Thoughts from the Harvard Business Review family business handbook: Thai family business success formula For sustainable business succession (Part 2)

When the heir decides to come work in the family business, whether heirs in the family, in-laws, or daughters-in-law, there should be a verification process before deciding to come to work. By considering that the future What will the job position be like in the family business? Because once you enter the workforce, leaving the family business is not easy.

Previous article The first part discussed deciphering the code and the power of family businesses. The second part in this issue is about the rights of family business owners. And the third part in the next issue will be about the challenges that family business owners face (Challenge you will face). The book is divided into seven chapters as follows.

1. Things that will cause the family business to be affected (Disruption) are 1. Death of family members 2. New people who will enter the family business. Whether it is an in-law or a daughter-in-law, 3. Inequality and 4. Behaviors that arise from health issues among family members. Dementia or other health If this is the case If the family has rules or family council family constitution working together And hiring outside experts to help can alleviate this problem.

2. The heir's decision to work in the family business Whether it is an heir in the family, in-laws, or daughter-in-law, there should be a verification process before deciding to come to work. By considering that the future What will the job position be like in the family business? Because once you enter the workforce, leaving the family business is not easy.

Family members' experiences from outside work will help in deciding whether or not to enter. or preparing to be tested in entering the family business and consider quitting the job if the work cannot be achieved according to the goals and in the case of outsiders who come to work for the family business Must build confidence among family members. And if there is a conflict between family members When in doubt, talk in the management room. or management room and should not involve family members in family conflicts

3. Establishing a clear employment policy for family members will create talented heirs. of the family wants to come work in the family business Establishing rules regarding employee employment and future planning, providing regular evaluation and development of employees who are family members, paying market-based compensation, including requiring family members to retire from employment. Doing family business when work doesn't meet goals as well. Importantly, you must not be a family member who is pampered to the point of not evaluating and developing your abilities.

4. How do you take responsibility for the wealth of your family business? whether it is maintaining the golden goose source of family business owners; Survival and long-term profits must be considered. Rather than growing your business quickly, build up debt with caution. and invest more into their businesses, creating sustainable and innovative investment portfolios. and allocating dividends to make the business independent from the family business

To make the family business responsible for its wealth By involving family members in the work More than an investment that creates wealth The worthiness of each person must be avoided and the heir must not feel that It is not just because they are children and grandchildren that they have the right to the wealth of the family business without having to work.

5. Conflict in family business It's important. Conflict is normal. The right amount of conflict can make a family business sustainable.

Conflict management is what is important. This book recommends using the following conflict management abilities:

• Find the right state of conflict (Goldilocks Zone of Conflict) because there is no family business without conflict. Just don't let there be too much conflict. Like the solar system If it's too hot or too cold, it won't work. Therefore it must be appropriate. Conflict is the same. Therefore, if anyone says that family businesses do not have conflicts. Therefore it is a scam. Because of not talking to resolve conflicts Because I don't want to argue or conflict. It will lead to violent conflict in the long run.
• This book recommends that if conflict conditions are appropriate, answer the question, In running a family business
  1. Are you satisfied with the direction of most family businesses?
  2. Important matters are decided by family members; and
  3. Are family members committed to good work and celebrating success together?
• The false harmony underlying conflict must be transformed into constructive conflict. By setting rules for constructive discussion. in a good atmosphere By setting common goals, progress is made in an evolutionary rather than revolutionary manner in ways that would result in conflict. Give importance to principles more than individuals.

Gradually introducing new ideas to insert into existing ideas So that it doesn't feel like a change Reaffirm traditional family values ​​without disrespecting the old as invalid. But explains the change that such thinking is incorrect.

• 6 types of conflict spiral patterns starting from
  1. Different benefits
  2. different positions
  3. miscommunication
  4. nepotism
  5. Starting a proxy war and
  6. Lawyers are called in to get involved in family wars by filing lawsuits in court.
• Resolving conflicts in the family by finding common ground, finding various options to discuss, building trust between each other, and finding outsiders to help mediate. And finally, avoid the 6 conflict spirals above by talking to each other and creating rules and regulations beforehand.

6. Establishment of a Family Business Office (Family Office) that determines its role in helping advise on family investments. Providing legal, tax and family member services in various matters. In determining the types of family business offices, there are many forms. Including establishment and termination when necessary. I have written an article on this topic in the Finance and Banking Journal before.

The final chapter of this book Discuss the dangers to family businesses that family business owners create, such as loss of control and ownership. Ownership and value of family businesses gradually It was eroded and the family business came to an end. because it did not respond to the economic crisis that occurred

When there is a danger signal (Red Flag) that has occurred, then Family members must be given importance. Because of this danger signal that will affect the family business, such as

1. The dividend rate is stable and never changes. whether more or less It will be dangerous. Because some of you may not have ever been involved in setting the company's work policy. To consider whether to get more dividends And in some years it may be less because the economic situation reflects reality. It allows you to truly understand the future characteristics of the company.
2. Board meetings are just a format. It's just a rubber stamp, there's no discussion.
3. Too much or too little business information? That is not enough to make a decision.
4. When the CEO feels that no one can replace him or her and is better at his job than his family members.
5. Family members are prevented from being involved in the business.

The book specifies 3 types of dangers to family businesses:

1. When there is a Red Flag danger signal, whether it's the CEO thinking that no one is better than him. Cannot be changed, dividend policy never changes, rubber stamp meetings and not allowing family business owners to interfere in the management room. Business owners must use their ownership rights to intervene by using the 5 rights mentioned in the book in Part 1, namely (1) designing the business type (Design) (2) making decisions (Decide) governance structure. Taking care of the business (3) Determining the value (Value) of the family business in terms of growth, liquidity, and control (4) Informing (Inform) through effective communication (5) Transferring (Transfer) the business to the next generation go

2. When the value of the family business begins to disappear, causing the business owner to have no pride, so don't think only about money alone. Even when the business has problems Business owners must teach their children that business has its ups and downs. Let's not differentiate between doing business professionally and doing business with a spirit of ownership.

3. When there is an economic crisis, business owners must turn the crisis into an opportunity by using the 5 rights of business owners mentioned above.

The final chapter of the book advises family business owners to evaluate the 12 areas discussed in the chapters. of the book, whether it be setting the format (Design), decision-making (Decide), etc., that each issue What does each person in the family think? Do they agree or disagree? And in the case that there is a problem, you must find out how to solve the problem. By setting guidelines for solving problems together among family members.

In the final part, I will bring the 6C formula, my Thai family business success formula, to study and compare. How can it be applied to Thai family businesses?