and how it will define family governance doesn’t really exist success. Often, these choices are and as one family business leader based on the shared purpose of the described, “What was considered family and the business: ‘Why are we to be a good practice 10 years ago here? What do we want to accomplish might be frowned upon today.” together? How do our choices reflect and support our family’s values?’ In reality, governance systems are a dynamic set of tools and it’s important Several family business leaders told to review them regularly to ensure us that it was essential to have formal that they continue to be appropriate The governance practices in place as their and relevant at given points in time concept of a companies grew and matured. The and, most particularly, during times of ‘best practice’ in time came when it was necessary to significant change. Better questions create appropriate frameworks and to be asking are: How does the family governance structures to make sure that checks enterprising family system define doesn’t exist. and balances were in place for the success? What does the family — A good practice business to scale up successfully. They as owners, executives and family told us that good family governance members — and the business need in 10 years ago might practices were a key factor in fulfilling order to be successful at any given point be frowned upon their family’s purpose and creating in time? today. value for customers, employees, shareholders and their communities.

Family business CEO Construction industry, United Kingdom

44 Governing with intent

ue to changing demographics, sure that the family’s purpose and business began to decline due to we are beginning to see values are reflected in all the strategic a lack of innovation and the highly D an emerging theme. There decisions that are made by the business. conservative approach of the non-family is a gradual shift away from being management team. Consequently, Mr. ‘family owned and run’ — which is With appropriate governance B.-Y. Hou, Universal Cement’s Chairman particularly common in first- and structures and systems in place, and CEO, assumed full ownership and second-generation family firms — to both business decisions and family management control in 2008 along being ‘family owned and non-family relationships can be enhanced. As J. with his two fourth-generation sons. managed’, whereby family members Murphy & Sons CEO, John Murphy When a family owns the equity but does are only involved at the ownership explained, “Every responsible not have adequate mechanisms for level (and occasionally on the board), business needs a good governance overseeing the company’s performance, but not in the day-to-day operations of framework to draw a clear line non-family management control may the business. This makes it necessary between where the family is and not be the best governance choice for governance structures to adapt where the business is. I am very for the long-term development and to a new scenario in which family proud of the heritage of our family sustainability of the business. members are primarily owners and are ownership and I see the benefit of the not involved in running the business. generational long-term thinking that The evolution of informal governance comes with it. However, businesses systems to those that are more Such is the case for J. Murphy & Sons need to have a professional edge and formalized is inextricably linked to the Limited, a third-generation family having a strong governance structure increasing complexity of the business business that develops and maintains helps to define how one maintains that and the family. It makes it necessary large infrastructure projects in the UK, level of professionalism.” for the governance systems to evolve Ireland and Canada. For this family, in parallel with the progression of the there is a clear definition of decision- In the case of Universal Cement family and the business and continue to making authority that is embedded in Corporation in Taiwan, a different model be fit for purpose at that time and stage the family’s governance framework has been adopted. The company was a of the family’s evolution. and captured in the shareholders’ founding member of the ‘Tainan clan’ agreement. While no family members in the 1960s, a collection of businesses Therefore, family governance — with the exception of CEO John that were jointly owned by several needs to be adaptable and reflect Murphy — currently participate in the leading families and members of the the generational composition, day-to-day operations of the business, community. Under the clan model, roles and responsibilities of family each branch of the family is represented non-family, professional management members as their ownership and on the operating company board to was the governance choice for all of the management responsibilities evolve. provide family oversight. This governance companies that were members. Over mechanism is designed in part to make time, however, Universal Cement’s

Making governance ‘fit for purpose’ 45

e have learned through Family business leaders we research and direct spoke with also described how W experience with family family governance practices and We have businesses throughout the world that tools are helping to shape and families who engage all generations reinforce a shared future for their been creating, of family members in planning and families by continuing to open up together with implementing their governance opportunities to review and agree my children, the systems achieve two objectives. upon the fundamental purpose First, senior members of the family of the business, confirm the future governance have the opportunity to reflect on family’s core values and define the rules for the what they have built and to pass desired culture and vision of the family assets. on what they have learned through business for the future as potential various changes in the family’s successors come to the forefront. It’s a process approach to governance. Second, that we’re going next-generation members of the With potential succession events on through together family bring a fresh perspective for the horizon and multi-generational addressing the challenges that the perspectives emerging within the so that they can current generation is facing in the family business, there is additional define what they family and in the business. Perhaps pressure on understanding the want, in terms of most importantly, the next generation impact that governance practices of the family has the opportunity may be having on critical, and often governance, for to co-create the future systems long-term, decisions. This includes the assets of their that they will ultimately oversee. the criteria for the development of own children and future successors and the criteria As Filipe de Botton, Chairman of for making the right choice of a grandchildren. Logoplaste in Portugal described, successor at the right time. These and “We have been creating, together other important considerations for Filipe de Botton with my children, the future succession planning are addressed Chairman, governance rules for the family in detail in the first article in our co- Logoplaste, assets. It’s a process that we’re going authored series, “The courage to Portugal through together so that they can choose wisely: Why the succession define what they want, in terms of decision may be a defining governance, for the assets of their moment in your family business”. own children and grandchildren.”

46 Whose role is it to govern?

John Murphy CEO, J. Murphy & Sons, United Kingdom

Whose role is it to govern? 47

amily dynamics often make Family governance also may include conversations challenging and the management of assets and wealth Fdiscussions in family business are through family councils, assemblies no exception. It can be difficult to talk and constitutions and the need to build about how the business may need to cohesiveness throughout the family, change and to agree on how to support especially when it begins to move to the its evolution from one generation to cousin consortium stage and beyond. the next — potentially from a business that has been based on a tradition Over the past 2 decades, the concept of ‘trust, informality and implicit of the family office has gained rules’ to a new tradition of ‘structure momentum. While families — especially and explicit rules’. As the business those in the West — primarily set up matures and grows, the presence family offices as one-stop shops for of family governance mechanisms investment, tax and estate planning, becomes all the more essential.25 they have now progressed well beyond wealth management to also carry out While evolution can be challenging, important governance, education, the value of good family governance philanthropic and social functions. systems at every stage of the business far outweighs the obstacles. In one case that we are familiar with, Family business governance is about a family business in Venezuela set up maintaining the equilibrium between a holding company — which could be what the business is trying to achieve seen as a form of the family office — to and what the family wants to achieve. effectively manage the family’s business So, in addition to customary corporate portfolio, which allowed them to create governance systems, families in a shared vision on topics such as business have the opportunity to build strategy, diversification, risk, profitability, their own unique family governance taxation and control. The family is now systems to balance their economic and in the process of institutionalizing the family-centric goals and translate them family office to advance the family into a shared vision for the family. governance functions and help the family establish its constitution.

25 “The Power of Governance in Family Business”, 21 February 2017, Dominic Pelligana, KPMG Private Enterprise, KPMG in Australia https://home.kpmg/xx/en/home/insights/2017/01/power-of-governance-in-family-business.html

48 The mechanisms of family governance

When assessing the role of family governance in your business family, it is important to consider some key principles and characteristics of effective governance.

Family governance in the family business model focuses on supporting the shared purpose, principles and values of the family and its business and answers the questions: why are we doing this together and what do we want to achieve?

Good governance sets clear boundaries around who decides what: what is a business decision, what is a board decision, what is a shareholder decision, what is a family decision?

There are many family governance mechanisms, such as family councils, assemblies, constitutions and family offices, but they are only effective if they are cohesive and flexible so that the family can work together and adapt them as necessary.

Family governance is dynamic and must continue to be ‘fit for purpose’ as the business and the family evolve.

Family governance works hand-in- hand with corporate governance, but it has its own unique purpose and value.

Jesus Luna National Private Enterprise Leader, Partner, KPMG in Mexico

The mechanisms of family governance 49

ffective family governance stay connected and have opportunities systems promote cohesion, to voice their concerns and share their E flexibility and communication. emotions in a professional setting.27 An This echoes Olson’s model of marital effective governance framework that and family systems, demonstrating includes communications protocol and that a functional family system conflict resolution processes is often requires a balance of cohesion and used to provide a neutral mechanism flexibility that is facilitated through for recognizing and resolving conflicts good communication. Family cohesion and promoting family harmony is defined as the emotional bonding whenever possible. that family members have toward one another and the degree to which they Forums such as family assemblies are connected.26 In environments that and family councils often provide are often dynamic and unpredictable, a dedicated platform for family flexibility is the key to finding the members to discuss specific issues. right balance between stability and However, it is important to note that change to maintain the health of the these structures may be ceremonially organization. While governance rules adopted28 and do not necessarily may impose restrictions on certain diminish the need for family members behaviors and actions, it can also be to acquire good and respectful flexible enough for family members communication skills for speaking, to undertake important actions within listening, self-disclosure, clarity and the governance framework. COVID-19 staying on topic with each other. has provided a multitude of examples of the ways in which good governance The family business leaders we have systems have upheld the need to be spoken with are generally well aware flexible without diminishing the stability of the critically important need to of the business and the family. maintain an open and constructive dialogue within their families. As Balázs The key here is how a system balances Lévai, Sales Director, BioTechUSA in stability versus change. A case in Hungary, described, “In the family, point is how effective governance we discussed everything. Every systems can prepare the family and contradiction became a compromise, the business for unpredicted adversity. never a suppressed contradiction The goal of good family governance that wasn’t heard and discussed.” is to make sure that family members

26 Olson, D.H. (2000). Circumplex model of marital and family systems. Journal of Family Therapy, 22(2), 144-167. 27 Berent-Braun & Uhlaner, 2012; Umans, Lybaert, Steijvers, & Voordeckers, 2020. 28 Parada, M. J., Gimeno, A., Samara, G., & Saris, W. (2020). The adoption of governance mechanisms in family businesses: an institutional lens. Journal of Family Business Management.

50 Promoting cohesion, flexibility and communication

Balázs Lévai Sales Director, BioTechUSA, Hungary

Promoting cohesion, flexibility and communication 51

espite the recognition of when some of those family members the importance of open and are no longer here. I’ve never forgotten Dhonest dialogue, there are it and I think that strong people We went often family boundaries that can shouldn’t try to impose themselves undermine the goals that are necessary on others’ decisions. We must leave for 3 years to drive meaningful discussions and room for everyone to state their own without talking resolve potential conflicts. Poor family intentions,” said an owner of a housing to each other. It relationships can add to the hazards, sector family business in France. since they don’t represent a moment in still marks your time, but an entire history of personal Those families that have effective life, even when and familial development. Childhood systems for managing conflicts are some of those disagreements may perpetuate into more successful in focusing on the the present and insert themselves into goals of the business and the family family members interpersonal dynamics in the business. rather than on personal views or old are no longer Your mother, for example, might be your grievances. Without question, “open here. I’ve never parent and your boss at the same time. communication” is cited as the most Or, as the eldest daughter in the family, effective strategy for preventing forgotten it and I you may find yourself working for your and resolving conflicts. Many family think that strong youngest brother. business leaders also subscribe to people shouldn’t implementing a defined decision- These situations are not unusual and making authority to help reduce try to impose conflict can be the norm for some potential role ambiguity that can themselves on families in business. Not only are ultimately lead to conflicts. others’ decisions. these situations detrimental to family harmony, but they can often spill over While literature suggests that We must leave and affect the long-term sustainability family and corporate governance room for everyone of the business itself. Avoidance isn’t systems are effective means for 29 to state their own usually considered to be an ideal conflict managing conflict, they were cited resolution strategy. Because conflicts infrequently by family leaders during intentions. can be detrimental to some families, our conversations. However, we noted however, it can lead them to practice that families who establish family Owner partial avoidance by resorting to an governance mechanisms, such as family Housing sector family ownership exit or the termination of a constitutions, often use those as a business, family relationship rather than reopening basis for defining how conflicts will be France old family wounds. resolved and how specific situations will be managed effectively. “We went for 3 years without talking to each other. It still marks your life, even

29 Kubíček A, & Machek O. (2020). Intrafamily conflicts in family businesses: A systematic review of the literature and agenda for future research. Family Business Review, 33(2), 194-227.

52 Learning to get along

A documented conflict resolution process is only a backstop. If the process has to be activated frequently, larger business and family issues likely need to be addressed. In certain situations, there is value in being preemptive. In one case that we Conflicts are a natural part of are aware of, a prenuptial agreement the family business system. It is is included in the family protocol as a important to seek to understand mandatory requirement prior to the the nature and root cause of marriage of any family member. These the conflicts in order to resolve agreements are intended to ensure the continuation of family ownership in the them. event of a divorce and they define in advance that any division of property will be based exclusively on matrimonial Well-defined decision-making assets that are not linked to the authority in the family business ownership of the family business. can reduce role ambiguity and potential conflicts.

Families should consider using a combination of conflict management strategies, such as open communication, governance, mediation and family therapy to achieve the best results for individuals, the family and the business.

Luis Díaz-Matajira Assistant Professor, School of Management, Universidad de los Andes, Bogota, Colombia

Learning to get along 53

he principal purpose of our to provide coaching and mentoring research was to evaluate the options to next-generation members T impact of changing demographics through their participation in on family business practices. We philanthropic projects, internships and weren’t surprised, of course, to learn apprenticeships. Future family leaders that the pace of change is increasing are often also engaged in junior boards rapidly with the growing multi- or as observers of the family council, generational outlook and approaches owners’ council or a business board. of family business leaders. Others have embraced the concept In this environment, families have an of the ‘learning family’, setting up immediate opportunity to secure the education and career committees within futures of their businesses by investing the family governance system. In this in their most valuable asset — the way, they coordinate learning initiatives next-generation family members who through a family-specific curriculum will lead the businesses forward. that educates the next generation about family values and traditions The development of this new breed and provides an opportunity for their of future leaders does not happen talent and creativity to be explored. in a vacuum, but at the nexus of the family and the business. It also isn’t As a family business leader in Germany confined to formal education alone, described, “Everybody has to get a but includes the informal learning decent education. Even if they pursue opportunities within the business a career that is not related to the family that the family often provides from business, they still have to fulfill their an early age. This implicit knowledge role as a shareholder. That means, usually begins to develop in the early even if they become a physician, years through family experiences and they still have to be committed to working in the family business.30 the family business and acquire the corresponding knowledge to make By applying their family governance a meaningful contribution as an systems to create learning owner.” Supervisory Board Member, opportunities, families are also able Mechanical engineering firm, Germany.

30 Chirico, F. & Salvato, C. (2008). Knowledge integration and dynamic organizational adaptation in family firms.Family Business Revies, 21(2), 169-181.

54 Investing in the family’s most valuable asset

Supervisory Board Member Mechanical engineering firm, Germany

Investing in the family’s most valuable asset 55

here is a strong association between family education and T career planning. Successful When I had families that have formal family governance systems typically establish to choose a career, a dedicated education and career I was guided by committee to help identify the career my father and aspirations of family members and bridge them to the development plans the passion I of the business and the family. already had for the company because Even when next-generation family members do not see the family I had worked in business as their preferred career the laboratory choice, families tend to immerse them and distribution in in the entrepreneurial environment of the family at a young age. “When I had my youth. When I to choose a career, I was guided by my studied industrial father and the passion I already had for engineering, I was the company because I had worked in the laboratory and distribution in happy because I my youth. When I studied industrial knew that it would engineering, I was happy because I ultimately help me knew that it would ultimately help me do my job well in the company,” said do my job well in José Manuel Suso Dominguez, CEO, the company. Arrocera la Esmeralda, Colombia.

The intention of next-generation family José Manuel Suso members to make the family business Dominguez their career choice is reinforced when CEO, they see a clear development path Arrocera la Esmeralda, ahead of them. Colombia

56 The role of governance in family career planning

Family education and effective mechanisms that support career planning contribute to the succession intent of next-generation members.

Families should seek to understand the individual aspirations of next-generation family members and the intended development plans of the family and the business as part of the career planning process.

A career development plan with clear rules and policies can help raise future generations’ succession intentions.

There is no one-size-fits-all approach to career planning. Families should tailor their strategies to reflect the development trajectory of next- generation family members, the family and the business.

Jeremy Cheng Researcher, Center for Family Business, The Chinese University of Hong Kong, Hong Kong (SAR), China

The role of governance in family career planning 57

he importance of developing family member is to be selected. The human capital is reflected in both family acknowledges that there are T corporate and family governance pros and cons to this policy and clear systems due to the need to engage family employment policies have been We and develop family and non-family adopted in their governance structure plan on having members. As we heard from family that everyone must adhere to. professionals leaders, there are various factors that affect decisions about engaging non- While some family firms may be in most senior family members as managers — or accused of nepotism in their succession management even leaders — of the family business. and recruitment practices, this is not positions in the When the family perceives advantages universally true. The choices they make in engaging professional management have to be right for that specific family future so that for the sustainability of their business, and at that specific time in their life cycle the company’s it is typically based on a fundamental and based on the history of the family, 31 operations decision to put ‘business first’. their current dynamics, future aspirations and overall attitudes and values. are managed As an example, Claudia Visani, former independently CEO and current board member of In this context, the concept of ‘fairness’ from family Venezuela’s Inversora Lockey explained, relates to meeting the economic “We plan on having professionals in and non-economic goals of the members, most senior management positions family business simultaneously.32 33 while the family in the future so that the company’s The privileged treatment of family continues to retain operations are managed independently employees, if based on merit, from family members, while the family does not necessarily contradict the control through continues to retain control through the ‘business first’ mentality, but it relates the board of board of directors.” to the family’s aim to maximize its directors. performance, as measured by realizing There are several factors that can both the economic and non-economic influence such a decision. Some goals of the controlling owners. Claudia Visani families choose to engage family Board member, members almost exclusively in With changing demographics and the Inversora Lockey, leadership and managerial roles. In the gradual shift away from ‘family owned Venezuela case of Arrocera la Esmeralda, a family- and run’ to ‘family owned and non-family run rice production and distribution managed’ that we noted earlier in this business in Colombia, for example, article, the concept of ‘business first’ the family protocol states that if there may have increasing appeal in certain are two equally qualified candidates family business situations. for a position in the business, the

31 Astrachan, J.H., & Kolenko, T.A. (1994). A neglected factor explaining family business success: Human resource practices. Family Business Review, 7(3), 251–262. 32 Samara, G., & Paul, K. (2019). Justice versus fairness in the family business workplace: A socioemotional wealth approach. Business Ethics: A European Review, 28(2), 175-184. 33 Samara, G., & Arenas, D. (2017). Practicing fairness in the family business workplace. Business Horizons, 60(5), 647-655.

58 Family first or business first?

While family firms may be criticized for nepotism, many have adopted professional norms and standards in their succession and recruitment practices.

Families can strike a balance between being ‘family first’ and ‘business first’ by implementing governance principles and practices that incorporate their choices in human resource planning.

Families that formulate family employment policies illustrate what it means to be ‘family first’ or ‘business first’. Fairness and transparency are critical qualities of these policies, however, the consistent execution of the policies is the key to deriving true benefits for the family and the business.

Establishing a retirement age for management and governance roles is advantageous to the current generation and future successors.

Tom McGinness Global Leader, Family Business, KPMG Private Enterprise, Partner, KPMG in the UK

Family first or business first? 59

v n addition to the importance of family business and encouraging education and career development, family members to embark on an I nurturing transgenerational entrepreneurial career. This sometimes The entrepreneurship is often a family includes the creation of a next- priority. It is viewed as essential for the generation venture inside the family entrepreneurial continued development of innovations business or a separate business that spirit in succeeding that will bolster the competitiveness is independent of the original family generations is of the business while also sustaining endeavor. Family businesses that the core purpose, principles and values undertake initiatives such as these offer kindled through the of the family. Family governance real opportunities to family members freedom given to structures have a role to play in this to pursue a boundaryless career by them to start their regard by formalizing the processes that developing their skills inside the family provide family members with practical business and beyond.35 own ventures. It is experience and opportunities to unleash prescribed in our their entrepreneurial spirit and create As an example, when it was recognized family constitution their own new ventures. that the entrepreneurial drive of the next generation of their family members was that monetary As described to us by Mr. John already well entrenched, one family in support and K. Paul, Managing Director of Guatemala developed a “young talent mentorship will be the Kuttukaran Group in India, his development program.” Its aim is family’s entrepreneurial ambition is twofold: to encourage the development provided to family actively supported in the following of innovations and to introduce young members who way: “The entrepreneurial spirit in family members to the company’s want to undertake succeeding generations is kindled culture. Next-generation members are through the freedom given to them to invited to develop a project to improve such activities upon start their own ventures. It is prescribed the business in an area that’s of greatest the discretion of in our family constitution that monetary interest to them. In one case, the fresh the family support and mentorship will be perspective of a young, up-and-coming provided to family members who want entrepreneur in the family gave senior business board. to undertake such activities upon the management a rapid insight as to how a discretion of the family business board.” new generation of consumers perceives John K. Paul the company’s products and markets Managing Director, More and more often, we find that and a plan for how the business could Kuttukaran Group, families are turning their attention pivot as a result. India to the ‘founding intention’34 of their

34 Schroder, Schmitt-Rodemund, & Arnaud, 2011; Zellweger, Sieger, & Halter, 2011. 35 Arthur, M.B., & Rousseau, D.M. (1996). The boundaryless career as a new employment principle. In M.B. Arthur and D.M. Rousseau (Eds.), The boundaryless career (pp. 3-20). New York, NY: Oxford University Press.

60 Nurturing tomorrow’s entrepreneurs

Nurturing the passion for entrepreneurship across generations drives innovation, family energy and future competitiveness.

Embracing the concept of the learning family, families should rethink the education and development of the next generation, including formal and informal learning aimed at increasing their roles as both shareholders and business managers.

The family governance system can be an effective mechanism to coordinate and plan the learning initiatives of the next generation of family members and the family as a whole.

Continuing investment in the entrepreneurial spirit of all generations can better utilize their energy and drive innovations forward.

Miguel Ángel Faura Borruey National Private Enterprise Leader, Partner, KPMG in Spain

Nurturing tomorrow’s entrepreneurs 61

t is important for every family The evolution of informal governance business to ensure its governance systems to those that are more I practices and mechanisms are formalized is inextricably linked to the aligned with the realities of the day. increasing complexity of the business The key is to determine how well each and the family. It makes it necessary for family’s governance system is able to governance systems to evolve in parallel balance the need for stability while with the progression of the family and retaining its agility and resilience. the business. This requires them to be While governance rules may impose flexible enough to achieve their intended certain restrictions on the behavior objectives — even during periods of or actions taken by the business unpredictable change — so that they and the family, they also need to be can continue to be fit for purpose. flexible enough to allow managers and family members to pursue new We encourage you to learn more about activities within that framework. the families who contributed to our conversations and brought to life their The responses to COVID-19 have insights on the impact of changing revealed excellent examples of how demographics on family governance family governance systems have practices. You will find the profiles achieved this balance through decision- of these prominent family business making frameworks that are flexible leaders and their businesses on the enough to allow quick action to protect KPMG Private Enterprise website. the family business without losing sight of its core purpose and values.

62 A blueprint for family governance

Uniting business purpose and family values

Published: January 2021

Georges Samara University of Sharjah, amily and legacy go hand in hand and most families Global Research Champion, in business have a desire to connect and contribute STEP Project, F to sustaining their legacy across the generations. Editor in Chief for Business Ethics: One way we do this is by sharing and maintaining the A European Review things we value, such as important traditions, milestones, personal histories and the family’s beliefs and principles. In family business, legacy is the connective tissue that binds the core purpose of the business, the family’s values and meaningful achievements across multiple generations. It represents the tangible and intangible assets: the financial worth and the social and emotional value that Andrea Calabrò the family has accumulated, adapted and paid forward. STEP Global Academic Director, Director, In this way, legacy is an effective medium for decoding, IPAG Entrepreneurship & Family Business Center, transferring and interpreting the purpose, values and IPAG Business School meaning of the business family across the generations. And, as is the case with so many business and family subjects, family businesses bring their own unique twists and nuances to the subject of legacy.

In family business research, legacy has been used to explain entrepreneurship, customer relationships and longevity. Tom McGinness To enhance our research with firsthand experiences, we Global Leader, went to the source: family business leaders across the Family Business, globe who joined us for conversations and offered their KPMG Private Enterprise, personal and impassioned descriptions of their own Partner, KPMG in the UK business and family legacies. They made it clear that business and family legacies are inextricably intertwined and each serves a purpose in reinforcing the other.

They also reminded us that legacy is not only about looking back, but also looking forward at what is valued from both a business and family point of view, Jubran Coelho and what motivates families to want to continue to Private Enterprise Leader for the South build on that value through future generations. Americas Region and Brazil, KPMG in Brazil

Silvia Rimoldi National Private Enterprise Leader, Partner, KPMG in Italy

Paying it forward 65

ach family’s legacy is as unique nurtured, protected and grown and it is a as the family itself. It can be a big responsibility for the family to take it Ebloodline, a name, heirlooms, a forward. The worst thing would be to pass legal entity or family stories, myths and on something to the next generation that Legacy is artifacts.36 As we’ve encountered in most is less than what you received.” a vital part of our family businesses, the family legacy also history that has typically includes the principles, purpose The choices that one generation makes and values that underpin both the family will affect the choices of every generation to be nurtured, and the business. that follows and it is important for older protected and generations to ‘make space’ for the next grown and it is a By associating the long-term orientation generation to make their own decisions of the business with the intention to about how they will take the family and big responsibility maintain it through multiple generations, business legacy forward. for the family to the pragmatic nature of family business take it forward. is closely connected with the ‘generative’ The founder plants the seeds and it is nature and emotive underpinnings the family’s responsibility to continue to The worst thing of the family’s legacy — that stage in nurture them and help them to grow. This would be to pass adult life when people are motivated reminded us of two parenting styles38 — on something to nurture and guide their children and the carpenter and the gardener — that are grandchildren.37 This is how families often discussed in family literature. The to the next code, transfer and interpret meaning concept is that the carpenter thinks that generation that is across multiple generations. the child can be molded (just as a sculptor less than what you might do) by taking a block of marble and There are aspects of legacy that represent chiseling it into a form that they want the received. both the business and the family to next generation to resemble. They tell reflect the family’s wishes, behaviors and family members what school to attend, Third-generation expectations, while also bequeathing what jobs to have and they shape the next family member and specific items of value from the business generation into how they want it to look. shareholder such as a sum of money, property or Mexico an ongoing business enterprise from The gardener, on the other hand, one generation to the next. There is an plants the seed and waters it, allowing expectation that future generations will the next generation to grow in the maintain, adapt and continue to grow the direction that they want. The family gift that has been given to them. cultivates opportunities to help them get there. The gardener mentality gives As a third-generation family member and members of the next generation the shareholder of an industrial manufacturing space to make their own choices with company in Mexico explained, “Legacy the guidance and support they need to is a vital part of our history that has to be make good decisions.

36 Barbera, Stamm, & DeWitt, 2018; Dyer, 1988; Hammond et al., Hunger & Rowles, 2005. 37 Dollahite, Marks, & Wurm, 2019; Erikson, 1963. 38 Alison Gopnik, “The Gardener and the Carpenter: What the New Science of Child Development Tells Us About the Relationship Between Parents and Children”, Farrar, Straus and Giroux, 2016.

66 Passing on more than what you receive

In family business, legacy is the connective tissue that binds the core purpose of the business, the family’s values and meaningful achievements across multiple generations.

The family legacy typically includes the principles, purpose and values that underpin both the family and the business.

Albert James Associate Professor, Rowe School of Business, Dalhousie University, Canada

Passing on more than what you receive 67

y its very nature, the family is Among many of the families that a stable social grouping that we interviewed, we found there Bhas been sustained throughout was a deep and almost genetic link My society. Though there have been between families and their businesses transformations and variations over in which family members clearly parents were time, family remains a “unity that can be intertwined their family identity entrepreneurs. distinguished from other forms of social with their business activities. 39 They ran a organization”. In contrast, businesses are less stable. In fact, some US As a Canadian family business CEO business. My statistics suggest that more than half described it, “My parents were mother’s parents of new businesses will cease to exist entrepreneurs. They ran a business. 40 ran businesses. within their first 5 to 10 years. It makes My mother’s parents ran businesses. sense, therefore, that a familiar way in Being an entrepreneur runs deep in Being an which family members often refer to our family and it’s in our genes.” entrepreneur runs their business legacy is in relation to deep in our family the impact that the family’s purpose, While the legacy that is left for future values and principles has had, and will generations is generally welcomed and and it’s in our continue to have, on their business. accepted as a ‘gift’, the obligation to genes. carry it forward can also be a burden. For example, Mr. George Vestey, A select number of family business CEO of Vestey Holdings in the UK, leaders with whom we spoke talked Family business CEO told us a compelling story of the of the “burning requirement” for the Canada resilience and ingenuity of his family family to be involved in the business and how the family’s business has to continue its legacy and how that survived an abundance of world is occasionally found to be a heavy crises for more than 125 years: responsibility and a source of tension. from wars to revolutions, political uprisings and hostile competitive However, Mr. Luiz Alexandre Garcia, environments, right up to the current Chairman of Brazil’s Algar Group, uncertainties surrounding COVID-19. emphasized to us that while sustaining the family and business legacy is a Regardless of the type of crisis, Mr. weighty obligation for the younger Vestey described how the family generations in his family business, it has exhibited the same resilient is important for them to understand characteristics throughout the their responsibility as shareholders. generations and succeeded in Beyond their ownership responsibilities, pivoting their business each time they are encouraged to pursue their due to the family’s incredible ability personal dreams without a sense of to reinvent itself. This legacy of obligation to work in the company. If reinvention is what subsequent they’re prepared to be successful on generations of his family have strived their own merits outside the family to maintain in both the business and business, they are encouraged to follow among their family members. their own interests and pursuits.

39 Cigoli & Scabani, 2006, p.24. 40 Lyengar, 2015; JP Morgan & Chase, 2014.

68 Legacy lessons from the past

The pragmatic nature of family business and its long-term prosperity are closely connected with the ‘generative’ nature and emotive underpinnings of the family’s legacy, which is how families code, transfer and translate their legacy across multiple generations.

When legacy is leveraged as a means to learn from the past, it creates continuous improvements in business processes and strengthens the emotional connection between the family and the business.

Georges Samara University of Sharjah, Global Research Champion, STEP Project, Editor-in-Chief for Business Ethics: A European Review

Legacy lessons from the past 69

family business is an asset The asset that future generations that has value at a specific are responsible for taking forward Apoint in time. Its legacy is the generally involves many more people Many generational value that the business and the impact of its success or family has contributed over several failure can be more substantial. next-generation periods of time. This legacy is not family members something that the next generation There is no going back, but it isn’t consider is simply given, but a responsibility always easy to move forward either. they are asked to undertake to Although there may be different preserving the maintain the success of the business points of views among different family legacy as a and the reputation of the family. generations as to how to manage the moral obligation, business, one thing remains constant: Receiving a legacy is often seen as the desire to maintain and grow the which encourages an honor and a privilege, and a legacy business and the family legacy. them to be conversation can be a very positive involved in the one about “bringing it forward” and A CEO from Saudi Arabia described growing it. However, there is also this situation in his family, saying, “My business early an appreciation for the significant father didn’t have anything to protect and fuels their responsibility that comes with when he started. I started with a legacy intention to take carrying a legacy forward. It can be that I needed to protect and we have challenging to think about achieving differences about how to do that. The on the business what your parents or grandparents way I was educated is different than reins. achieved — likely with fewer resources the way he was educated; the market at their disposal. Will I ever be as today is definitely different than the good as them? How can I continue way it was in his time. I believe that’s Andrea Calabrò to honor what they have created? why he and I have differences about STEP Global the future direction of our business.” Academic Director, A young family business successor Director, in Hong Kong (SAR), China told us Even for family members who might IPAG Entrepreneurship about the opportunities that are being not work in the company, legacy is a & Family provided to him for sustaining his responsibility that each generation Business Center, father’s legacy. “Inheriting my father’s must perpetuate to disseminate the IPAG Business School legacy is my responsibility, but growing principles and values of the family and the business is my true mission. the business and the obligations of Succession means you don’t need to being an owner. We are beginning to sell the business; it’s yours to grow see an emerging trend with some family and an opportunity for you to build businesses moving toward being family your own identity and social status.” owned but non-family managed. This will make it even more important to tie The responsibility for being a good future generations to the core purpose owner and steward grows exponentially of the business and an understanding with each generation. Founders of what it means to be a good owner. who fail with one idea often go back to the beginning and start over.

70 Opportunity or moral obligation?

The desire to preserve family business legacy can be an asset or a liability for the family business, depending on how it translates into business practices.

While most future generations view legacy as a ‘gift’ to be preserved, some see the obligation to carry the legacy forward as a burden.

Jubran Coelho National Private Enterprise Leader, Partner, KPMG in Brazil

Opportunity or moral obligation? 71

here is a clear overlap between Not all family businesses are led and the values that represent the managed by family members like the Tfamily and how those are Hoey brothers and Mr. Garcia. Given Algar Group extended to create and sustain the importance of family values, we a family business legacy. were interested in understanding the has operated for impact of the emerging “family owned 90 years in many Family members in our interviews but non-family managed” business different fields and clearly see the family identity being model mentioned earlier and the ability reflected in their business activities as to sustain the legacy of business the business has we found in the case of Country Crest families is this new model. We were changed a great in Ireland. Brothers Michael and Gabriel fortunate to have the opportunity to deal in that time. Hoey are the current generation behind discuss this question with a recently Country Crest and they have a passion hired non-family CEO in Mexico. But the principles, for producing the best quality food purpose and while also maintaining long-established He told us that he views the family’s values of the relationships with local Irish and legacy as the “lighthouse” for the international farmers. The firm’s farming management team. The question for company have practices are directly connected to the management is not simply “where never changed. Hoey family’s strong intergenerational do we want to go?” but also “how do That’s our primary values: respect for the land, we want to get there?”. The family’s environmental reciprocity, sustainable purpose, principles and values are the legacy. It is what practice and community investment. guiding light. He understands the critical has brought the importance for management to continue company to its Family business leaders like Michael to be the pioneers and innovators that and Gabriel Hoey are bequeathing the founding generation embodied. position today and their accumulated family legacies to what will carry it their businesses, not only to improve He also understands the importance into the future. and maintain them for themselves of maintaining respectful relationships and future generations, but for the with the company’s employees and benefit of all the communities they communities. A pioneering spirit and Luiz Alexandre Garcia engage with along the way. respect for everyone that the company Algar Group, touches are the two guiding principles Brazil Mr. Luiz Alexandre Garcia of Brazil’s and framework for the companies’ Algar Group described a similar situation operations. These are legacies that in his family business by saying, “Algar must be sustained in determining how Group has operated for 90 years in many work gets done and how management different fields and the business has executes the company’s plans. changed a great deal in that time. But the principles, purpose and values of the company have never changed. That’s our primary legacy. It is what has brought the company to its position today and what will carry it into the future.”

72 Sustaining a legacy of values

Family members often refer to their business legacy in relation to the impact that the family’s purpose, values and principles have on the significance of the business.

In family businesses that are led by a non-family CEO, the clarity of the family’s purpose, principles and values guide how decisions are made and the firm is managed.

Silvia Rimoldi National Private Enterprise Leader, Partner, KPMG in Italy

Sustaining a legacy of values 73

any family businesses create The involvement in social issues that and sustain their legacies Mexico’s Grupo Urrea has shown Mby making meaningful throughout its history, for example, contributions to the communities began with the actions taken by Raúl around them. Often, this takes the form Urrea Avilés, who led the business in of philanthropic activities with families the mid-1950s. In his eyes, the perfect and their businesses giving back to indicator of the company’s success was society through financial contributions a comparison between the welfare of to organizations that are important the company and that of its employees. to them. Many also make significant He became president of COPARMEX ‘gifts in kind’ by donating their time and (the Employers’ Confederation of the sharing their expertise on community Mexican Republic) and worked together and charity boards. with the Confederation of Mexican Workers to create the Jalisco Institute For example, Mr. Brian Sidorsky, who of Social Assistance. Its mission was is Executive Chairman of Lansdowne to provide dignified housing to workers Equity Ventures in Canada, attributes in the region. Through the institute, his personal business success to the workers saved 5 percent of their salary opportunity he was given to participate and Grupo Urrea contributed the same in the local Junior Achievement program amount as a salary incentive. in his teenage years. It was there that he learned the principles of good business While the initiative was implemented practices and where his passion for first in Grupo Urrea, it was adopted by lifelong learning began. Mr. Sidorsky has several companies that belonged to the returned that gift as a former Chancellor confederation. It became the model of Junior Achievement Worldwide’s for decent housing and the basis for University of Success, a curriculum the nationwide creation of the National program that teaches financial literacy Workers’ Housing Fund Institute to make the world a better place for youth across the world. Similarly, legacy engenders a commitment and tangible support to In several of our interviews, we heard corporate social responsibility which about the expansive contributions often becomes an important thread that many family business leaders that ties families together across the are making, along with multiple generations. As an example, Ireland’s generations of their family members, Country Crest has gone as far as to long-term social initiatives that are establishing a dedicated corporate a meaningful reflection of the family’s social responsibility (CSR) arm in the values and purpose. business which is led by Michael Hoey, who feels that he and his brother’s generation have a duty to give back.

74 Purpose and philanthropy to achieve lasting meaning

Purpose and philanthropy to achieve lasting meaning 75

ost of us would like to know generations to revitalize them to that we’ve contributed make sure that they continue to have Msomething to the world and meaning in contemporary society. the lives of others that is worth being In my remembered and carried on. As with Even when faced with financial experience, the many aspects of family business, challenges, some of which were a result best way to build creating and sustaining a meaningful of the financial crisis in Asia, Thailand’s legacy has special significance. Not only Siam Amazing Park has remained a legacy culture does it represent the achievements of committed to preserving the company’s is by engaging the business, it is also a reflection of vision and the family’s legacy. While a members the character of the entire family and sale of the business was contemplated what they want to pass on to future at one point in its history, the second- of younger generations to maintain and adapt. generation family members were generations convinced that the business could be in company Through our conversations with family revitalized with more contemporary leaders across the globe and several management practices. They were activities, such members of their families, we have committed to maintaining the business as philanthropic gained practical insights into how and the family’s heritage of bringing efforts and families are using their accumulated affordable entertainment to the people knowledge and experiences to of Thailand and it was a legacy that they family assembly strengthen their businesses. were passionate about preserving. meetings, and We’ve seen how family values are through examples continuing to be embedded in their We have observed that the desire businesses and their motivations to perpetuate family values and to of the desired to not only extend their family and continue the past accomplishments of behaviors in every business legacies, but to continue to the family across generations is at the action and every nurture and guide their evolution. heart of a family legacy. The business legacy perpetuates the family’s decision that is This reinforces our understanding business activities, such as the pursuit taken every day. of how the stability of the family of innovation and entrepreneurship as a social organization is being across the generations. Tom McGinness leveraged to support and sustain family Global Leader, businesses and it is clear that family Mr. John K. Paul, Managing Director of Family Business, and business legacies are important Kuttukaran Group in India described the KPMG Private Enterprise, to each other and to each generation. value of institutionalizing the legacy of Partner, the family and the business in this way: KPMG in the UK There are unique opportunities to not only institutionalize family business legacies, but for future

76 Looking back in order to move forward

Through our discussions with family business leaders, we learned how transferring their values into their businesses continues to be central to their family and business legacies. While this may be seen as a burden or a challenge by some, we were encouraged to hear from most that the opportunity to carry these legacies forward is a strong motivator and an opportunity to be embraced.

It is our hope that this will encourage more family businesses to continue to unite the purpose of their business and the family’s values for an enduring legacy that generations to come are inspired to carry forward.

Looking back in order to move forward 77

Our company’s purpose is ‘sustaining life’ — Abunayyan we want our successors to be proud of that legacy Holding Company for themselves and their children.

Established: Abunayyan Holding Company, Saudi Arabia — An enduring sense of purpose to support a sustainable future Family: r. Abdullah Abunayyan, Laying the groundwork for the founder of the management succession Business sector: M Abunayyan family of companies, pioneered the The family of companies now importation of modern technology includes several brothers from to harness Saudi Arabia’s scarce the second generation, and third- water resources for agriculture. As a generation family members who Current leader’s family business start-up in 1950, the are today in the business. Khalid generation: company permanently transformed Abunayyan considers it to be the nation’s irrigation methods by unlikely, however, that all family Generations active supplying diesel-powered water members in future generations will in the business: pumps to farmers. Today, the family work in the business. “I don’t see business has an impressive portfolio my children being forced to join — or of businesses covering public the business being forced to employ private partnership investments, them. It has to be of mutual interest Family ownership: including Vision Invest and Acwa for it to work. Some children may Power, as well as products, solutions have certain ambitions or interests and services through its strategic to be part of the family business, but Annual turnover: business units and joint ventures there is no automatic process for that provide integrated solutions handing down the business to our v for water, power, oil and gas and older sons or daughters.” construction. Operations: Unexpected successions The next phase in the company’s evolution has begun as it transforms Mr. Abunayyan emphasizes that from an LLC to a closed joint stock succession planning does not company. Khalid Abunayyan, begin with an imminent retirement Chairman of the Board, describes event. For smooth transitions, this next stage of the company’s succession should be approached transition in this way, “We are as a clear and ongoing process that progressing from being a family- continuously assesses the rise and owned and family-run business to development of the next generation being family-owned — and best- within the business and their ability managed company. Our succession to earn the family’s confidence as decisions are focused on achieving they progress from entry level to this distinction.” management positions.

80 Family business profiles

© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. To prepare for unexpected events, regardless of whether or not the family strong succession at the board level is such as a health-related emergency or business is their final career choice. vital to continue to steer the company the sudden departure of an individual and to provide direction and leadership in a management or leadership role, As Mr. Abunayyan explains, “The worst continuity alongside family members Abunayyan Holding Company has situation would be for one generation who can engage with the public, assist obtained legal and structural guidance to pass away and have the children say, with business development and interact from external advisors. The family has ‘Just give me the dividend check’. That with stakeholders documented a thorough and agreed- would destroy the strength — the DNA upon process for identifying successors — of the family. As ownership starts Institutionalizing the business of to step into these roles, if necessary, to dilute through the generations, it is the family and invested significant amounts of becoming even more critical to keep the time discussing the protocol for an succeeding generations involved. Even The company is moving toward the unexpected succession to ensure that if they don’t have a vote in the board formation of a family council and everyone is aligned. today, they can hear the debate and other initiatives that will continue to learn how decisions are being made. If strengthen the institutionalization of Preparing for future succession they have gone through the journey and the family business and shield it from events listened to these debates and business individual and personal decisions discussions, they will have faith in the by shareholders. Mr. Abunayyan To solidify the foundation for responding institution and want to remain attached emphasizes that, “These approaches to planned and unexpected succession to the business.” have been written into management events, the company is actively building a science for 100 years, but that doesn’t program in each strategic business unit so For those who do choose a role in make it any easier. Try to implement it that family members, regardless of their the business, a family protocol was in a family business, and you can throw age, can step in if their capabilities are developed in 2011 to address the ways all your MBAs out the window. It’s very needed. In addition to their capabilities, in which the next generation will be complex, and the emotional reaction of Mr. Abunayyan emphasizes that it is engaged and developed. family members isn’t always logical or equally important to ensure that these reasonable.” • Following completion of their family members understand and uphold education, family members are the family values and continue to reflect Securing the business and required to work in an external them in all their actions. family legacy organization for at least 3 years prior to entering the family business. Special development programs are “From a family perspective,” concludes being implemented for NextGen • They are treated in the same manner Mr. Abunayyan, “I want to make sure family members, including courses at as all other employees. Pay and this is an institution that will continue Stanford and Harvard, external coaching benefits are the same for family and for the next 100 years. I want to leave and specialized leadership courses in non-family members alike. behind a place where the shareholders financial management and strategy and future generations are inspired and • They cannot be hired by a relative. development. “My nephews are in the interested in being a part of it. From a They must be interviewed by a team business, and I serve as their coach and business perspective, my father didn’t that includes HR and satisfy all the mentor,” says Mr. Abunayyan, “We’re aspire to be wealthy. This was not his job requirements — competencies, trying to understand their aspirations priority. He created a business legacy technical skills and soft skills. and what they want to achieve to and culture that centered around develop customized programs that work reliability, innovation, customer centricity Strengthening board leadership for them.” and honesty. Till today, these remain our core corporate values. We want to Board succession is on the minds of the The continuous engagement of create a global business that serves Abunayyan family as well, particularly NextGen successors our company’s purpose of sustaining following the transformation of the life and creates long term economic, holding company, which presents an One of the company’s succession social and environmental value. This opportunity to invite non-executive and goals is to maintain the continuity and is my father’s legacy that we hope to independent members onto the board. prosperity of the children. As cousins, endure through future generations of There will be eight board members they will constitute the majority of the the family business. If our employees, — five family, including the chairman, future shareholders and they are actively shareholders, customers and young and three non-family independent involved today in the business to ensure family members believe in our purpose, members who are investment, audit, they are aware of what is happening I’ve done my job, and that’s what will and industrial investment subject matter and have confidence in its direction, inspire the future generations.” experts. The company believes that

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The role of every leader is to assemble the Orbis Terra Media jigsaw puzzle pieces in a manner that is aligned with the company’s sense of purpose and a deep appreciation for disparate opinions.

Established: Orbis Terra Media, Switzerland — Leadership in a multi- dimensional family of businesses Family: rbis Terra Media is an the root of the family’s enterprises international media content as reflected in Orbis Terra Media’s O studio and publishing initiatives and several publications Business sector: house led by Ramia El Agamy, a and podcasts that are dedicated to second-generation member of a supporting family businesses and v family of businesses. The founding entrepreneurs throughout the world. business was an education advisory firm created by Ramia’s father Developing a wider generational Current leader’s more than 30 years ago. The family and world view generation: enterprise now includes Orbis Terra Media as well as the Tharawat Ramia and her sisters Farida and Family Business Forum — which is Shereen lead all but one of the El Generations active a non-profit network dedicated to Agamy family of businesses. Ramia in the business: Arab family firms — and Tharawat says that it might be appealing to take Magazine, a global publication the romantic view that somehow her for family businesses that was generation ‘got it right’ for women in cofounded by Ramia who is also its family businesses, where generations Family ownership: editor-in-chief. before them weren’t successful. However, as she points out, the will When Ramia’s father opened his and impetus for change happens at education design firm, it was for the the precipice and is more practical Annual turnover: purpose of pursuing a lifelong quest to than generational. With women v improve lives through education. Her comprising more than one-half of the mother’s career in healthcare reflected world’s population, there is a real need Operations: a passion for improving peoples’ for women to be in the workforce. If lives as well. The unifying factor in all that was not the case, conversations the family’s businesses today is this about gender diversity and women as interconnected sense of purpose. leaders would not be happening at all. Employees: It is the foundation of the family and v

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© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. She also recognizes that the increasing what happiness and success looks like. leader, she has an opportunity to lead by focus on women in family business In their businesses, they hold each other example and a responsibility to help shape specifically is not the epiphany of a accountable for making sure that each that open mindset. generation or a sudden moment of business defines success equally by illumination. It is an economic reality fulfilling its purpose and addressing the Due to the nature of their businesses, and one that has been pushed forward economic and social reality of the time. Ramia believes that she and her sisters by multiple generations of women may have more opportunities than who rallied for their right to vote and to In the current climate, for example, leaders of non-family businesses to have participate in the workforce. Ramia takes Ramia suggests that she may decide candid conversations about patterns note that her generation happens to it’s more important to create jobs than of behavior and perceptions that may have been born at a tipping point of what to achieve high profit margins. That is a be putting women and others at a hundreds of years of lobbying and work legitimate choice and it doesn’t mean that disadvantage. While this may present a efforts have accomplished. the business is less successful. It’s just unique opportunity for progress in the a different metric from what might have family business environment, Ramia is To continue to progress, Ramia believes been considered a successful business concerned that women’s views are not that her generation and those that follow outcome during boom times. being communicated sufficiently to truly have a responsibility to shape how open up opportunities to invite a diverse peoples’ overall well-being is affected as The sisters’ most difficult challenge range of viewpoints and experiences and more women assume leadership roles. in defining what the success of to discuss them openly in the hope of This reshaping extends well beyond the their businesses looks like in today’s achieving a more balanced view. fact that women are able to do meaningful environment has been uncoupling their work and are considered to be legitimate goals from family expectations. All three She is quick to clarify that these patterns successors to their family business. It also are learning to let go of pleasing family are not coming from a place of malice or includes how that process happens and members and moving toward pleasing poor intentions, but because businesses what success looks like when women the business by making decisions that and business environments have they take on these roles. support the goals of the business as they historically been dominated by men and have defined them. Ramia is quick to traditions that are difficult to change. Redefining success point out that no one wants to disappoint their family and the uncoupling process Ramia believes that it took a long time for Ramia suggests that the broad is not an easy one. She and her sisters she and her sisters to feel that they were definition of a successful family started by recognizing old patterns in allowed to be as ambitious as men, to business will continue to evolve their behavior and now challenge each be big dreamers and pursue ‘big, hairy, through the experiences and outlook of other in answering, “Are we making audacious’ goals. She and her sisters each generation and the business and this decision because it’s best for the have recognized this about themselves social environment they are operating business or because we really want to and are giving each other permission in at the time. make the family happy?” to go after what they want and to stop waiting for someone to tell them they’re Her parents, for example, built their Creating a diverse and sustainable good enough. business to support the wellbeing of their business family. The economic environment was With access to the right content, for on their side and it helped them achieve In the quest to ensure that she continues example, reading the right book or article that goal during a long period of invention to do what is best for the business, Ramia at the right time, and the open acceptance and economic advances following the emphasizes that Orbis Terra Media’s of new generational points of view, Ramia Second World War. In contrast, Ramia sustained success is only possible by believes that peoples’ thinking can begin and her sisters started their careers in welcoming a diversity of perspectives to pivot. We are on the cusp, she says, the midst of an economic recession. As and wide-ranging expertise. The role of of a powerful basis for challenging each a consequence, Ramia explains that she every leader is to assemble the jigsaw other on an old narrative about the role of has never worked in boom times and she puzzle pieces, she states, in a manner women in family businesses. That’s what and her sisters have a scarcity mindset, that is aligned with the company’s sense really matters now and there are many not one of never-ending prosperity. As of purpose and a deep appreciation for conversations to be had. a result, each has her own definition of disparate opinions. As a family business

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We are focused on maintaining the company’s Avila Wagner SAS traditional values while also refreshing its vision for the future.

Established: Avila Wagner SAS, Colombia — Transforming retail with the next generation. vila Wagner SAS represents The contribution of women to the Family: an entrepreneurial legacy Avila family of businesses v Athat has been sustained across the family for close to 50 From its earliest days, the Avila Business sector: years. It began with the passionate family’s entrepreneurial ambition was efforts of the original founders, reflected in a commitment to shared Nelly Vélez and her husband leadership by both men and women José Ávila, who acquired a retail in a traditionally male-dominated Current leader’s hardware operation in 1971. business. The starting point was a generation: Ferretería Argentina (Argentina bold decision by Nelly Vélez to sell her Hardware Store) was located in family home in order to finance the the town of Pasto outside the main acquisition of Ferretería Argentina, markets of southern Colombia, the starting point for her and husband Generations active where hardware companies were José to work side-by-side and build a in the business: not well-situated at the time. The thriving business together. couple’s ambition was to stand out from their competitors. Energized That same entrepreneurial energy by that competitive spirit, they reemerged with another female Family ownership: made an 8-hour journey across rural member of the family in 1997 when roads every 2 weeks to stock up on María Fernanda, the youngest products in the city of Popayán. daughter of Nelly and José, opened Annual turnover: Ferretería Buenos Aires (Buenos Aires v With a larger inventory of high-quality Hardware Store) together with her products, lower prices and great husband Petter Wagner under the legal customer service, Nelly and José entity Avila Wagner Limited. Operations: succeeded in setting themselves apart. By 2010, Ferretería Argentina In a business that might typically employed 150 people in three stores be seen as ‘men’s work’, the Employees: with sales approaching 40 billion contributions of mother Nelly pesos (US$11 million). They also and daughter María Fernanda are succeeded in sharing their values and noteworthy. In addition to being the entrepreneurial character with their cofounder of her business, María children and their youngest daughter, Fernanda has held several influential María Fernanda, in particular. roles in Ferretería Buenos Aires, ranging from sales and treasury to overseeing the company’s substantial financial affairs.

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© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. Different times, new capabilities While the commitment is there, varied perform, sharing in the day-to-day perspectives are arising between operations and contributing a next- The founders of Ferretería Argentina and the second and third generations generation point of view on the future of Ferretería Buenos Aires have built a strong regarding the plans for sustaining Avila the company. sense of ’emotional ownership’ into their Wagner’s prosperity. María Fernanda businesses with family and non-family and Petter are focused on maintaining En route to a prosperous future members alike. This affinity and loyalty the company’s traditional values of to the business underpins their strong excellent customer service, good prices María Fernanda and Petter’s retirement commitment to its success and the and high-quality products, all which have plans and the stability of their post- family’s keen interest in keeping it growing been the foundation for the success of retirement income are another important for future generations. their business to-date. Their children are part of the family conversation regarding introducing challenges to the company’s the path ahead for Ferretería Buenos Aires. It is widely recognized that succession traditional vision with the goal of The creation of a family council is being planning is not an event that happens on charting a refreshed path for taking the considered to maintain communication a scheduled date, but rather a process business forward. and unity among the family members and that takes place over a period of time. to contribute to the smooth transfer of the This process had not yet started in the Forging a new path ownership and leadership of the business Avila family. Following the passing of down the road. José Avila in 2015, a protracted 2-year It is evident that María Fernanda and succession began. The succession Petter want the next generations of the The emotional ownership of the family choices between the son and daughter family to be their successors and they business is embedded in María Fernanda of his first marriage and the daughter of acknowledge that resolving the differing and Petter’s retirement decisions due his second were intricate and it took time points of view regarding the company’s to their strong desire to protect the to resolve them satisfactorily. vision will be the first critically important company’s values as a fundamental basis step before this goal can be realized. for its continuing success. As a result, they Despite the complexity of the Avila family Family discussions are already underway are contemplating the creation of a board structure and this challenging succession to surface the new perspectives and to of directors so that they can continue to experience, the motivation to keep the consider them carefully to ensure that participate in the business and transfer business in the family remains strong. The the business will continue to prosper for their knowledge to future generations second-generation successors to the Avila generations to come. through this new role. They are also family of businesses have reaffirmed their considering the formation of a family commitment to keeping the leadership While the Avila Wagner family hopes to council to maintain open communication and ownership of the business within the keep the business in the family and the and unity among all the family members family in order to secure the emotional family in the business, they also recognize and support the smooth transfer of roots that were fostered by the founders’ this may not be the career choice for future ownership and leadership in the business entrepreneurial energy. generations. Some are already pursuing when the time for their retirement arrives. careers outside the family, particularly The hope is that the third and fourth if they haven’t been involved directly in The entrepreneurial spirit of the Avila generations will be interested in joining the the decision-making and don’t have a Wagner family is the engine that drives business, bringing more diversity of ideas significant enough emotional ownership its leaders. Looking ahead, María and plans for the future with them, while and attachment to the business to make it Fernanda Avila and Petter Wagner fully staying committed to the core values their career choice. understand the need to ensure that that have made the businesses great. the vision for the future is fully aligned By tapping into the knowledge of these Others, such as Stefano, the youngest throughout the family to help achieve younger generations who have grown up son of María Fernanda and Petter, are the company’s economic goals. At the in technological environments, the family charting their own paths inside Avila same time, they have also recognized is eager to add a fresh, contemporary Wagner. Stefano’s emotional attachment that welcoming greater diversity of perspective to a very traditional retail to the business is already strong and he ideas from the younger generations business — one that creates a powerful is focused on learning by observation and may help transform the traditional retail new competitive advantage. respecting the history of the successful business and continue to advance the businesses that his family has built. He entrepreneurial spirt of the family. is learning each task that his parents

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It should be okay for women and men to Canadian Fiber embrace their differences. It is the differences that Optics Corp. are important for moving us all forward.

Established: Canadian Fiber Optics Corp., Canada — A new generation of family business leadership

anadian Fiber Optics values forward with it. Second, it Family: Corp. is a family-owned is fulfilling both generations’ desire Ctelecommunications to create and build a business that infrastructure company. will be sustainable in the family for Business sector: Headquartered in western Canada, multiple generations to come. the company builds and delivers high-speed internet connectivity A transformational turning point to remote and rural communities — for the family and the business in underserved areas. The origins Current leader’s of the company are the story of a Jodi initially chose not to be involved generation: transformative family succession in the traditional family business, decision that led the first-generation wanting instead to figure things out founders of the Bloomer family for herself and create something to exit their long-established and uniquely her own. After a few minor Generations active traditional businesses to become successes and what she describes in the business: shareholders in an ambitious new as ‘good character-building failures’, technology enterprise founded an opportunity presented itself by the next generation — their to support her family through a Family ownership: daughter, Jodi Bloomer, and her complete business restructuring. husband Arjen Kaput. This process ultimately led to the family’s consequential decision to While this might not be a typical exit their businesses entirely. Not Annual turnover: family business succession story, only was this a critical turning point v it has a great deal in common for the family, it also paved the way with most. For one, it is clearly for a new career path for Jodi when extending the entrepreneurial spirit she recognized that she had skills Operations: of the family from one generation and knowledge that would add value to the next and taking the family to the exit process.

Employees:

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© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. The transition from daughter to trust that already existed between and behind her to support her in what she business advisor is not always a father and daughter to unfold in a has chosen to do. straight or easy path. In Jodi’s case, it business relationship. The business was critically important to declare her relationship evolved and became Externally, where she is not known, dual roles openly, and recognize that it clearer when Jodi and Arjen founded however, she recognizes that there might take time for her parents to be Canadian Fiber Optics Corp., with may be perception issues that have able to differentiate between her role her family financially and emotionally to be addressed quickly for women in in the family and her responsibilities invested in the company, but not business, particularly those working in in the business. She started by openly participating in it directly. male-dominated industries, to build and expressing to her father that she was maintain their credibility. there to add value to the exit process, Leading with respect not as a ‘daughter with her hand out’. In today’s environment, authenticity Jodi is a young woman working in a is becoming increasingly important. For family business successors, she tech industry dominated by men. In For women in male-dominated family describes the transition to a dual Canadian Fiber Optics Corp.’s early days, businesses, that means leading like family/business role in this way: “It she was running the construction side a woman, not like a man — to be is important to be very clear about of the business. She understood the feminine, sensitive and intuitive in a why you are making the choice to join importance of earning the respect of business environment and effective in a family business, the role you can the men on the company’s construction growing a prosperous business. play and what you can offer that will sites, many of whom are her father’s add value to the business and to the age and have been working in the An environment that allowed women family — not what you can get from it. industry for more years than she has in business to be authentic often didn’t If I have to ask myself those questions been alive. exist for previous generations and every day for months, I will. Frankly, women had to ‘put on their shoulder it’s empowering.” Her starting point was a position of pads’ and work hard at trying to be enquiry to acknowledge that they knew one of the boys. It is Jodi’s hope that Blurred lines more than her and to understand their authenticity becomes the standard for specific areas of expertise. Their input all women in business. To lead the way, Jodi is the first to admit that the lines is critical to making good decisions on she believes that family businesses between her as the daughter and her behalf of the entire company. As their have an exceptional opportunity to in the business were blurred initially business leader, she has established give a new generation of women a and it was often difficult to detach the a tone of mutual appreciation for their greater voice in their businesses and two. They were comingled and it took experience and knowledge, combined demonstrate the value they add through some time to achieve clarity on how to with her technology and business their talent and distinctive perspectives. separate them. In the early stages, it development know-how. was more challenging for her father than “When you believe that this is the way her mother to see Jodi as an adult and Future prospects for women in things should be for women in business, to let go — to trust how they raised her family business it’s important to remember that this and to be confident in her knowledge isn’t the way things have always been,” and ability to execute business plans. The Bloomer family raised their daughters remarks Jodi. “It’s due to the hard work to be strong women. The message when of so many women — and men — who However, the exit process became a Jodi and her sister Carlie were growing have come before us to open the doors. significant transition point itself, as up was, ‘you can do whatever you want’. It should be okay for women and men it became increasingly necessary to Today, she feels that her entire family — to embrace their differences because it allow others to become involved in husband, father and mother, sister and is the differences that are important for the business and contribute their very brother-in-law — are always right beside moving us all forward.” specific expertise. It also allowed the

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Innovation has always been at the center of Logoplaste everything we do. Being one step ahead means taking calculated risks and a willingness to invent your own future.

Established: 1976 Logoplaste, Portugal — The evolution from family enterprise to enterprising family Family: de Botton arcel de Botton arrived Time to pass the baton in Portugal in 1940 Business sector: Mand for many years, To maintain the company’s growth Plastic packaging he owned one of the largest momentum, Marcel de Botton knew Portuguese plastic factories in that Logoplaste needed to expand the greater Lisbon area. That all its horizons and its markets and an Current leader’s began to change, however, in international expansion strategy would generation: 1974 as dramatic developments in be the answer. He also recognized Second Portugal’s political landscape began something that entrepreneurs often (with non-family CEO) to have a negative effect on the fail to admit: he did not have the management of privately-owned capabilities that would be required companies. He sold his interest in for an aggressive entry into foreign Generations active the company for $1 and returned to markets. in the business: what he loved best — rigid plastic Second and third packaging — and Logoplaste was A NextGen successor steps forward born in 1976. While research suggests that many Family ownership: At the time, only companies with family business CEOs are often 40% via Family Ofﬁce fewer than 50 employees could reluctant to pass the leadership of Generation operate without an employee council their business to the next generation, or union. That political situation wasn’t Marcel de Botton’s decision is an Annual turnover: about to change, so Marcel thought exception. At the age of 64, and of an ingenious way to make it work with international expansion as the EUR 500 million for him. He created what he called a impetus, Marcel decided to pass ‘through-the-wall’ business model, the leadership baton to the next Operations: producing packaging in small factories generation, his son Filipe. In addition Portugal, with 64 (each with fewer than 50 employees) to representing some foreign banks in factories in 16 countries that were installed directly on the Portugal, Filipe de Botton had already client’s site. This fully integrated been playing an important role in the solution, marked the beginning of financial matters of Logoplaste for Employees: in-house manufacturing in Europe, and several years. 2,400 Logoplaste grew aggressively in the Portuguese market between 1976 and the late 1980s.

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© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. The legacy of an entrepreneurial Group became a 60 per cent shareholder generation of de Botton family members in mindset in Logoplaste. The de Botton Family Office the company will be vital. Although private retains the remaining 40 per cent. equity is currently the first shareholder, he While Filipe was involved in the family is conscious that the fund will exit at some business at an early age, he was also an Filipe became Chairman and Alexandre point in the future and it will be necessary entrepreneur in his own right outside the joined the Board, as both stepped down to identify a successor who will be family firm. He founded a private bank as Co-CEOs. And for the first time in prepared to carry the business forward. with his longtime friend, Alexandre Relvas. Logoplaste’s history, a non-family CEO When the bank was sold in 1991, Filipe was hired. Planning for that succession is already de Botton used his proceeds to purchase underway. the ownership shares of Logoplaste from The challenge of non-family CEO his father and sisters, giving him both transitions The future of the family business management and ownership control. Filipe acknowledges the difficulty in the Filipe has led the de Botton family’s As a condition of the purchase, Filipe made transition to an external CEO. “It was progression from a family enterprise to sure that his father would continue as the hard,” he says, “of course it was hard, a high-functioning ‘enterprising family’. company Chairman. To this day, Marcel even if you tell yourself it is not. In the first He has created many new ventures de Botton, at the age of 94, remains the couple of months I was here in the Family outside Logoplaste such as a non-profit Honorary Chairman of Logoplaste. Office and I did not understand why they organization to support children with were having meetings in the Logoplaste disabilities, a joint venture with another New ownership structures for a bold office across the lawn and I wasn’t being family firm which is the leading premium way forward called to attend those meetings. It was not ice cream producer in Portugal, a co-work that I wanted to be there. I just suffered venture, as well as one in ceramics and This succession of both management and because of not being there.” another related to blueberry production. ownership to Filipe was a new chapter in Filipe’s son Lourenço works in the the Logoplaste family narrative — a family The continuing role of family company’s blueberry operations and the business story that continues to build on governance family shares a modern open-office space the visionary strength and ingenuity of its with 20 co-workers, all working side- founder. Although the CEO succession process by-side on the family’s commercial and was externalized, within the setting of the philanthropic ventures. In Filipe de Botton’s words, “Innovation partnership with Carlyle, the de Botton has always been at the center of family intends to maintain its role in the The evolution from a family enterprise everything we do. Being one step ahead governance of Logoplaste. to an enterprising family means taking calculated risks and a willingness to invent your own future. “Logoplaste is, at its core, a family In the case of Logoplaste, the transfer It also means developing new ideas, business”, as is stated on the company’s from the first generation to the second and new concepts and revolutionary ways of website and the de Botton family the plan for the transfer from the second thinking about the business — and who continues to be the key ingredient in generation to the third appear to be very will be the right person to lead it in a bold Logoplaste’s success and continuity. different transition events. However, they new direction.” share two important and common threads As Filipe de Botton explains: “In order to in the de Botton family enterprise: Filipe took one of those bold steps in 1996 strengthen your role as an influencer in • a strong-willed entrepreneur with a when he invited his friend and former the company, it’s very positive when your clear vision of how the business and business partner, Alexandre Relvas, business partner understands that what the family should evolve, and to join Logoplaste as Co-CEO and a you are suggesting is, indeed, the best minority investor, opening up the group’s thing for the company; that you are not just • an older generation that begins to leadership to a non-family member for taking positions based on emotions and consider succession at an early age the first time. Logoplaste experienced personal aspects.” One day in the future, (Marcel in his ‘60s and Filipe in his strong international expansion under their his successors can help in the selection of late ‘50s). co-leadership, a success that appears to the next CEO for Logoplaste. contradict some research that suggests Marcel de Botton did not hesitate to that non-family CEOs of family firms Planning for the third-generation pass the company leadership to the next outperform when they don’t share power successor generation. As the passion for sustaining with family members. the family business continues to echo According to Filipe, maintaining the bond through the second and third generations, As Logoplaste’s success continued, a between the company and the founding Filipe de Botton also appears to welcome new expansion opportunity emerged in family is important, even for the private the idea of passing the baton within the 2016 that required a large capital injection, equity investors, since this link increases family as well. and Logoplaste made a decision to seek the company’s value. For this reason, he is a private equity investor. In 2016, Carlyle confident that the involvement of the next

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Several members of the family have influenced Arrocera La the evolution of our corporate governance and Esmeralda S.A.S. created policies and protocols that have made our decisions more objective.

Established: Arrocera la Esmeralda S.A.S., Colombia — Cultivating a family and a business together Family: rrocera la Esmeralda S.A.S He notes that when he and his siblings has reached an important were graduating from university in Amilestone in its history, the 1980s and 1990s, they brought Business sector: celebrating 70 years of sustainable with them a new generational rice production and distribution mindset that reflected the importance throughout Colombia. Today, the of implementing total quality company retails a wide variety of management, just-in-time production rice products under its legacy brand and continuous improvement — all Current leader’s Arroz Blanquita, as a tribute to Mrs. of which were garnering widespread generation: Blanquita Cárdenas, the mother of attention at the time, but not the founder of the family’s business. widespread adoption.

Learning from experience The second-generation vision Generations active in the business: As in many family businesses, the The original business approach had current CEO, José Manuel Suso been cautious and operated under two Dominguez, was exposed to the key principles: paying the maximum Family ownership: business at an early age, working in price to the farmer and selling at the the company during the summers. minimum price to the consumer. This small-margin approach meant that “When I had to choose a career,” many operations, including inventory Annual turnover: he says, “I was guided by my father management, were conducted in- v and by the passion I already had for house and often by hand. While the the company. I used to do a bit of principles behind the strategy were everything and I was always making admirable and benefitted farmers as Operations: observations and finding opportunities well as customers, it wasn’t optimal for improvements. My father could for the company’s growth. see that those were important Employees: contributions.” With José Manuel’s arrival, a modernized vision for the future was This informal learning throughout the introduced — one that would promote summers advanced the development agro-industrial innovation in an efficient of José Manuel’s understanding of and sustainable way, supported by fair the family’s values and traditions. It trade and a respectful commitment to also gave him the opportunity to apply equality and diversity. his creativity in developing innovative solutions to the company’s operations.

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Family business profiles 91

When we discuss family business legacies, Algar Group ownership is not enough. There must be a leader within the business and the family. It’s important to know who will carry the flag to the next generation. Established: 1930 Algar Group, Brazil — A living legacy of people serving Family: people García rice threshing machine was that a true family business is one Business sector: created by Mr. Alexandrino in which the entire family becomes Diversiﬁed A Garcia on October 10, involved in managing the company. 1930 and marked the founding And under such circumstances, of the Algar Group whose name the financials of the company are Current leader’s represents the initials of its founder. blended with those of the family. generation: Mr. Garcia was a visionary, well Third ahead of his time, and he had an Algar Group, on the other hand, extraordinary capacity to overcome sees the family relationship with challenges. He also had a genuine the business as, “a family that Generations active commitment to serving others. controls a group of companies”, in the business: His goal was to make life easier for and it is important to differentiate Second and third people and to help them prosper. between the company/business and the family/owner of the assets. The Family ownership: The founder’s commitment Algar Group’s management team is continues today and the company comprised of business managers 75% openly communicates its primary from outside the family and only purpose as “people serving people” three family shareholders currently Annual turnover: across its telecom, technology work in the company. US$570 million solutions, entertainment and agricultural commodities businesses. The family owners’ primary Operations: responsibility is to provide guidance Reconciling the family/business to the managers; direct the company Brazil, Colombia connection strategy; make sure its culture is & Mexico aligned with that of the family; and The Garcia family no longer thinks develop the next generation to Employees: of the Algar Group as the family become good owners. 21,000 business because they believe

92 Family business profiles

© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. Over the decades, Algar Group for themselves beyond being a good members’ spouses and in-laws don’t has consistently reinforced the owner and to be prepared to attain the participate and work in the business.” interdependence of the company academic credentials and experience The main rule, he said, is to be culture and family culture and their that will be required if that is their career transparent and speak from the heart. If shared purpose. The family has an choice. one difficult topic is discussed with one important responsibility in making segment of the shareholders, everyone sure that the principles and values of Family members are told that they will else is made aware of that conversation the family continue to be the driving be provided with the best training in and has the same information. forces behind the company’s strategic terms of education and life experience direction. It is also the family leaders’ to build their life and to be successful As in many family businesses, there role to make sure there is a long-term in a business role within the company are regular family rituals, meetings and view that generates ownership behavior if that’s what they choose. They have family events to talk about the family’s throughout all generations of the family the right to make that decision, but history and learn about the business. and among the company’s employees. there is no family obligation to do so The family legacy had been embedded and family members are encouraged in the business using old movies of Mr. Luiz Alexandre Garcia, Chairman of to pursue their own interests his grandfather who has achieved icon the group, said that the responsibility and develop their own particular status within the family. As well, Mr. for sustaining the business is far greater capabilities outside the company. Garcia’s father is 85 years old and is the for future generations than it was for the ‘culture ambassador’. Everyone likes to original founder. Founders usually come While this is a highly democratic talk to him and take pictures with him from humble beginnings and, if they fail, approach, Mr. Garcia pointed out that when he attends events. However, the they go back to the beginning and often it can be potentially challenging to family legacy is now becoming more start over. When future generations develop the next generation’s sense institutionalized as it moves from being receive a large asset that they are of ownership when they don’t actually focused on a specific family member responsible for managing, the scale work in the company. Without this to being the wider family and the of the potential damage can be much connection, there is a possibility of them business collectively. higher if they fail because the company saying, “I’m going to sell my shares no longer belongs to only one person. because I don’t have a sentimental On a more formal basis, there is a relationship with the company.” The Shareholder’s Academy with academic Learning to become a good guardian Algar Group works very hard to keep an lessons and leadership coaches. Equally emotional attachment in place and to importantly, the family has created The first lesson that Algar Group teaches help the members of each generation UniAlgar, a formal teaching mechanism the members of each generation is their understand that ownership is their for employees to learn about the responsibilities as owners. Even though responsibility but preserving the legacy company’s culture, values and principles they may never work in the company, and taking it forward is a requirement and develop their management skills they have to be conscientious guardians that has even greater consequences. through classroom lessons and videos. of the company’s principles and values and to prepare themselves as much Learning to live the legacy The legacy that the founder has left to as possible for the role that they will the family is enduring and while the be expected to play based on their Sustaining a legacy can feel like business itself will change, the culture interests and abilities. a weighty obligation for younger should last forever. The testament to generations who may not fully this is that Algar Group has operated for Mr. Luiz Alexandre Garcia, Chairman understand the importance of the more than 90 years in many different of the group, remarked that members purpose and values of both the family fields of business. The principles, of the next generation can prepare and the company. There are two key purpose, values and success of the themselves to be executives of the factors in Algar Group’s mission to company have never wavered and have company if that’s where their interests keeping the legacy alive within the been widely recognized. As recently lie, or as a board member if they have family: repetition and transparency. as November of 2020, Algar Telecom the right qualifications. Another option was recognized as Brazil’s “Company is to not be involved in the business As Mr. Garcia explained, “You have to of the Year” by Exame, a magazine at all and participate only as an active keep doing this over and over again specializing in economics, business, member of the family. While no one in because each generation will ask the politics and technology published by the family relinquishes their ownership same questions that the previous Editora Abril. responsibility, it is up to them to decide generation asked. Sometimes, these independently what role they want are difficult topics, such as why family

Family business profiles 93

Women who perform diverse roles in the Hirsch's family as well as in their business are often more flexible and they’re able to make good decisions in the moment while juggling multiple priorities.

Established: Hirsch’s, South Africa — A champion for women in family business Family: argaret Hirsch has become of its ongoing projects is identifying an inspiring example to and celebrating 100 inspirational Mbusinesswomen across African women who are motivating Business sector: Africa, starting from humble beginnings and supporting the entrepreneurial to eventually co-founding and managing dreams of other women across Africa. Hirsch’s with her husband Allan. Today, Margaret is one these influential Current leader’s Hirsch’s is the largest independently lionesses. owned appliance and electronics retail generation: operation in South Africa. One of her enthusiastic interests is creating opportunities to work with It was a small business for a long time entrepreneurs and family enterprises Generations active and only began to expand significantly to help them build their businesses. in the business: when the founders were in their fifties. Through a regular series of networking For 30 years, Margaret poured her events and conversations that she energy into building the business. leads with other business experts from She was 62 when Hirsch’s began its around the world, she provides practical Family ownership: transformation into a business family guidance that is helping to build up and she was able to broaden her the business acumen of existing interests beyond the scope of the entrepreneurs and those who have a Annual turnover: core business to pursue several new dream of becoming one. philanthropic endeavors. Laying the groundwork for the next One of her passions is to act as a generation of the family business Operations: champion of women’s empowerment. She strongly believes in giving back Within the Hirsch family business, to the community and is driven by the Hirsch’s son and daughter were a desire to guide and assist people not encouraged to enter the family Employees: in less fortunate situations, having business directly based on their firsthand experience from financial and parents’ belief that it would be healthy emotional setbacks in her own early life. for them to work outside the family first to develop an understanding of what “Lioness” of Africa — matriarch of it’s like to be an employee. The Hirsch the family business siblings saw what was going on in the world, considered the options and “Lionesses of Africa” is a social ultimately made the choice to join the enterprise working to advance family business. Africa’s female entrepreneurs. One

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We believe in sustainability and in being Country Crest true to nature to deliver the best produce to & Ballymaguire the market. Foods Established: Country Crest & Ballymaguire Foods, Ireland — Passionate 1910 (family farm) & about Irish food, agriculture and the environment. 1993 (Country Crest ichael and Gabriel Hoey sister company, Ballymaguire enjoy a long-standing Foods. The brothers’ vision is Family: M family farming heritage to lead the way in viable food Hoey dating back to the establishment innovations by producing fresh of their family farm in 1910. and healthy prepared meals for Business sector: These strategic fourth-generation consumers through sustainable and brothers have expanded beyond traceable farming practices within Sustainable agriculture the traditional farming practices the “farm-to-fork” model. and food production of their predecessors to answer the call of modern consumer Local impact through the family’s Current leader’s needs. And they have done so shared values generation: without compromising their deeply embedded, intergenerational The family’s values are evident in Fourth family values: respect for the Country Crest’s farm-to-fork model land, environmental reciprocity, and the day-to-day operations of Generations active sustainable farming practices and Ballymaguire Foods’ stated values: in the business: community investment. sustainability, teamwork, integrity Fourth and trust, quality, community, In 1994, the Hoey brothers innovation and giving back. established Country Crest, which Family ownership: initially specialized in potato The value system of the Hoey 100% growing, grading and packaging for family and the internal operations retailers and providing private label of its businesses emphasize their Annual turnover: products for grocers’ brands. Today, commitment and duty to the Country Crest is a multi-division community and the imperative US$97 million company that supplies potatoes to give back to society. The family and vegetables to retailers across business has invested in a wide Operations: Ireland, Northern Ireland and the variety of social and environmental Ireland, UK & United Kingdom. actions that reflect a strong sense of North Ireland community care, accountability and They have also expanded environmental reciprocity that are their product horizons with a reflection of the company’s name Employees: prepared foods and vegetable and reputation. 350 accompaniments through their

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Our succession and innovation decisions Universal Cement were decided simultaneously to keep the company Corporation competitive and to make sure it continues to be fit for the future.

Established: Universal Cement Corporation, Taiwan (jurisdiction) — An integrated network of families and businesses. Family: niversal Cement is a family leaders of what has become known business within a family of as the “Tainan clan”, a group of families U businesses and it reveals that brought together their capital and Business sector: a unique system of ownership and human resources to build significant management in the family business commercial enterprises during a model. The company’s origins began vigorous period of industrialization with capital from the Hou family following the recovery of Taiwan. They in 1960, followed by investments invested in each other’s companies Current leader’s from 40 additional families and and gradually developed a unique generation: community shareholders shortly system of corporate governance for thereafter. Four founding family overseeing them collectively. leaders from the Hou, Wu, Yan and Generations active Kao families came from nearby Adopting a non-family governance locations in Tainan City in southern model to maintain autonomy in the business: Taiwan. They, along with their relatives and villagers in nearby Unlike many family businesses that communities, not only helped to are controlled by a single family, Family ownership: establish Universal Cement, they ownership and management rights of v also helped to finance the creation each company in the Tainan clan are of several companies in their not controlled by individual families. communities. While the four core families have a Annual turnover: significant ownership stake in their All of the families are from the Beimen individual businesses, there are also District of Tainan. They are business numerous minority shareholders from Operations: partners, good friends and the primary several families in local communities.

Employees:

98 Family business profiles

© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. In order to keep the management and Along with their father, the two sons In 2010, Universal Cement signed a operation of each company running entered the family business to apply what contract with the Industrial Technology smoothly, the founding members of they had previously learned while working Research Institute to transfer the patented the Tainan clan decided to maintain outside the company. They revamped the technology of novel pressure sensor and the autonomy of each company’s company’s operations and fulfilled their collaborate on its application to computer, management team by appointing non- father’s succession plan. communication and consumer electronics family CEOs who had full responsibility for products and establish the production line each company’s operations. Ownership C.-S. Hou, the elder brother, is currently of novel pressure sensors. remained among the families within the Universal Cement’s executive deputy Tainan clan. However, family members general manager. Early in his career, he The brothers also introduced strict controls typically did not participate in the regular was a member of the research team of the in the business, reduced excessive costs operations of their own companies. Industrial Technology Research Institute and conducted a deep analysis of the in Taiwan, where he was engaged in the cement industry to proceed in a new The Hou family originally followed this non- research of thin pressure sensors. His direction with building materials, such as family management protocol, even though expertise in the electronics industry and gypsum board. By 2014, the performance the family owns the majority of Universal his creative vision became a source of of gypsum board surpassed cement Cement’s shares. The commitment to diversification for Universal Cement. and ready-mixed concrete as the most non-family management began to change, profitable division of Universal Cement. however, in 2008. C.-Y. Hou, the younger brother, is the deputy general manager. During his The value of family leadership Demand in the cement industry was studies abroad, he once served as the beginning to decline rapidly and growing President of the Harvard Taiwan Student The Universal Cement example illustrates environmental protection issues were on Association and interned in a US some of the potential challenges the horizon. Universal Cement was under financial institution. in monitoring and motivating the the management of a very conservative performance of non-family leaders. In non-family CEO at the time and without Business transformation through particular, if the family owns the equity but any innovation or diversification plans, strong family governance does not have adequate mechanisms for the company was beginning to operate overseeing the company’s performance, at a loss. It became clear that a new, The succession and innovation decisions non-family management control may not transformational strategy was required made by Mr. B.-Y. Hou have worked hand- be a good governance choice for the long- for the company to survive. And, so, in-hand to keep the company competitive term development and sustainability of 48 years following the formation of the and for family members to continue their the company. business, the third-generation chair and professional development. CEO of Universal Cement, Mr. B.-Y. Hou, The return of family members to assume purchased all the shares of the company The next-generation family leaders have management duties at Universal Cement and assumed management control. changed the conservative culture of not only shows the value of family the company and managed to preserve management and leadership, it also All signs point to transformation its revenue and profits in a mature highlights the potential for continued trans- industry. One of the first steps that generational entrepreneurship in a mature Unlike some family leaders who have the Hou brothers took was to increase company and industry when innovations concerns that their children may not be the performance of gypsum board and potential areas of diversification are interested in the family business, Mr. B.-Y. construction material, which added profits not only encouraged but expected. Hou was one step ahead. Not only did he to the core business of Universal Cement. take control of the family business, he also In this case, the succession and innovation created a development map for his two The second step was a transformational decisions were decided simultaneously, fourth-generation sons who had strong investment in the production of making the company competitive once attachments to the business. They also value-added products, including the again and providing the family oversight had the talent and willingness to introduce development and commercialization necessary for ensuring that it continues to innovations that would be necessary for of high-tech materials, such as thin- be fit for the future. the family enterprise to evolve and survive. pressure sensors.

Family business profiles 99

BioTechUSA During an intense development phase, the second generation took on a significant role Established: and brought a systems approach as well as new ambitions to our business.

Family: BioTechUSA, Hungary — Governance and ownership for a v second generation.

ith $50 in their pockets, 2020 was a year of dynamic growth. Business sector: Katalin and Ferenc Lévai After buying Shopbuilder, the biggest W headed to Ukraine during and oldest dietary supplements web the rapid build-up of the fitness shop in Hungary, they acquired their market in 1992. Their goal? To raise biggest competitor, Scitec Nutrition, enough capital to finance a new and doubled the number of employees gym-equipment import business. to 1,800. The headquarters moved Current leader’s to a new 3,200 square meter office generation: Within a short period, they building. successfully equipped 150 gyms across Hungary. When the gym Growing into the family venture Generations active equipment market became less From the seeds of Katalin and attractive, Katalin and Ferenc quickly Ferenc’s modest beginning, the in the business: mastered the art of the pivot and Lévai family has nurtured their introduced exercise-related nutritional business into a full family affair supplements to their gym customers. with Ferenc’s mother working as a Family ownership: By 1999, they had managed to take warehouse supervisor in the early over the BioTechUSA brand name days of the business, his father as the from the former American owners and accountant and Katalin overseeing partners, and since 2004 they have Annual turnover: the head of office with Ferenc in dealt exclusively with the distribution charge of strategic management. of dietary supplements, opening the first European BioTechUSA franchise “It was just a dream at the time,” says Operations: store in Hungary in 2005. Today, they Ferenc, “but I wanted all our work in have over 170 stores spread across the ’90s to lay the foundation for a Europe and produce BiotechUSA family business that would provide a products in their own factory in relatively better life for the second or Hungary. third generations of our family.” Employees:

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© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. The second generation arrived in the business. In 2010, after graduating from The family discussed everything openly mid-’80s with the birth of their sons university, they took jobs in open positions and made every effort to make sure that Balázs and Bálint. From the outset, at the company — Bálint in the marketing conflicts were not suppressed. These Katalin and Ferenc taught their sons department and Balázs in sales. candid conversations led to compromises independence, perseverance and because Balázs and Bálint had proven responsibility. Balázs and Bálint recall The boys steamed ahead with Balázs themselves professionally after several being involved in small company tasks travelling and building international years in the business, making it easier to during school holidays, such as going to strategies, and Bálint responsible reach a solution or agree to a concession. the warehouse to label products. for building strategies, processes and structure. These were serious The dynamic and harmonious relationship In their childhoods, they did everything assignments with significant between the two boys is also very together. During high school, they spent responsibilities, and implementing their important in the life of the company. a year in Germany, where they lived with ideas was left entirely to them. They easily adapt to each other and stand separate families and attended the local behind each other’s decisions. secondary school, all of which required Managing conflict — maintaining cohesion them to build relationships and learn a The transfer of governance and language in order to prosper. The teams that the company has built ownership When they were able to speak German have always been dynamic. Bálint and fluently, Ferenc took the boys with him Balázs have attracted young people to The process of the generational to exhibitions and negotiations, where the company, and that youthfulness changeover and the transfer of corporate they listened and learned or acted as is evident today as people inside the governance and ownership was interpreters. “We went with them company are being educated to grow deliberate and divided into two stages. everywhere and grew into the business,” into more senior roles. In 2014, Balázs and Bálint assumed Balázs recalls. leadership authority and were given full Following several on-the-job learning control of the company. In 2019, the Creating a path to the family’s shared years, the family voted unequivocally to transfer of ownership was completed future make Bálint the CEO in 2014. He was when it became apparent to Ferenc already responsible for marketing and and Katalin that the business — and the Since 2014, Balázs has been the IT and communicated well with other values that underpinned it — remained company’s sales director and Bálint has company executives. Although Balázs is intact under the leadership and control of been its CEO. 2 years older, he spends much of his time the second generation. abroad in international trading activities Their university days appear to have been and he was appointed Sales Director. an important turning point in the decision Today, Balázs and Bálint each enjoy a 45 to join the family business. They were percent ownership in the family business, The success of the generational involved in corporate assignments, such with their parents retaining 10 percent, changeover was not guaranteed, however. as inventing product names and later and they ensure the preservation and criticizing them on the basis of what they regulation of family property through Recognizing that conflicts in the transfer were learning. Together, they developed a family trust fund. While a separate of ownership would be inevitable, the an idea for a self-branded shaker and protocol has not yet been developed Lévai family acknowledged that respectful were given the green light to tailor the for an unexpected succession, the communication was necessary so that concept to BioTechUSA. Today, that shaker organization is designed to run smoothly everyone was aware of the decisions represents revenues of US $3.3 million. and independently without them. that were being made. Ownership and Generational transitions and the leadership responsibilities had to be very challenges ahead clear as well as how these responsibilities would continue to support BioTechUSA’s While they achieved this early success, underlying vision and family values. the brothers soon realized that they had to learn the practicalities of operating a

Family business profiles 101

Siam Amazing Park Even when faced with financial challenges, we were committed to preserving the company’s vision and the family’s legacy. Established: Siam Amazing Park, Thailand — Creating a world of eternal fun and happiness

Family: r. Chaiwat Luangamornlert, exposure to the business from an the founder of Siam early age and by ensuring that they MAmazing Park, has been a have had the opportunity to take roles successful business person since in the company that fit their talents and Business sector: the 1960s. In his first entrepreneurial personal interests. endeavors, he was among the first in Thailand to invest in breeding and His eldest son, Mr. Sittisak marketing freshwater fish, followed Luangamornlert, for example, Current leader’s was interested in technology and generation: by his entry into the real estate development market. electronics since early childhood and his father provided full support Recognized in Thailand as a true for his interests, such as purchasing Generations active visionary, he became involved in the a computer for him to pursue his leisure and attractions sector in 1980, self-study interests. When he joined in the business: based on the strong belief that he the business, Mr. Sittisak was the could bring affordable and endless initiator of the company’s information happiness to families in Thailand. He technology system to improve the Family ownership: started this new journey with the management of the park, increase opening of “Siam Amazing Park”, the efficiency and reduce costs by first water and amusement park in streamlining the ticketing process with Thailand. It has now succeeded in new point-of-sale software. Annual turnover: becoming a second-generation family v business and one of the largest theme The second son, Mr. Wuthichai parks in southeast Asia. Luangamornlert, had both a marketing vision and market development Operations: The cultivation of an capabilities. After earning a master’s entrepreneurial family degree from a university abroad, he joined the company and began Employees: Mr. Chaiwat has successfully instilled standardizing service processes, his entrepreneurial spirit throughout v enhancing the park’s brand and the family. He has also taken good opening up new markets in China and care to ensure that his next-generation western Asia. As the firm’s Managing family members were well-prepared Director, he continues to concentrate to become potential successors on raising the park’s visibility through their formal education,

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Family business profiles 103

If the welfare of our employees is improving, Grupo Urrea that’s a good indicator of the company’s growth and success.

Established: Grupo Urrea (Tools and Locksmith Division), Mexico — 1907 Preserving the family’s social legacy

Family: rupo Urrea is a five- The birth of a family legacy Urrea generation family business G that was founded in Raúl Urrea Avilés empowered 1907 as “Valvulas Carroll” (Carroll his children at early ages to take Business sector: Valves) by William Carroll. Mr. responsibility for the operations of Tool manufacturing Carroll was an adventurous New the company’s two divisions, which Yorker who came to Mexico with made it possible for him to devote Current leader’s a US railroad company. He chose more attention to social issues that to remain in Mexico where he were of great personal interest and generation: created a successful business in a importance. The social impact of Fourth rapidly emerging market for indoor Grupo Urrea continues to be central bathroom fixtures, valves and to the way the company conducts Generations active plumbing products. business today and it is the power in the business: behind this legacy that the family and In 1963, thanks to the vision and the business have sustained for close Fourth and ﬁfth inspiration of William Carroll’s son-in- to 114 years. law, Raúl Urrea Avilés, the company Family ownership: added a tools division through an It began with a deep concern 100% association with Proto Industrial for the welfare of Grupo Urrea’s Tools in the US (now a division employees. For Raúl Urrea Avilés, of Black & Decker). Today, Grupo the company’s growth and success Annual turnover: Urrea continues to operate through was only meaningful if the welfare Not available two equally important divisions: of its employees improved as well. one focused on manufacturing If, for example, the percentage of Operations: and marketing valves including employees who could own a house Mexico showers, ceramic products and or a car was growing, that was a good accessories for bathrooms and indicator of the company’s success. kitchens; the second on tools, Employees: hardware and locksmith products Raúl Urrea worked on many social 388 that are distributed in more than 20 projects as president of COPARMEX countries across the Americas. (Employers’ Confederation of the Mexican Republic). In this position and

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You build credibility by being authentic and Kwatani acknowledging what you don’t know. If you do that, it really doesn’t matter what other people think should be men’s work or women’s work.

Established: Kwatani, South Africa — A passion for creating value through diversity Family: im Schoepflin has chosen the hands of women, 51 percent of road less travelled. As the whom are black women, making Business sector: K second-generation successor Kwatani the first company in its to the family business founded class to exceed the requirements of by her father, she is charting her the South Africa Mining Charter. own path as the CEO of Kwatani in South Africa’s male-dominated The focus on women in an industry Current leader’s manufacturing and mining industry. dominated by men sets Kwatani apart. Kim is quick to point out that 50 generation: She is the first to acknowledge percent of South Africa’s population the challenges of being a woman is female so, practically speaking, it doing what some consider to be makes sense that qualified women Generations active ‘men’s work’. Whether there is are available to work in any industry. in the business: overt discrimination or more subtle In Kwatani’s case, women are inherent bias, she says there can be currently running the company’s an undertone in some companies business development, internal sales, that ‘you are not legitimate’ and that warehouse, dispatch, HR and finance Family ownership: ‘women don’t belong here’. Kwatani departments. Half of management v stands apart. roles and two of the company’s three board positions are also held by Annual turnover: The company has been supplying women. the South Africa mining industry v with large-scale vibrating equipment The importance of knowing what for 44 years. Approximately 5 years you don’t know Operations: ago, the company entered into a partnership with Vhatsila Holdings, Kim has a European strategic which acquired a 30 percent share consulting and investment banking of the company. Today, 100 percent background. She was catapulted Employees: of Kwatani’s ownership lies in the into the interim CEO role at Kwatani

106 Family business profiles

© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. following the illness of her father. A search Her father may have been old fashioned, Having said that, it is understandable, she began for an external leader who had but he was also pragmatic. When he saw says, that some distant family members, extensive experience in manufacturing what his daughter was accomplishing though not those who are actually familiar or engineering along with the requisite as a strategic consultant and investment with the Kwatani business, are likely entrepreneurial drive and cultural fit with banker, he understood the value she asking themselves, “what is a woman Kwatani. She became the permanent could add to the family business. Not only doing in that role?” CEO when a suitable external leader could was she talented, she also had diverse not be identified. experiences outside the family business In some family businesses, female that could help to take the business in a leaders can face challenges with Male and female family members face new direction. employees as well, especially men potential challenges in family businesses who are working in manufacturing jobs. if there is a perception that they have their An evolving leadership style To address this potential issue directly, jobs only because they are someone’s Kim is visible on the factory floor, visits son or daughter or have another family In her previous corporate role in Europe, customers on the mine site in overalls relationship. There can be a significant Kim was very results-driven and her style and safety boots, on occasion participates difference in this perception when family was authoritative. She suggests that the in the assembly and testing process members have proven that they have family culture of the Kwatani business of exciter gearboxes and talks with delivered results outside the family added a consultative element to her employees as they’re working on the business. Even though she does not have leadership style and that she always line. All of this is done in the interest of the engineering background that could sought her father’s advice and thoughts understanding what they are doing and be expected, she believes that her work on new ideas. Today, she taps into her exploring their ideas. experience in Europe, outside the family team and members of the board for business, was to her advantage. similar sources of objective input. Legislating gender parity — is this a good idea? While the transition to the CEO role She supports the view that the multi- wasn’t completely smooth, Kim was able faceted roles that women play as a It isn’t surprising to note that men hold to establish her credibility as a leader who daughter, wife, mother and manager can most of the power and influence in mining could take the business in new directions result in exceptional leadership qualities. and manufacturing and it is generally by ‘knowing what she didn’t know’ and In addition to learning to handle many difficult to find qualified women for roles ensuring that the right people were in things simultaneously, she believes such as engineering. However, Kwatani place who did have the expertise where it these multiple roles have honed her differentiates itself and employs a number was needed. ability to concentrate on details while of female engineers. While unconscious not losing sight of the big picture, to bias may not have abated and quotas The hidden wealth in family bonds make quick decisions when needed, to can create greater awareness of biased be disciplined in making tough choices beliefs and practices among some people, The strong intergenerational bonds within and not to take things personally. All Kwatani does not subscribe to legislated family businesses have been shown to would be outstanding qualities for any programs, mandated quotas or other rules deliver healthy financial and emotional leader to embrace. for hiring women as the answer. dividends over time. It is widely believed that this is particularly true of the bond Does she feel the need to legitimize Kim strongly believes, however, that between fathers and daughters in family her role as the leader of a company family businesses have a responsibility business relationships. that traditionally operates in a man’s and an unbiased set of opportunities to world? She is emphatic, saying, “You set the example and lead the progression Kim’s father, Gunter Vogel, was the build your credibility by being authentic, toward greater diversity in businesses of founder of the Kwatani business. He acknowledging what you don’t know all types. carried traditional beliefs and values and asking the right people the right throughout his life and the idea of having a questions. If you do that, it really doesn’t female senior manager, let alone a female matter what other people think should be CEO, likely wasn’t on his radar as the men’s work or women’s work — and the business continued to grow and mature. kind of work that you should or should not be doing.”

Family business profiles 107

Lansdowne Equity Ventures Ltd. My greatest legacy will be sharing my formula for success with future generations and stimulating a passion for growing their own businesses. Established:

Family: Lansdowne Equity Ventures, Canada — A 50-year formula for success n 1967, at the age of 20, Mr. Over the past 30 years, Mr. Business sector: Brian Sidorsky embarked on Sidorsky has become a highly Ihis first venture: the opening of successful owner and operator v a small furniture store in the city of shopping centers, residential of Calgary in western Canada. He housing and commercial property speaks of learning about how to developments and a sizeable Current leader’s be a successful entrepreneur at portfolio of land banks. generation: “the school of hard knocks” and attributes his early successes to The Sidorsky formula for “worth the experience he gained during creation” Generations active his teenage years through the local Junior Achievement program. Mr. Sidorsky has children and in the business: There, he not only learned how to grandchildren, none of whom run a business, he also gained in have joined him yet in the family confidence his abilities and self- business. He is committed to Family ownership: esteem. sharing his business acumen among the youth of the world, The business he created through however, and one of the starting Junior Achievement turned into points is within his own family. Annual turnover: the inspiration for his first business v venture and gave him the lessons His ambition is to transfer the on buying and selling that he knowledge and the financial and Operations: required to be successful as a experiential wealth that he has gained furniture retailer. That seedling over the past half century to his business ultimately grew to children and grandchildren. His desire become the largest retail furniture is to maximize their abilities and to help Employees: and appliance store in the city them appreciate the opportunity they v and he ultimately sold it to a large have been given to create even greater national furniture chain in 1980. family worth by succeeding together Following that sale, Lansdowne for many generations to come. Equity Ventures became a reality.

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Family business profiles 109

As custodians of a family of businesses, Vestey Holdings the company’s aim is to build and improve them for the future.

Established: Vestey Holdings, United Kingdom — Good ownership is 1895 good for everyone

Family: estey Holdings is a fourth- succeeding generations have done Vestey generation family business, has defined us as a family. We would V involved primarily in the be remiss in letting the flame of our global food industry. CEO George family identity go out.” Business sector: Vestey tells a compelling story of Food production the resilience and ingenuity of his This family legacy of reinvention is family and how the family business what the current generation wants to Current leader’s has survived many world crises over continue through the immediate and the past 125 years, from wars to future family succession processes. generation: revolutions, political uprisings and Fourth hostile competitive environments Ownership succession as a priority and the current uncertainty created Generations active by COVID-19. The family ownership structure is in the business: critical for Vestey Holding’s success, 2020 marks the 125th anniversary and a great deal of thought has been Fourth of the Vestey family business when given to the subject of ownership brothers William and Edmund Vestey succession. There are 11 children Family ownership: established the Union Cold Storage in the fifth generation of the family 100% Company in Liverpool. Among the and it is not yet known whether any first to exploit the potential use of members of the cousin generation will refrigeration, the company developed be interested in, or capable of, taking Annual turnover: cold storage facilities across the UK on management or leadership roles. US $650 million and throughout Russia, the Baltics, and Western Europe. This made it With the assistance of an external Operations: possible to supply large quantities of facilitator, a family council is United Kingdom quality affordable meat, poultry, eggs being created as a vehicle for and fish to the growing UK population the succession process. The first during the Industrial Revolution. priority will be to address the inter- Employees: generational transfer of ownership 1,000 Keeping the family in the business to the 11 cousins. Management — and the business in the family succession will become a focus further down the road when these As George Vestey describes, “Ours is NextGen family members have a brilliant story of pioneering people become more attuned to the who lived tough lives. What they and business.

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If the current leaders fail to engage with The selection criteria for future The enduring entrepreneurial spirit of the next generation successfully, or generations the Vestey family continues to influence are unable to find the right successor the way its business is led today. Vestey or if the family council is unable to get The succession model for the Vestey Holding’s aim is to sustain its business itself organized, a pragmatic decision family has evolved between the through long-term thinking and careful will likely be made to recruit the best generations with an appreciation of succession planning. Maintaining a non-family executive possible, while the unique characteristics of each new profitable business is an essential pre- retaining the deeply rooted sense generation as they join the business. The requisite. Without profit, the company of ‘familiness’. This might involve model has changed over time as the result cannot be sustainable or able to do good. strengthening the capability and of a liquidity event, a desire to change the “But we stand for a greater sense of participation of the ownership group role of cousins, the implications on future purpose than profit alone,” states George to reflect the familiness components leaders and the evolution of a stronger Vestey, “as we have a responsibility of the business alongside a non-family relationship between family members — both collectively and individually in executive who shares their values. and the business. the business — to enhance our local communities by making them a better However, while the model may place to live and work now and in the have evolved, the standard criteria future. By being a good owner, that’s good for selection continues to be based for business and good for everyone.”

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Gender equality has characterized the Inversora family, and now we have an opportunity to turn Lockey C.A. our attention to generational diversity as well.

Established: Inversora Lockey C.A., Venezuela — Three generations aligned around a shared purpose nversora Lockey C.A., founded Today, three generations of the Family: by Claudio Visani and a group Visani family are involved in the Iof strategic partners in 1975, business, with second-generation has been producing and marketing family members having control the CISA and Schlage lock brands over ownership, management and Business sector: throughout South America for governance. The company founder, decades. By the early 1990s, the Claudio Visani, maintains his company accounted for more than presence with regular visits to the 70 percent of the entire Venezuelan company’s facilities. Current leader’s lock and padlock market. Even though Claudio Visani did generation: Since 2007, the ownership and not have a formal succession management of Inversora Lockey plan, the family believes that two has been in the hands of second- important elements led to the Generations active generation members of the Visani successful transfer of leadership in the business: family, at which time the youngest to the second generation. The daughter, Claudia Visani León, was first was the confidence everyone appointed as the CEO and firstborn had in both Claudia and Andrés. son, Andrés Visani, as COO and The second was their individual Family ownership: Vice Chairman. academic achievements. Andrés joined Inversora Lockey in the late Laying the groundwork for ’80s after completing an industrial Annual turnover: succession engineering degree and an MBA. He also gained direct experience v In 2015, CEO Claudia Visani León at CISA in Italy before entering the negotiated the purchase of all of family business. Operations: the company’s shares from its international partner at the time. Claudia became directly involved Her father’s lifelong dream to have in the family business in 1995 as a full ownership of his company had lawyer specializing in the fiscal and finally been achieved. financial areas, which were critical aspects of the relationship with Employees: Inversora Lockey’s several national and international partners at that time.

112 Family business profiles

© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. The rise of female family business more feminine settings. All this is the were not involved the day-to-day leaders product of my dad’s work and we all business or decision making. When ended up falling in love with it. This is the family assumed 100 percent Over the past 20 years, the visibility what we prepare for — taking over the ownership of the company, the ad and influence of women in business business. We multitask, we do many hoc family council was transitioned has continued to increase, with women things at once and we come forward to a formal board of directors that increasingly taking charge of their family without fearing the daily challenges.” included all four members of the firms. The women of Inversora Lockey second generation. are no exception and their involvement The basis for a smooth transition • Development of financial is rooted in the gender equality that was structures to safeguard the practiced by their parents. While a documented succession plan family assets was not in place at Inversora Lockey, the Claudia, supported by her sister Eunice León, wife of Claudio Visani, family had undertaken several informal Marila, developed a set of financial played an important role in the and important activities that facilitated a structures aimed at addressing company’s early days. She supported smooth transition of the leadership roles the monetary issues related to Claudio when he decided to become to Andrés and Claudia, including: shared family assets. This included an entrepreneur and once the business • The engagement and preparation setting up a holding company was stabilized, she developed her of potential successors who to effectively manage the Visani own professional career as a criminal had expressed an interest in the family’s portfolio, allowing them to lawyer specializing in public corruption. business. adopt a shared vision on topics such This, in turn, led to her holding Both Andrés and Claudia were as strategy, diversification, risk, important positions in the Venezuelan involved in the family business after profitability, taxation and control and public sphere, in addition to directing completing their undergraduate consolidated reporting of results. postgraduate studies in criminal law at and graduate studies and both had the Central University of Venezuela. gained previous work experience in Claudia and Marila promoted the organizations that were not related development of a position that is The Visani women have been raised to their family. responsible for managing the family’s in an environment in which they play inheritance, similar to that of a family valuable family roles at home and • Progressive empowerment of the office, though that protocol is not productive roles in the company. The successors. currently in place. importance of having a role in the family A gradual allocation of management business was instilled in the daughters responsibilities allowed Andrés Navigating the road ahead from an early age, regardless of the to strengthen the production male-dominated nature of the industry processes and introduce quality Gender equality characterizes the in which they worked. control procedures and provided dynamics of the Visani family. The Claudia with the freedom second generation now has an In 2019, an unexpected event created to implement management opportunity to turn its attention to the family’s second succession when improvements. generational diversity as a matter of Claudia Visani stepped down as CEO • Implementation of priority as well. With three demographic to relocate to Mexico following her communication and governance cohorts coexisting in Inversora Lockey, husband’s appointment as Nestlé procedures. the Visani family is in a unique position Mexico’s Executive President and Corporate governance structures for the Baby Boomer, GenX and Chairman. The family’s board of were in place due to the partial Millennials to share their visions and directors appointed Marila Visani, who ownership by external partners and diverse points of view and contribute to had co-created the company’s financial a board of directors that provided the future direction of the business. structures with her sister Claudia, as the oversight on the company’s strategic firm’s new CEO. direction and financial results. Ultimately, there are three generations Separately, Claudio Visani engaged aligned around a shared purpose, vision As Claudia explains, “I know that having his second-generation family and set of values and who are ready to women in charge of a company that members in an ad hoc family council take them forward for the good of the makes locks may look a bit strange, that included two daughters who family and the business. because we are used to seeing her in

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We recognize that ‘joining the business Wates Group later’ may be a realistic expectation for the next generation.

Established: Wates Group, United Kingdom — Inspiring better places, communities and businesses of tomorrow

Family: rom its early days in 1897 as Professionalizing the generational a house building pioneer, the succession process FWates Group has become one of the leading privately-owned Andrew Wates, former Chairman Business sector: construction, development and of the Wates Group, was heavily property services companies in involved in the Institute for Family the UK. With four generations of Business and the Family Business Current leader’s family leadership behind its success, Network, and introduced numerous the company is preparing to pass progressive processes. He was generation: the reins to a fifth generation of instrumental, for example, in successors who will write the next introducing a parallel planning chapter of the Wates family and approach for professionally Generations active business legacy. managing the succession and in the business: transition processes. The role of non-family executives The fourth generation has moved The Wates Group’s day-to-day those processes further. By doing Family ownership: executive management roles are so, they can continue to evolve the held by non-family members, business in a way that is appropriate with five family members on the for the incoming generation’s needs, Annual turnover: company board. As for the next interests and capabilities as well as generation of family members and current business norms. their relationship with the business, succession discussions in the What will inspire fifth generation Operations: near term will likely focus on the leaders? stewardship of the company through board, family council alongside The family leaders of the Wates family advisors and non-executives. Group anticipate that several Employees: members of the fifth generation Andy Wates, Director and will have an interest in joining the Chairman of the Wates Family company at some time in the future. Enterprise Trust, emphasizes, Nevertheless, Andy acknowledges “Losing the family culture would that the NextGen cousins have more make you question the point of options than previous generations having a family business at all.” and some may be more inspired

114 Family business profiles

Family business profiles 115

Being willing to lead is a question of Hawk Filtration enthusiasm. Being able to lead is a question Technology of ability. (Shangai) Co., Ltd. Hawk Filtration Technology (Shanghai) Co., Ltd., China — Established: Willing to lead with enthusiasm — able to lead with ability 2002 awk Filtration Technology Most of the enterprises founded by Family: (Shanghai) Co., Ltd., located the first generation of entrepreneurs ZHU Hin the Shanghai Qingpu in China are concentrated in Industrial Zone, is a specialized filter traditional industries, many of manufacturer. Established in 2002, which are being transformed and Business sector: the company currently makes more expanding internationally in a global Specialized ﬁlter than 1,000 types of specialized filters economy. The overseas education manufacturing for vacuum cleaners, air purifiers, of many second-generation family automotive air conditioning, power members is generating innovative tools and respirators. The company’s strategies and operating models Current leader’s vision embodies the protection of that are transforming many family generation: the environment, clean air, pollution businesses through the succession First prevention and safeguarding human process. health. Among its customers are Generations active many of the most well-known ZHU Naifeng is a typical in the business: brands in North America, Europe and representative of this second mainland China. generation. He possesses an First and second overseas education and work Within the next 3 years, Hawk experience and had many options Family ownership: Filtration Technology will be led to consider before his decision 100% by the family’s second-generation to return to China and the family successor, ZHU Naifeng, who is business. expected to continue to evolve the Annual turnover: company’s industry specialization Critical factors for successful Not available and overseas expansion strategies. succession The company was founded by his Operations: father, ZHU Xuehao, who is exiting ZHU Xuehao announced his 5-year Shangai Qingpu the company gradually and plans to retirement plan at the company’s retire fully when be believes his son 2017 annual meeting, along with Industrial Zone is ready to inherit the business. several senior employees who have been with him from the start of the Employees: For family business leaders such as business. Despite ZHU Xuehao’s 500 ZHU Xuehao, China’s one-child policy retirement intentions, Hawk has presented unique challenges, Filtration Technology does not have with only one daughter or one son to a written succession plan. However, choose from as a potential successor as with many first-generation — assuming that the second leaders, he has his own criteria for generation is interested and willing to how a successor will be chosen. take over at all.

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© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. “My dad has a couple of preconditions way to assess a potential successor’s • the need to thoroughly assess to evaluate whether I can take over leadership skills, alignment with the the company’s culture, structure the family business,” says son ZHU company’s values and vision and their and employees’ capabilities Naifeng. “The first is the willingness. ability to get results. when considering visionary new Enthusiasm is a prerequisite and strategies, and everything else is based on that. The Both ZHU Xuehao and ZHU Naifeng • the amount of patience, time, careful second is to train a successor to see if have gained important insights from thought and planning required to they are capable of succeeding. There ZHU Naifeng’s leadership of the foreign fully develop a new strategy and can be a wide span between those two trade division, especially as it relates implement it successfully. conditions. You may have the will to do to several generational differences in it but do you actually have the ability each other’s vision for the future of the Broadening the view of succession you need in order to succeed?” business, strategic opportunities and management approach. As a key component of the strategy Cultivating a successor development process at Hawk Filtration Managing intergenerational Technology, both generations have now For any second-generation family differences broadened their views of succession member who meets the first condition as well, with an increased appreciation and is willing to take over the family A different generational perspective for for the need to have a thoughtful business, the process does not happen the future of Shanghai Hawk Filtration succession process at all levels of the overnight. After completing his studies Technology began to emerge in the business. As ZHU Naifeng explains, and being employed in North America third year following ZHU Naifeng’s the succession of the company’s core for several years, ZHU Naifeng returned return to China, when he worked as values is one important factor. Equally to China to begin working at the ground the foreign trade project manager important, however, is being able to level of the family business, rotating in the family business. As a second- transfer the knowledge and experience among different departments, from generation successor, he was looking of everyone in the company to the driving delivery trucks to sales and then for more freedom to manage the people who will come behind them. as the sales manager. business in his own way, applying the experience and knowledge he had ZHU Naifeng believes that the In late 2006, problems arose in the gained from his time in North America. factors his father uses as his guide to foreign trade business sector of Hawk This led to challenging discussions with succession — willingness and ability Filtration Technology. With the language ZHU Xuehao regarding the company’s — are ‘intertwined twigs’. Making a proficiency he fostered when studying strategies and customer philosophies. mistake with any of them could lead abroad, ZHU Naifeng began to work as the business in a negative direction. a foreign trade salesman in the division. It was during this time that ZHU Naifeng Consequently, with more than a decade Under his direction, the company’s made a decision to return to business of training at the company’s grassroots foreign trade business improved school for an Executive MBA. “I met level, he is now guiding the family dramatically. He was ultimately given great mentors and classmates who gave business alongside a team of mid-level the opportunity to lead the independent me a lot of guidance and help, which led core leaders who he is developing and foreign trade segment and he gradually me to identify my own shortcomings promoting as they continue to build their formed his own management team. and helped improve the discussions own capabilities. with my father about the future direction ZHU Naifeng recognizes that cultivating of our business,” he says. The cultivation of successors is a a successor requires visionary systematic project, as is the exit of the thinking and preparation and he was It also helped him to understand that first-generation founders, and ZHU fortunate to have the opportunity to within any company there can only be Xuehao has taken a training program develop a segment of the business one person making the final decisions. divided into several steps for his own independently. He suggests that “When I realized this, I adjusted my retirement planning. While the team providing potential successors with position,” he says, “I would then talk to established by ZHU Naifeng and his an opportunity to lead and develop my dad about a lot of things and give core of managers continues to take a division or special portion of the him many opinions and ideas, and he the business forward, ZHU Xuehao business, such as the opportunity that made the final decisions.” remains as its Chairman and stays he was given, is of benefit to everyone. closely connected with Hawk Filtration The experience of ZHU Xuehao and ZHU Technology while also organizing his For the potential successor, it is an Naifeng provides important insights retirement life. opportunity to decide if taking over the regarding the value of leveraging the family business is right for them and diverse experiences and perspectives of “I now arrange my life according to what they really want, if they have the different generations, including: three ‘ones’,” he says. “One-third of will to lead and whether they have the • the importance of open discussions my time for traveling and reading, one skill set and knowledge to be successful. to consider new ideas from all third for company management and generations within the business — one third for helping and promoting my For the current business leader, it even when the timing may not yet son’s work.” provides a first-hand and practical be right for implementing them,

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Authors: Georges Samara, University of Sharjah, 2. Case study approach Global Research Champion, STEP Project, Editor in Chief for Business Ethics: A European Review, We used a multiple case studies approach to analyze the data and Andrea Calabrò, STEP Global Academic and purposefully ensured diversity in our sampling and data Director, Director, IPAG Entrepreneurship & Family collection. This process allowed us to increase the variability Business Center, IPAG Business School and comparability across our main variables of interest (Eisenhardt & Graebner, 2007). Given the global nature of the The following is a summary of the methodology that we STEP Project Global Consortium and the international scope adopted to develop a series of four co-authored articles: The of the findings, we made sure to have a diversified sample courage to choose wisely, The power of women in family from multiple continents and regions. This permitted us to business, Creating value through good governance and The explore a variety of perspectives on how demographical enduring legacy of business families, which were included changes are impacting family businesses across different in the STEP Project Global Consortium and KPMG Private cultures and institutional contexts. Enterprise “Empowering the future of family business: A four- part article series of research-based practical insights”. Every STEP affiliate conducted semi-structured, in-depth interviews with family business leaders in their respective 1. Sample and data collection countries, using open-ended questions in their interviews. Additional questions emerging from the dialogue allowed the The STEP Project Global Consortium and KPMG Private interviewers (our affiliates) to explore the personal stories Enterprise 2019 Global Family Business Survey revealed and perspectives of the interviewees (DiCicco-Bloom & the ways in which demographic changes are affecting Crabtree, 2006; Woodfield & Husted, 2017). The questions family business behavior in various circumstances. To better were consistent and replicated across interviews to ensure understand the reasons behind these findings, we adopted consistency and allow comparability. a qualitative approach that not only allowed us to answer the “why” and “how” questions, but also enabled us to gain a All interviewees had the option to remain anonymous deeper understanding of the perspectives of the interviewees or for their names to be disclosed. This allowed for the and to uncover unanticipated avenues of interest in the field of free expression of their perspectives and permitted us family business research and practice. to compare different perspectives across the interviews. Out of the 37 cases, 15 opted to remain anonymous In collaboration with KPMG Private Enterprise, we collected and 22 agreed to reveal their identities. Interviews were qualitative data from 37 cases in 22 countries, territories, or conducted in multiple languages: English, Spanish, jurisdictions spanning five continents: Asia, Africa, Europe, Portuguese, Turkish, Chinese, Thai, Hungarian, Russian, North America and South America. The list of locations from French, Dutch and German, all of which were later which the data were collected is presented in Table 1. We translated into English. Subsequently, the STEP affiliates also collected information about the industry in which the submitted a document that highlighted the different family business operates, the generation leading the family and most interesting perspectives collected from their business, number of employees, annual turnover rate and the interviews. These documents were used for analysis position held by the interviewee. purposes and for conducting our qualitative data collection.

Twenty-six cases were collected by STEP Project Global In addition, all the quotes in the report were reviewed and Consortium affiliated universities and eleven cases were approved by their respective owners prior to publication. collected by KPMG Private Enterprise. Furthermore, because Furthermore, for those cases that agreed to disclose their the COVID-19 pandemic had such significant impact on identity, we created individual family business profiles based business practices, we followed up with additional interviews on the developed cases, which were also validated and to explore specifically how the global pandemic affected approved by each of the family firms prior to publication. The individual family businesses and business families. For family business profiles are available on the Empowering the example, the initial questions for the succession theme future of family business website. aimed at investigating different generational and demographic perspectives around retirement plans, such as: “What may trigger/have triggered your thoughts regarding retirement? Is age a critical factor that is driving you to think about retirement more? What concerns do you have?” While the COVID-19 follow-up questions also addressed the succession and retirement topics, they were targeted specifically at understanding how the pandemic had affected family business succession plans, “How has COVID-19 affected your family business practices (e.g., succession, governance, contingency planning, early retirement, entrepreneurship)?”

118 Methodology Note

© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 3. Philosophical assumptions regarding the nature of saturation. At this stage, we eliminated some themes where social reality not enough information was available and we grouped other themes where we found several commonalities. For example, Because we are addressing a complex phenomenon as to we initially had a theme focused on sustainability. However, how demographic changes are impacting family business this theme was eliminated as the data was present in very processes, we adopted an inductive approach, taking an few cases, which did not allow us to make general inferences interpretivist perspective (Nordqvist et al., 2009). As previously on how demographic changes are affecting the sustainability outlined, we adopted a multiple case studies approach to practices of family businesses. Moreover, the intention to provide a robust basis for interpretation (De Massis & Kotlar, transfer the business to future generations and entrepreneurial 2014) and to elicit a rich understanding of the interviewees’ exits were grouped with succession, as they both refer perspectives. Using multiple cases also allowed us to make to either a succession intention or an intention to exit the comparisons for identifying similarities and differences across business. At this stage, the analyzed data showed consistency cases coming from multiple countries and cultures (Yin, 2009). and richness around four main topics: succession, women, Furthermore, all interviewees were still active in their family family governance and family business legacy. business in senior managerial roles. Therefore, they were well informed about the business history, culture and processes. The fourth stage involved a theoretical integration of the collected data by looking at it holistically and reanalyzing 4. Data analysis some of the findings. This involved an iterative process, during which we developed our initial findings and looked for either Following the guidance of Grodal et al. (2020), the qualitative confirmatory evidence (i.e., additional support) or contradictory analysis was structured in four main stages. The first stage evidence that led us to eliminate some findings (Grodal et al., involved identifying broad themes where we noticed that 2020). The outcome of this stage is an overall understanding generational changes and demographics are impacting of how succession, the role of women, family governance and various family business variables. At this stage, we followed legacy take form across different institutional contexts and how a manual textual analysis and made sure that the initial and why demographic changes are affecting these variables. categories we developed were theoretically meaningful When no new insights were found, including the additional data and distinct. The interview questions were focused on collected by KPMG Private Enterprise, we realized that we had the variables that we investigated in the STEP Project reached theoretical saturation and that our findings are rigorous Global Consortium/KPMG Private Enterprise 2019 Global (Strauss & Corbin, 1998). Family Business Survey, while keeping an open mind for unanticipated avenues. In particular, we noticed different 5. Reliability perspectives of multiple generations with regard to several family business outcomes, which were later grouped around To ensure reliability in the coding process and analysis, one succession, the role of women, proper family governance and researcher initially took the lead in performing the first round building and sustaining the family business legacy. of qualitative analysis of the submitted cases. Subsequently, the STEP qualitative research committee, the KPMG Private The second stage involved engaging in an open coding Enterprise team and the STEP academic director were process to generate initial categories. Staying close to the involved in analyzing the data. After discussion among all data and reading the case write-ups and quotes carefully, we involved parties, consent was reached on the main variables extracted codes that reflect the evolution of the perspectives that would constitute the focus of the qualitative reports and of different generations around their family businesses on the main codes and categories. in general and around succession, women, governance and legacy in particular (Nordqvist et al., 2009). To ensure 6. Concluding remarks consistency, we continuously compared the codes initially extracted from the first cases that we analyzed with the new We believe that our qualitative approach has provided codes that were generated as the data analysis evolved and much-needed details that complement and add to the STEP as we analyzed more cases collected by STEP affiliates and by Project Global Consortium and KPMG Private Enterprise KPMG Private Enterprise. As we progressed with our coding “Empowering the future of family business: A four-part and initial categories began to develop, we noticed several article series of research-based practical insights”. This co- commonalities across the findings (Strauss & Corbin, 1998). authored article series provides an in-depth explanation of the perspectives of the interviews and expands on some of The third step involved refining the initial categories. While in the most important reasons behind the quantitative report stage 2, we found several broad themes and categories. We findings, while also exploring several unanticipated avenues. It looked at the data in a careful and holistic manner and retained is our hope that you find our approach rigorous and replicable the categories that showed consistency across the cases, and that you have enjoyed reading the co-authored article which provided us with enough information to reach theoretical series from the case studies.

Methodology Note 119

De Massis, A., & Kotlar, J. (2014). The case study method in family business research: Guidelines for qualitative scholarship. Journal of Family Business Strategy, 5(1), 15-29.

DiCicco-Bloom, B., & Crabtree, B. F. (2006). Making sense of qualitative research. Medical Education, 40(4), 314-321.

Eisenhardt, K. M., & Graebner, M. E. (2007). Theory building from cases: Opportunities and challenges. Academy of Management Journal, 50(1), 25-32.

Grodal, S., Anteby, M., & Holm, A. L. (2020). Achieving Rigor in Qualitative Analysis: The Role of Active Categorization in Theory Building. Academy of Management Review (In Press).

Nordqvist, M., Hall, A., & Melin, L. (2009). Qualitative research on family businesses: The relevance and usefulness of the interpretive approach. Journal of Management and Organization, 15(3), 294.

Strauss, L. A., & Corbin, M. J. (1998). Basics of qualitative research: Techniques and procedures for developing grounded theory (2nd ed.). Thousand Oaks, CA: Sage Woodfield, P., & Husted, K. (2017). Intergenerational knowledge sharing in family firms: Case-based evidence from the New Zealand wine industry. Journal of Family Business Strategy, 8(1), 57-69.

Yin, R. K. (2009) Case Study Research: Design and Methods. 4 ed. Los Angeles, SAGE

Table 1: List of countries

Continent Countries/territories/jurisdictions

Philippines India Thailand Taiwan (jurisdiction) Asia China Saudi Arabia Hong Kong (SAR, China)

France United Kingdom Portugal Switzerland Europe Netherlands Spain Italy Germany Turkey Russia

North America USA Canada

Peru Guatemala South America Mexico Venezuela Colombia Brazil

Africa South Africa

120 Methodology Note

Our sincere thanks to the 1,834 family business owners and managers who generously gave their time to participate in the STEP Project survey and the 37 family business leaders who participated in personal follow-up discussions and contributed to the creation of their family business profiles.

We would also like to thank our project managers, Arpita Vyas (The STEP Project Global Consortium) and Chelsey Byng (KPMG Private Enterprise), the STEP Project Global Consortium research affiliates and the STEP Project Global Consortium and KPMG Private Enterprise editorial board, who generously contributed their knowledge and insights to the STEP 2019 Global Family Business Survey and the preparation of the article series. Family Business leaders

Khalid Abunayyan Jodi Bloomer Claudia Visani Ramia El Agamy Abunayyan Holding Canadian Fiber Optics Corp., Inversora Lockey C.A, Orbis Terra Media, Company, Canada Venezuela Switzerland Saudi Arabia Gabriel Hoey and John Murphy Chaiwat Luangamornlert Luiz Alexandre Garcia Michael Hoey J. Murphy & Sons Limited, Siam Amazing Park, Algar Group, Country Crest, United Kingdom Thailand Brazil Ireland John K. Paul Jack Hou José Manuel Suso Alfonso Urrea Martin Kuttukaran Group, Universal Cement, Dominguez Grupo Urrea, India Taiwan (jurisdiction) Arrocera la Esmeralda, Mexico Colombia Kim Schoepflin George Vestey ZHU Xuehao Kwatani, Vestey Holdings, Petter Wagner Hawk Filtration Technology South Africa United Kingdom Avila Wagner, (Shanghai) Co. Ltd., Colombia China Brian Sidorsky Andy Wates Lansdowne Equity Ventures, Wates Group, Ferenc Lévai Margaret Hirsch Canada United Kingdom BioTechUSA, Hirsch’s, Hungary South Africa Filipe de Botton Logoplaste, Portugal

STEP Project Global Consortium

Asian Institute of Dalhousie University National Research University Universidad de los Andes Management Canada Higher School of Economics Colombia Philippines Russia Dublin City University Universidad de Piura Audencia Business School Ireland Nova School of Business and Peru France Economics Grand Valley State University Portugal Universidad Francisco Babson College United States Marroquín United States Princess Nourah Bint Guatemala IMF Institute for Mittelstand Abdulrahman University Bangkok University and Family Firms Saudi Arabia Universidad Icesi Thailand Germany Colombia Tecnologico de Monterrey Bogazici University Instituto de Estudios Mexico University of Bergamo Turkey Superiores de Administración Italy Venezuela The Chinese University of Budapest Business School Hong Kong Windesheim University of Hungary Indian School of Business Hong Kong (SAR), China Applied Sciences India Netherlands China Europe International Universidad de Jaén Business School I-Shou University Spain China Taiwan (jurisdiction)

Acknowledgments 121

Dr. Hanoof Abohodair Alexandre Dias da Cunha Jesús Luna Yeny Rodríguez Saudi Arabia Portugal Mexico Colombia

Daniël Agterhuis Luis Díaz-Matajira Bharagavi Mantravadi Elena Rozhdestvenskaya Netherlands Colombia India Russia

Dalal Alrubaishi Irmak Erdogan Antonio Martinez Valdez Fernando Sandoval- Saudi Arabia Turkey Peru Arzaga Mexico Kevin Au Keeva Farrelly Tom McGinness Hong Kong (SAR), China Ireland United Kingdom Allanne Mae Tiongco Philippines Nunzia Auletta Steve Gaklis Kenneth Metrado Venezuela United States Philippines Daniel Trimarchi Canada Alan Barr Ana C. Gonzalez L Tommaso Minola South Africa United States Italy Suchart Tripopsakul Thailand Ameline Bordas Mario A. Gonzalez Patricia Monteferrante France Mexico Venezuela Manuel Carlos Vallejo Spain Mara Brumana María Hernández Ágnes Mosolygó-Kiss Italy Spain Hungary Julian van den Akker Netherlands César Cáceres Dagnino Remedios Hernández- Carmen Pachas Orihuela Peru Linares Peru Diego Vélez Montes Spain Colombia Myriam Cano-Rubio Francisca Panades Spain Albert James Spain Jaly Vibeth Chea Canada Menéndez Nupur Pavan Bang Fuad Chapra Guatemala Saudi Arabia Marshall Jen India Hong Kong (SAR), China You-fong Wu Luckxawan Pimsawadi Helmuth Chávez Asturias Taiwan (jurisdiction) Guatemala Brittany Kraus Thailand Canada Özlem Yildirim Öktem Stefan Prigge Jeremy Cheng Turkey Hong Kong (SAR), China Nyeste László Germany Hungary Hua Zhao Miruna Radu-Lefebvre Hsi-Mei Chung China Taiwan (jurisdiction) Kg Lobo France Philippines Jubran Coelho Kavil Ramachandran Brazil Louise Lu India Taiwan (jurisdiction)

122 Case study authors

We would like to thank all of the KPMG Private Enterprise member firms that participated in the development of this report, in particular, those that contributed to the interviews and case studies.

Australia Ireland Robyn Langsford Olivia Lynch Singapore Partner, Partner, Jonathan Ho Private Clients & Family Business, KPMG Private Enterprise in Ireland Partner, KPMG Australia T: +353 1 410 1735 Head of Private Enterprise Market, T: +61 2 9455 9760 E: [email protected] Head of Internal Audit, Risk & E: [email protected] Compliance Services, Israel KPMG in Singapore Brazil Jonathan Lavender T: +65 6411 8336 Jubran P P Coelho Global Head, E: [email protected] Private Enterprise Leader for the South KPMG Private Enterprise, Americas Region and Brazil, KPMG, South Africa KPMG in Brazil Partner, Alan Barr T: +55 1139403221 KPMG in Israel National Private Enterprise Leader, E: [email protected] T: +972 3 684 8716 Partner, E: [email protected] KPMG in South Africa Canada T: +27 833886404 Mary Jo Fedy Italy E: [email protected] National Private Enterprise Leader, Silvia Rimoldi Partner, National Private Enterprise Leader, Spain KPMG in Canada Partner, Miguel Angel Faura Borruey T: +1 519 747 8875 KPMG in Italy National Private Enterprise Leader, E: [email protected] T: +39 011 8395144 Partner, E: [email protected] KPMG in Spain Daniel Trimarchi T: +34 914563868 Director, Mexico E: [email protected] Family Business Global Network, Jesus Luna KPMG Private Enterprise, National Private Enterprise Leader, Switzerland KPMG Partner, Hugues Salome T: +1 416 777 3816 KPMG in Mexico Partner, E: [email protected] T: +52 55 5246 8899 KPMG in Switzerland E: [email protected] T: +41 58 249 37 75 China E: [email protected] Karmen Yeung Netherlands National Private Enterprise Leader, Olaf Leurs United Kingdom Partner, Head of Private Enterprise, Tax Tom McGinness KPMG China Tax Partner, Global Leader, T: +86 755 2547 1038 KPMG Meijburg & Co, Family Business, E: [email protected] KPMG in the Netherlands KPMG Private Enterprise, T: +31 88 909 3414 Partner, France E: [email protected] KPMG in the UK Alpha Niang T: +44 207 694 5453 Senior Manager, Portugal E: [email protected] KPMG Private Enterprise Luis Silva KPMG in France National Private Enterprise Leader United States T: +33 155686189 Partner, Conor Moore E: [email protected] KPMG in Portugal National Private Enterprise Leader, T: +351 220102329 Partner, Germany E: [email protected] KPMG in the US Vera-Carina Elter T: +1 415 963 7559 Head of People and KPMG Private Saudi Arabia E: [email protected] Enterprise in Germany, Fuad Chapra KPMG in Germany National Private Enterprise Leader Bradley Sprong T: +49 211 475 7505 Partner, Partner, E: [email protected] KPMG in Saudi Arabia KPMG Private Enterprise T: +966 503660370 KPMG in the US India E: [email protected] T: +1 816 802 5270 Kalpesh Desai Dr. Hanoof Abokhodair E: [email protected] Partner, Associate Director, KPMG Private Enterprise in India KPMG Private Enterprise & T: +91 98193 73637 Family Business, E: [email protected] KPMG in Saudi Arabia T: +966 504684064 E: [email protected]

KPMG Private Enterprise member firms 123

The STEP Project Global Consortium is a global applied research initiative that explores family and business practices within business families and generates solutions that have immediate application for family business leaders. The STEP Project Global Consortium aims to be a leading global family business research project with an international reputation. The research insights are specifically drawn to be of relevance to developing new theoretical insights that can offer novel and valuable best practices recommendations to the business stakeholders and the practice community at large. Having a global worldwide orientation, the STEP Project Global Consortium offers networking opportunities for researchers, family business owners and consultants coming from five continents.

Visit: thestepproject.org

About the KPMG Private Enterprise Global Center of Excellence for Family Business

As with your family, your business doesn’t stand still — it evolves. Family businesses are unique and KPMG Private Enterprise Family Business advisers understand the dynamics of a successful family business and work with you to provide tailored advice and experienced guidance to help you succeed.

To support the unique needs of family businesses, KPMG Private Enterprise coordinates with a global network of member firms dedicated to offering relevant information and advice to family-owned companies. We understand that the nature of a family business is inherently different from a non-family business and requires an approach that considers the family component.

Visit: home.kpmg/familybusiness

About KPMG Private Enterprise

Passion, it’s what drives entrepreneurs, it’s also what inspires KPMG Private Enterprise advisers to help you maximize success. You know KPMG, you might not know KPMG Private Enterprise. KPMG Private Enterprise advisers in member firms around the world are dedicated to working with you and your business, no matter where you are in your growth journey — whether you’re looking to reach new heights, embrace technology, plan for an exit, or manage the transition of wealth or your business to the next generation. Working with KPMG Private Enterprise, you’ll gain access to a trusted advisor — a single point of contact who shares your entrepreneurial mindset. With access to KPMG’s global resources and alliance network, we’ll help you drive your business forward and meet your goals. Your success is our legacy.

Visit: home.kpmg/privateenterprise

124 About the Successful Transgenerational Entrepreneurship Practices (STEP) Project Global Consortium

STEP Project Global Consortium

Andrea Calabrò Georges Samara Yashodhara Luis Díaz-Matajira STEP Global Academic Director, University of Sharjah, Basuthakur Assistant Professor, Director, Global Research Champion, School of Management IPAG Entrepreneurship & Family STEP Project, Research Associate, Universidad de los Andes, Business Center, Editor in Chief for Business Ethics: Thomas Schmidheiny Centre for Bogota, Colombia IPAG Business School A European Review Family Enterprise, Indian School of Business

Rodrigo Basco Nupur Pavan Bang Jeremy Cheng Albert James Associate Professor, Associate Professor, Researcher, Associate Professor, Sheikh Saoud bin Khalid bin Thomas Schmidheiny Centre for Center for Family Business, Rowe School of Business, Khalid Al-Qassimi Chair in Family Family Enterprise, The Chinese University Dalhousie University, Business, Indian School of Business of Hong Kong, Canada American University of Sharjah Hong Kong (SAR), China

KPMG Private Enterprise Center of Excellence for Family Business

Jonathan Lavender Mary Jo Fedy Jubran Coelho Melany Eli National Private Enterprise Private Enterprise Leader for Managing Director, Global Head, the South Americas Region KPMG Private Enterprise, Leader, Strategy, KPMG in Canada and Brazil, Partner, KPMG in Brazil Marketing and KPMG in Israel Communications, KPMG Private Enterprise, KPMG

Tom McGinness Karmen Yeung Silvia Rimoldi Jesus Luna Global Leader, National Private Enterprise National Private National Private Enterprise Family Business, Leader, Enterprise Leader, Leader, KPMG Private Enterprise KPMG China Partner, Partner, Partner, KPMG in Italy KPMG in Mexico KPMG in the UK

Daniel Trimarchi Miguel Ángel Director, Faura Borruey Family Business Global Network, National Private Enterprise KPMG Private Enterprise, Leader, Director, Partner, Family Enterprise Advisory, KPMG in Spain KPMG in Canada

Editorial board 125

Andrea Calabrò Tom McGinness

STEP Global Academic Director, Global Leader, Director, Family Business, IPAG Entrepreneurship & KPMG Private Enterprise, Family Business Center, Partner, IPAG Business School KPMG in the UK E: [email protected] E: [email protected]

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