Latin America. The relevance of family businesses in the global economy is undeniable, especially when considering the impact of their operations on overall social progress. Historically and currently, family businesses constitute the majority of new ventures, showing a wide range in terms of size and areas of economic activity.
According to the Superintendency of Corporations, about 70% of companies in Colombia are family-owned and most are run by their founder. According to a study carried out in 2020 by the same entity, 2,386 companies are family businesses and 25.9% are in the first generation, that is, led by the founder of the company. The same study showed that only 27% of these companies had a succession plan, as part of a documented process.
"The growth and expansion in the market of these companies is not necessarily linked to the proper implementation of 'standard processes' in terms of leadership that ensure future success. This is because many do not make significant investments in succession planning, unlike large multinationals or larger companies. This planning is crucial, considering the particular dynamics and challenges that these companies, like any other, must face," explains Gabriela Castro, president of the Andean Region of Korn Ferry.
For this reason, Korn Ferry, a global organizational consulting firm, recommends four key steps that have been defined by the consulting firm in order to support family businesses that begin a succession process:
1. Allocate resources for effective succession planning: family businesses should start by improving their receptivity to the issue of succession and understanding the importance of this process, in addition to considering the allocation of financial and human resources for this process as it ensures an orderly transition and minimizes the risks associated with succession.
2. Properly develop the successor: Preparing the next leader is essential to ensure a smooth transition and the long-term success of the company. It is critical to provide professional and personal development opportunities to the future leader, ensuring that they are equipped with the skills and competencies necessary to lead successfully.
3. Involve management in the succession process: Managing staff involvement in this process is critical to ensure the necessary support and collaboration, as they fill the gap between high-level directives and the rest of the company. By involving current and future leaders in the planning process, goal alignment and business continuity are promoted. Cross-generational collaboration ensures a smooth and successful transition.
4. Foster a culture of transparency and communication: transparency and open communication are fundamental pillars in the succession process. It is essential to establish effective communication channels that encourage information sharing and building strong relationships between family members and employees. Transparency and open communication are key elements in building the trust and commitment needed for frictionless succession.
According to information compiled by Korn Ferry, today only 37% of organizations support the recognition of the importance of succession planning with substantial financial commitments, which raises much more alarms about the need for these types of companies to advance in a correct strategic leadership planning.
Against this backdrop, it is clear that by synchronizing resources with strategic priorities, family businesses can strengthen their succession planning processes. "Succession planning goes beyond preserving the current situation; Its purpose is to equip organizations for the challenges ahead. By strengthening their management team, organizations will be able to adapt, expand and evolve to meet the changing demands of the environment," concludes Castro.
