Like father, like son? Egon Zehnder’s advice on succession in a Hong Kong family business
Family businesses form the foundation of the Hong Kong economy and are increasingly important in mainland China. Unfortunately, they also sometimes cause discontent and distress, especially over the question of succession.
Founder-entrepreneurs put a lot of energy into building their businesses, and understandably expect their children to take up the reins with equal enthusiasm — yet many heirs have different interests. It’s no surprise, perhaps, that only 30 per cent of family firms outlive their founders.
I recently discussed this issue with several founding CEOs while on a tour of mainland China and Hong Kong with my colleague Claudio Fernandez-Araoz to launch his new book, It’s Not the How, or the What, but the Who: Succeed by Surrounding Yourself with the Best.
One chairman, who has created a multibillion dollar business, is passionate about building a “100-year-old company” that will outlast him. He has three sons, but was unsure whether to groom them for leading the company or encourage them to pursue their own passions.
Our advice was that he should appoint the best CEO for the company — whether that person was a family member or not. If one of the sons was right for the role, his success would be aided by a board that included expert independent directors who could mentor the young CEO. If the sons were better equipped for other fields, they could still play a major role in the family business, by serving on the board, for example.
In another conversation, we spoke to a young leader who was the potential future CEO of his family business. His father had high expectations, and he was worried about whether he could live up to them. Our advice was to surround himself with a diverse group of talented people and help them to thrive; by building a great team, he would become a better leader.
The key to long-term success — and familial harmony — is to encourage the next generation to follow their interests, and simultaneously engage external talent in governance and leadership.
This article appeared in the Classified Post print edition as Securing succession.