Transferring the core values of the family is one of the key challenges facing a family-owned business in ensuring its long-run viability

Values transfer keep family firms afloat

Kwanchai Rungfapaisarn 
The Nation June 11, 2013 1:00 am

B Grimm head outlines fundamentals to sustainability

Transferring the core values of the family is one of the key challenges facing a family-owned business in ensuring its long-run viability.
Harald Link, chairman of B Grimm and a member of the third generation of the founding family, said yesterday that the core values of his family applied by or transferred from generation to generation are the desire to contribute, caring for ordinary people and compassion in daily life. 
“This means that we make a strong effort to be caring, reliable and responsible towards all people we deal with in our daily lives, be happy for other people’s successes and invest our time and money in social development projects that further education, culture, the environment, sports, religion and care for those in need,” he said.The family’s background is in religion, education and medicine. It has Protestant pastors, professors and pharmacists. So there may have been a strong desire in the parents to pass their core values on to the next generation.
“My key ambition is to contribute to a compassionate society and strong economic development with modern infrastructure and cultural offering that contributes to people’s happiness and then transfer B Grimm to the next generations with a strong foundation,” Link said.
“To be sustainable, we want to first and foremost base it on the professional and engaged people who work at B Grimm, who share the same values, work according to their strengths and are happy working at B Grimm.
“We also want to be in solid businesses supervised by a functioning board with solid financing and reliable partners,” he said.
The family wants the next generation to be well educated and experienced to take over their functions. It wants to have a clear agreement among its members about their roles and responsibilities and to have strong relations with the community and society they work in.
The key obstacles in sustaining family-owned businesses are the following:
nLack of transparency, perceived fairness and communication or ability in the family leading to family disagreements.
nInability to lead the firm well because either family members are not capable enough or professional, capable managers are not hired.
nA mindset of not having the company’s benefit in mind and thinking of the short-term desires of the family first.
nLack of competitiveness, bad markets or force majeure.
To overcome these, family-owned businesses need to arrange an open discussion moderated by a capable and knowledgeable outsider and to be ready to be fair and listen. Then there must be a clear family agreement acceptable to all that the long-term good of the company has to come before the short-term desires of family members, while non-working family members should be able to sustain their lives without dividends.
They should prepare the next generation early and well, let them try things out and maybe also fail to get experience. 
They should have outsiders or the board or advisers judge their capability and openly discuss the results in order to assign the next generation the right responsibilities.
They should always conduct strategic reviews and portfolio adjustments to go with the times and not cling to something only for sentimental reasons like the founder’s favourite business, Link said.
Christine Blondel, adjunct professor of entrepreneurship and family enterprise at the global business school Insead, said that to ensure the continuity of a family business, the owners first of all have to make sure that the business is not too dependent on them, that it could be run through a board of directors consisting not only of the owning family but also outsiders. It also must be able to sustain itself with good management at every level. 
Family owners must be open and put a high focus on communicating within the family about the future, succession and the role that each person can play, whether as an owner, manager or just supporter of the family’s unity.
They should have rules within the family on what will happen if someone wants to join the business or wants to sell some shares. Without such rules, it would be difficult to make decisions when the circumstances require them, she said.