Last week I was on a live discussion, where someone who was in Germany was asked why African Family Businesses were not multi generational. I will forgive their ignorance as they have never actually been on the continent because they fell into the assumption that African families are close and are about community therefore the assumption is that they automatically have multigenerational businesses. This is a huge assumption that is highly inaccurate. Being African, raised in Africa and working with African businesses, I have seen that Family Governance is the biggest problem that family businesses on the continent face. The family itself and the various intricacies that are part of the African family contribute to a lot of the issues that then affect the business and its transfer thereof. The unity in African families is usually held intact by a matriarch or patriarch (usually the founder) who has a dominant voice on the family and its activities and various relationships, on passing of this individual in most cases the family then fails to stay together and the disintegration of the business then happens rapidly afterwards.
So my take on this discussion is that the biggest challenges for family businesses in Africa have to do with the family and not with the business. I will clarify below by stating the obvious but not normally highlighted nuances that are challenges for African Family Business in no particular order:
Educating but not Integrating the next Generation: Most African families value education a lot and invest a lot in their children getting the best of education. It is usually the main driver for providing the best for their family that drives founders to set up their businesses. This drive also lends itself to having founders sending their children to the best schools globally to ensure they get the very best in education. Given that the founders themselves then remain in their home countries focusing on the business, they never truly experience the same experiences that their children do in their time away from the home country’s environment. This then sees either the children returning to work in the family business or not returning but choosing a life abroad. Let’s look at both cases as separate challenges. In the case of the founders who have children who decide to stay abroad and not return home- the business itself may then end up being sold as the founders pass on or decide to retire and move to be in proximity to their children. This becomes a loss to the community, in terms of the goods or services the business supplies. A loss in skills that the business provided and an overall loss in the economy of a viable and functioning business. In the other case where the children decided to return home the founders because of the many years at the helm of the business are reluctant to integrate the new generation with their new or foreign ideas into the business. The founders forget that they educated the new generation for the purpose of continuity and instead see themselves and the business as one entity and the new generation as a looming threat to both their existence. This usually means that the children feel rejected and then either refuse to join the family business, join and then leave, or start their own business similar to that of the family. All of which lead to the family business not becoming multigenerational.
Possible Solution: It would be important for the founders to not look at the next generation as a pest or as a threat to their success but to see them as their legacy. The next gen are an investment that could not only double their success and continue building their company, but also give them their chance at immortality (through building the name and the heritage of the business). By simply accepting the differences that may be caused by many years apart or even by difference in education and beliefs and using them to work together towards a better and more diverse solution, there is the ability to merge their joined experience for the advancement of the business. In the cases of next gen who do not want to return to the country or business, the option of selling the business and maintaining ownership that gives access to financial benefit is also an option. The next gen may not immediately see the benefit of such a move but long term financial investment is always a good option, moreso if the business provides the community with the essential goods and services and skills cultivation.
The looming Honor system: In Africa we have a deep rooted culture of putting our elders on the pedestal and never challenging or questioning their authority of decisions. Because of this, many Next Generations are “gagged” and stopped from speaking openly about issues that they feel may be affecting the family. They cannot judge or challenge the decisions of the founding or elder generations. This ends up with many, many situations of Next Gens not being made fully aware of complex situations that they then inherit on the retirement of the founder, which in most cases happens when the founder passes on and is no longer there to answer to, or provide guidance as to their wishes in the handling of the situations. Some of which may involve complex relationship issues like, children who were unknown to some members of the family, spouses who were unknown to some members of the family. Promises and agreements which were undocumented but are only known to some members of the family. Unclear ownership and succession situations that need clarity. The issues that children may have heard of but were never clarified. Including unclear intentions around the succession of the company and its management thereof. When the founder then demises, because of the honour system, sometimes succession decisions are then left to elders or the presumed elders of the family who may not be savvy to the operations of the business and may not know what needs to be done to ensure the business stays in operation. This may in turn cause the business to close down or stop operations whilst legal or family wrangles are being resolved. Depending on the nature of the business this usually leads to the business eventually losing customers, market share, credibility, critical staff and finally its eventual folding.
Possible Solution: The honour system is a global phenomenon, where the elders have always been seen to hold more wisdom because they have lived longer and have more experience. This should not change but the adoption of inclusivity may be an advantage for the advancement of all societies, moreso the African society. Representation of the younger and next generation is essential in all platforms of decision making. Not just token representation, but actual representation which gives them a voice that is heard and respected. Sharing of critical information is also necessary. It may cause embarrassment or shame for the interested parties but once difficult issues are put forth for discussion one can start putting in place possible resolutions, healing and acceptance becomes an option and future losses are mitigated or stopped. Communication is not easy but it is essential for the resolution of all issues. Or the beginning of healing thereof.
The family Matriarch and Patriarch with an uncertain succession plan: As with the previously mentioned points, when the founder holds all powers and no family governance or corporate governance is exercised appropriately in the business,the business owners are faced with issues of uncertainty indefinitely. The matriarch or patriarch who holds court as did the kings and queens of old, are faced with the same dilemmas if they do not clearly state who their successor is. Worse still if the founder does not train the successor and make it clear their role and also acclimatise the family to this new leader. The major issue in business is that the operations of the business are not as easily run as with the family. In a family the assumption is that the oldest son or at times daughter automatically takes the headship of the family. This does not always translate to business because the assumed “heir” by default may have little to no knowledge or interest in the business and may be instead, a hinderance or a causation of business bankruptcy or failure. It would be essential for the founder who is matriarch or patriarch, to state clearly their intentions for succession and ensure they have prepared the proper successor and given them the right tools to succeed at the job. As well as rallying the family to the successor so that there is little to no in-house fighting that could spill over to the business.
Possible Solution: Succession is always a hot topic. With many players wondering if they will be the “chosen” one. Experience has taught us that birthright has always been the most convenient succession selection plan but it has not always been the most successful or right plan. Not all people are suitable for the “office” or for “leadership” and not all people choose leadership. In fact many people shy away from leadership and choose to be instead in the contributing team and do so effectively. And the Matriarch or Patriarch may have successfully managed to lead their family but it is also their responsibility to identify and nurture the right successor based on the values they hold dear as well as based on the qualities needed to head the family. It must be kept in mind that the successor to head the family may not necessarily be the same successor who heads the family business. The skills-set needed for both these jobs may be different. The founder must be clear about this and set up the family and business for the right leaders and if indeed the leaders are different, the founder must take responsibility of teaching these two unique leaders to work hand in hand for the success of the family and the business. Moreso because the family business is the uniting tool of financial interdependence that will eventually foretell the financial destiny of the collective family.
Power play as a way of family life: All families have dynamics. Moreso complex families that are as large and intertwined as the African family. We embrace all relations, and the traditional nucleus of family as known in the Western complex is not known in Africa, where totems and family branches are deep and multi-rooted as the baobab trees. In such families where relationships can be blurred and interchanging based on assumed seniority, the law sometimes can govern the relationship but not always.
Possible Solution: In cases of business and family, family is complex and can be counterproductive if not governed correctly. And even in spaces where family governance is taken seriously and adhered to, it is necessary to implement legal advice and structures which may become the final power instrument to ensure a family multigenerational business to survive or even thrive. Getting legal advice to enforce the constitution may seem extreme but even in Africa, the law can trump the sometimes long winded and exhausting traditional rites and practices.
At the end of the day what makes family businesses unique is family. Family is the anchor that makes the business begin and weaves the history of the business. Without family the business would likely not survive or thrive. Family brings with it resilience, togetherness and the thread that all humanity lives for “a story” and a “history”. Once we learn this and implement the right structures to allow the story to become multi-generational, we will create the businesses and solutions that change communities and contribute to the human history and our families will become the “legends” that are spoken about throughout the timeline of man.