FAMILY GOVERNANCE IN BUSINESS
This week we continue on our journey with Ms. Olivia Simbajena. Ms. Simbajena is a businesswoman whose business falls under the category of SME and MME. Hers also falls under the category of Family Business. As we have defined before Family Business is a business started by an individual for the benefit of his or her family and is then run by the individual to serve the interests of their communities as well as those of their family. Family Business’s main characteristics are that a family owns the majority shareholding of the business. However, from the characters and their situations, although fictional, we are starting to see that there are dynamic intricacies that effect Family Businesses. Laying down a foundation by introducing our fictional business owners will help to establish context when we go in-depth and unpack more problems and solutions for Family Businesses.
Last week we met our trader turned enterprise builder Ms. Simbajena. Ms. Simbajena is one of the powerhouses in the SME and MME section. Ms. Simbajena is a Trader who managed to open a store, which then became a chain of stores and diversified into manufacturing. According to research done by the UN and World Bank, Women play a crucial role in trade in Africa and will be essential to Africa’s success in exploiting its trade potential. Daily, millions of women in Africa are engaged in one form of trade or another, either within their countries or across national borders. They buy and sell everything, from agricultural produce to manufactured products. It is mostly women who conduct cross-border trade, delivering goods and services, reports the World Bank. They also run the majority of agricultural small landholdings. Indeed, women traders’ contribution to national economies has become essential in boosting trade in Africa. It is well known that most women in Africa start a business out of necessity, and that necessity is to feed their family. Women Business owners are the majority of many Family Business Owners. The biggest obstacle is that they do not see their business as a business that can become bigger than just feeding their family, even though they contribute to the Ecosystem of many economies in a considerable way.
As time goes by, Ms. Simbajena expands her business. She opens more stores, and she now has a small manufacturing company that supplies uniforms for corporates and schools. She is traveling less and has three children with her husband, and her daughter has graduated from university and has now moved out of their home. Ms. Simbajena wants her daughter to learn how to manage her businesses, but her daughter does not seem interested because of the conflict with her step-father. Ms. Simbajena’s husband wants his sons to work more in the business and eventually take over and is not willing to allow his stepdaughter access into the business, especially the manufacturing company. He believes she must stick to the “boutiques.” At the boutiques, Ms. Simbajena’s brothers are now blatantly running the show and will not permit their “niece” to “boss” them.
As Ms. Simbajena’s boys grow older, they are drawn into the animosity their father feels towards her daughter, and Ms. Simbajena now believes that her daughter will be treated as she once was by her own brothers.
When Ms. Simbajena’s mother dies, she wants to put her daughter as a director in her company, but this causes conflict within her marital home. This now spills over to her businesses, and it now looks as if her businesses are about to fall apart.
Her husband has taken charge of the manufacturing company and left his car dealership after it went broke. He fires critical members of the management staff who question some of his new rules. He will not be “undermined,” so he hires without criteria and causes sales to fall.
The same rules govern family Businesses as any other enterprise with the distinct exception that a family is at the center of the foundation. This means that the family values, missions, goals, and visions are intertwined with that of the business. The family defines the business’s Values, Vision, and Mission. Communication or lack thereof will cause a detrimental or positive impact on the business. For example, if Ms. Simbajena and her husband have a rift and are fighting, this trickles down to the business and causes the staff to feel the tension. And if clear structures are not put in place, the staff may get conflicting orders from their bosses. Communication between the family and the business should be structured, and the key players in the business must know who to answer to and who to work with. Staff confusion and any uncertainty can lead to low morale and low productivity. Conflicts between family members also open up the business to mismanagement by staff who can escalate the conflict for their own benefit.
Conflict Management within the family must be resolved as quickly as possible. Resolving conflict requires experts who understand family dynamics and the various issues that can play into them. Experts with experience in Family Business and Family Structuring and Governance must be brought on board to assist with the structuring of the family systems concerning their business. If a family council can be set up, this can help with creating the relevant discussions that can result in the family identifying their goals and the definition of wealth as well as their business-related goals. Succession in a family business should also be defined. As much as we believe that certain members of the family will inherit certain things, businesses are intricate vehicles that have legal implications. Using these legal tools can substantiate inheritance issues in the family business. However, legally inheriting a business does not equate the ability to operate the business. And in a situation like Ms. Simbajena’s, it is critical to ensure that the business enterprise she has built is protected and the interests of her family defined so that it is protected in the right way.