3 family business succession models Case studies and concepts for family business succession from 3 continents

            “The important thing is Maintaining balance in the survival of the family business and good relationships among members are the source of true happiness.”

Problems that every family business must face

            When the founder builds the family business until it is firmly united. and want to reduce their role or retire from the family business to live the life they want What the founder thought next was So who will take over the family business? Most of the answers are probably the "heirs" whether they want to or not!

            If the family business has heirs who are ready and want to take over, there will probably be no problem. But in many cases, the heirs that parents expected to take over are not ready. or do not want to run a family business or in some cases A family may have several heirs who want to come back to work at the same time. How do parents decide?

            From having the opportunity to study the formats of family businesses in many countries, it was found that each family business is There are different concepts of inheritance. which has existed since the founder (or the previous generation) instilled (forced) the next generation to work in various departments. of family business Providing large compensation or shares to encourage children and grandchildren to want to continue the business or even requesting to allow outsiders to take over management so that the family business can continue to exist. Even if those who inherit are not real descendants.

            These different ideas also reflect the situation. the context of those businesses and families And to get a clearer picture of different family business succession models, the author will give examples of case studies of family businesses from 3 continents to see how they are similar or different.

Case study of business succession concepts from 3 continents

            Information from the book Centuries of Success by Professor William O'Hara has been compiled 100 The world's oldest family businesses, which can distinguish the number of family businesses from different countries as follows:

                Nationalities of the 100 oldest family businesses First in 2003

                                Source: Centuries of Success, Professor William O'Hara, 2003

            From the statistics, it can be seen that Most family businesses come from three continents, including America, Europe, and Asia (Japan). Therefore, family businesses from countries on all three continents were brought up to study, including the United States, Germany, and Japan. From the samples used in the study, it was found The concepts of family business succession are extremely different as follows.

MODEL 1 : Not mandatory. If you want it, you must buy it yourself.

            It started as a family business in an extremely liberal and democratic culture such as United States We bring up the case study of Keddeg to study the idea of ​​delivering a family business. Keddeg is a company that manufactures equipment and air filtration systems (Air Filtration Systems) for airplanes, located in Kansas. The business is owned by a husband and wife team named Tom and Patty. The couple have five children together, each with their own full-time job. All have families and reside in other states. In the past, no children have ever joined the family business.

            After Tom and Patty had been in this business for more than 20 years, they began to think about retiring. Tom wanted to become a teacher. and travel, while Patty wants to do charity work and travel The two therefore called Eric and Dan, children whom they thought might be interested in inheriting Ked Dek Company, to discuss inheriting the family business.

            The discussion at that time It's not about inheritance. or passing the baton from generation to generation, but Tom and Patty tell their children of their own to bid on the family company that both children deem suitable to take over management (Eric and Dan can choose to bid separately or you can bid together) along with a plan for the transition period between yourself and your child.

            But if both children are not interested or if the price isn't attractive enough, Tom and Patty are ready to sell the business to outsiders. Giving the reason that He has spent a long time building his business. When it's time to take a break, they (Tom and Patty) should be paid. (from the business created) that is appropriate as well which in the end While negotiating with my children, a company doing similar business contacted me. and offered a price that Tom, Patty, and their two children were satisfied with. Everyone then decided to sell off Ked Dek Company and end the family-owned business.

Keddeg was founded in 1986 when Tom and Patty acquired an aircraft parts manufacturing business. Keddeg became famous in the industry for inventing a new type of air filtration system in 1998, when Tom and Patty were negotiating the deal. A family business with children, Clarcor Inc., a company that develops all types of air filtration systems and products, approached them about acquiring the business. and reached an agreement to purchase the Keddeg business in December 2008.

MODEL 2: Not forced, but cultivated and supported.

            Model 2 is a German family business in Europe. It is the continent with the highest number of family businesses that have been around for more than 100 years in the world. A liberal and democratic culture combined with a society that still values ​​family living together creates a unique concept of inheritance. Klett Gruppe is an educational business group that operates With operations all over the world, the Klett Gruppe is now in the care of its 4th generation, with more than 50 family members, all of whom are expected to be part of the Klett Gruppe.

            When members reach 18 years of age, they are eligible to be allocated shares. This depends on agreement within the family. After that, members will receive training on various management skills. Be introduced to the family business. Klett Gruppe offers children the opportunity to intern at the company during school breaks. and create recreational activities that families deem beneficial to members' self-development When these family members graduate and are ready to work, Children also have the right to choose whether to work in the Klett Gruppe or not.

            And if you come to work must go through the recruitment process like other employees. without receiving special privileges over others (No Automatic Rights). In order for family members to cross over to become senior executives of the family business, Must pass the qualification criteria set by the executive board of the business group. and the joint family council predetermined it, such as

• Have completed at least a bachelor's degree.
• Can speak at least 2 foreign languages ​​(not counting German)
• Have experience working in a company that is not in the Klett group for not less than 2 years.
• Have experience in management in important departments of the Klett Group for not less than 5 years, etc.

The Klett Gruppe was founded in 1897 by Earnst Klett Senior as a small printing house. Later, Klett received concessions to print telephone books in several cities in Germany. Until being able to expand the business into other printing businesses Later, Klett Gruppe has now become a large European education business group with a total of 67 companies located in 15 countries, focusing on the production of teaching media. Child Development Center and School Including online learning systems. In 2016, the Klett Group had more than 3,600 personnel, generating revenue of more than 537.3 million euros/year.

MODEL 3: Children must inherit the family business.

            This last model reflects Asian cultures that adhere to the values ​​of an interdependent society. (Intense Collectivism) The Hoshi Ryokan is the oldest ryokan hotel business in Japan. It was founded in the year 718, or more than 1,300 years ago. Currently, the heir of the 46th generation family named Mr. Zengoro Hoshi is in charge of the entire business. Mr. Hoshi spoke about the secret of the family business being able to survive. for a long time saying It is the result of adhering to the principle that

            The business was passed on to the eldest son only. If you don't have a son (Or the son really doesn't have enough talent) can give the son-in-law Or you can adopt children to take over the business.

            There will only be one person receiving the inheritance. They must inherit the family business in order to gain possession of the property. and must act as the leader of the family (Family name must also be used)

            Another family business that has been in business for over 1,440 years, Japan's Kongo Gumi has used the same inheritance principles as Hoshi since ancient times. And a new culture of its own was created to increase flexibility, such as having a younger brother take over the family business to replace an older brother who was not ready to take over. or consenting to allow the heir's wife to take on the duty of inheriting the family lineage and family business in place of the husband who died, etc.

            The Japanese business succession concept above is based on the ancient Japanese philosophy that comes from the word 家 or “ie,” which means family or home. This philosophy reflects the concepts of survival and growth. (Prosper) which Japanese people in the past thought that there could only be one successor. (Especially the eldest son) who must be the heir to the family. and family business together In the past, heirs who did not inherit the business had to leave the family. and went on to establish itself on its own unless assigned by a successor to join in taking care of the family business in some way.

Kongo Gumi was founded in 578 by an early ancestor named Shigetsu Kongo who traveled from South Korea (Beakje) following the wishes of Prince Shotoku Taishi who needed a skilled carpenter to build a Buddhist temple in the Osaka area. The Kongo family Recognized for his skill as a carpenter, he was tasked with building and repairing Buddhist temples throughout the area throughout the centuries. Later, the Kongo family business has diversified into more businesses. But still holding on to the business of repairing and building temples using ancient techniques. Currently, the Kongo family has sold the Kongo Gumi business to the Takamatsu Tenketsu construction business group, but the Kongo family still has the right to continue serving the family business.

Compare 3 family business succession models

            From case studies of three family business models in the past While this may not be a complete reflection of the concept of family companies on the continent, it does provide a glimpse into the different mindsets of family businesses with their roots. Social backgrounds, cultures, and values ​​differ to some extent in each area of ​​the world. The important points of the concept of family business succession in all 3 models can be summarized as follows:

                            Comparison table of 3 family business succession models

Source: Kawin Theppatipat 2563

We probably cannot say that Which family business succession model is the best? Because each model has strengths, weaknesses, and suitability according to the situation. and the context of family business But we can borrow the advantages of each model and adapt them as appropriate for us, such as cultivating and developing successors from a young age. Creating flexibility in business succession or even finding a way out (Exit) so that previous leaders can comfortably rest their hands, etc. It is important to maintain a balance in the existence of the family business and good relationships among members, which is the source of true happiness.

Reference:

• “The world's oldest family companies: One hundred lessons in endurance from 17 countries” , Professor William O'Hara
• Case Study “Keddeg Company: Succession to the Next Generation of Small Business”, John L. Ward & Carol Zsolnay, Kellogg School of Management, Northwestern University
•  “1,400 Years of Family Business”, Irene Herera, Works that Work no.3
• “Centuries-old Japanese family-owned inn a model for succession”, Morten Bennedsen, South China Morning Post
• “Multigenerational Family Companies: Path to longevity for family companies and their families”, Dr.David Klett