Management and institutionalization processes in family businesses are of great importance for the sustainable growth and success of the company. The success of family businesses can last for generations and the continuity of growing businesses depends on a solid management structure.
In this blog post, “7 Steps to Governance and Institutionalization in Family Businesses”, we will discuss strategies that will help strengthen the governance structure of family businesses and successfully complete the institutionalization process. In this process, we will prepare for the future by preserving the values and culture of the family and supporting the continuous growth and innovative approaches of the business.
Family businesses are of great importance in the Turkish and global economy. More than 40% of the people on Forbes’ billionaire list are owners of family businesses, and 7 of the world’s 10 richest companies are family-owned. There are three companies from Turkey on the list of the 100 largest family-owned companies in Europe: Koç Holding in 16th place, Hacı Ömer Sabancı Holding in 28th place and Doğuş Group in 61st place. This demonstrates the economic value of family businesses and their influence across sectors.
Every family business is founded with the intention that it will continue for generations, but there are many obstacles to overcome along the way. Problems such as the lack of competence of family members at the management level, closed career paths for professional employees, conflicting business and private life relations, uncertainty about the distribution of company shares, and personal expectations in strategic decisions make it difficult for family businesses to achieve sustainable growth.
Here are the golden keys to initiating and sustaining management and institutionalization in family businesses!
Step 1: Creating a Family Constitution
One of the cornerstones of management and institutionalization in family businesses is the family constitution. The family constitution is a document that regulates the business relations between family members, defines their roles and responsibilities and sets out the long-term strategic goals of the company. The family constitution defines the relationship between family members and the company. It demonstrates that the needs of the company take precedence over the views of family members. A family constitution is an important step towards objective company decisions.
Step 2: Adopt Corporate Governance Principles
Management and institutionalization processes in family businesses are strengthened by the adoption of corporate governance principles. The principles of transparency, accountability, fair behavior and responsibility play an important role in the sustainable success of family businesses. In family businesses that implement corporate governance principles, personal conflicts are prevented from getting in the way of the company.
Step 3: Building a Professional Management Team
An important component of management and institutionalization processes in family businesses is the professional management team. The employment of experienced and competent professionals other than family members is of great importance for the sustainable growth and success of the company. Professional staff makes an important contribution to the effective use of human resources by the family business. This not only increases the level of competence and experience of the company, but also enriches the distribution of authority and responsibility.
Step 4: Identifying Strategic Management Processes
Another important step in the management and institutionalization processes of family businesses is the determination of strategic management processes. Clearly defining the company’s vision, mission and long-term goals is crucial to the success of family businesses. This strategy may differ for each family. The important thing is to bring the management to a professional basis by observing the harmony of family relations. In this context, the culture of the family business, the competition between family members, the active participation of family members in the strategy formulation process, intergenerational relations and the management structure should be taken into account.
Family businesses differ from non-family businesses in terms of their goals, objectives and other characteristics. Accordingly, the evaluation and control of strategies should also differ.
Step 5: Developing Human Resources Policies
Human resources policies are at the heart of management and institutionalization processes in family businesses. The effectiveness of human resources policies is one of the keys to sustainability in order for the company to attract, employ and retain talented and qualified employees. Career roadmaps, recruitment processes and promotions should be based on merit and justice. In addition, activities such as management transparency and the implementation of a performance evaluation system are effective in ensuring that company decisions are rational.
Step 6: Corporate Communication and Image Management
A family business needs effective communication policies that regulate its relations with customers, suppliers and other business partners and determine the company’s communication strategies towards the outside world. In order for institutionalization processes in family businesses to be successful, communication and image management should reflect the corporate identity of the company as well as the family culture.
Step 7: Being Open to Change and Innovation
Companies need to be open to innovation in order to adapt to ever-evolving market conditions, produce innovative solutions and gain competitive advantage. This is no different for family businesses. Gaining adaptability by being open to change and innovation is of great importance for the successful realization of management and institutionalization processes. Family businesses need to take advantage of new development opportunities in competition with large-scale companies.
In conclusion, the successful implementation of governance and institutionalization processes in family businesses is the key to their sustainable growth and success. By implementing the above-mentioned 7 steps, family businesses in Turkey can conduct their business processes in a more efficient and organized manner, thereby increasing their competitiveness in national and international markets.
In implementing these steps, each family business can adopt an approach to institutionalization that is unique to each family business and successful family businesses models and systems around the world may be analyzed or original models may be generated. In this way, it is possible for the family business to achieve sustainable growth by overcoming family conflicts.
In the process of institutionalization, many issues such as the representation of family members on the board of directors, working and wage conditions of family members, profit distribution principles, share transfer rules, inheritance plans are regulated in writing.
In addition to the steps listed above, in order to be successful in national and international markets, family businesses should pay attention to the following basic recommendations.
Utilizing Training and Consulting Services: Outsourced training and consultancy services can help companies overcome their lack of knowledge and experience, making it easier for family businesses to run their processes more effectively and successfully.
Strengthening Communication within the Family: The success of institutionalization processes depends on healthy and open communication between family members. Strengthening communication within the family contributes both to the healthier conduct of the company’s business processes and to the strengthening of relations between family members.
Future Planning in Family Businesses: Future planning is of great importance in achieving sustainable success. Detailed and strategic planning is essential for the transfer of the company to future generations, the continuity of management processes and the achievement of the company’s long-term goals.
Risk Management and Financial Planning: Managing financial resources effectively and taking precautions against risks play a critical role in achieving sustainable growth and success.
Ethical and Transparent Management in Family Businesses: Adopting an ethical and transparent management approach increases the reputation and credibility of companies. It also helps the company establish and maintain healthy relationships with its employees and business partners.
A Culture of Continuous Learning and Development: A culture of continuous learning and development is essential for the success of management and institutionalization processes in family businesses. This culture helps the company adapt to evolving market conditions and increase its innovation and competitiveness.
Digital Transformation and Technology Investments: Digital transformation and technology investments help companies carry out their business processes more effectively, efficiently and quickly. At the same time, they help companies strengthen their customer and supplier relationships and increase their market share.
How can Teolupus help you?
There are many answers to the question of why family businesses have a short lifespan, but all answers can be evaluated under the title of lack of institutionalization. As Teolupus, we conduct a free preliminary examination and diagnostic study in your business at the beginning of our work. Then, based on our observation and examination results, we offer our solutions specific to your organization, which we agree on and draw the road map according to international standards.
We aim to ensure that your family business achieves sustainable and healthy growth in our consultancy service that we apply specially for family businesses. Contact us if you want to learn about our services for your company.
Bu gönderi şu adreste de mevcuttur: Türkçe