17 January 2017
Nurul A’in Abdul Latif, Markets Leader and Partner, PwC Malaysia
Presentation of global survey findings:
Ng Siew Quan, Asia Pacific Leader for PwC’s Entrepreneurial & Private Clients practice
Presentation of local survey findings:
Fung Mei Lin, PwC Malaysia Entrepreneurial & Private Business Leader and Senior Executive Director
Mei Lin moderated the panel discussion, which comprised the following panellists:
Family businesses in Malaysia have ambitious growth plans, yet do they have a proper strategic plan that can help them carry on their legacy into the future generations? This was the main theme of discussion at the launch of PwC’s Family Business Survey 2016 (The Malaysian Chapter).
The ‘missing middle’ is an obvious gap – many local family businesses lack a strategic plan that links where the business is now to the long term. With a lack of emphasis in strategic planning, the road towards success is down to luck, which is clearly not ideal.
The way forward is clear. To address the ‘missing middle’, “the planning of a robust strategy must start now,” urged Nurul in her opening remarks.
Family businesses will need to think beyond the immediate demands of day-to-day business and develop an informed view of what the future shape of their business will look like over the next five years or more.
Siew Quan shared that while family business issues are the same globally, family businesses in Asia (13%) fall below the global average (15%) in having a robust and documented succession plan. This is concerning considering that succession planning is a key factor in addressing the ‘missing middle’.
It is heartening to know that there are Malaysian family businesses across generations that share the same aspirations about growing a sustainable business to be passed on to future generations, said Mei Lin, sharing one of the survey responses across three generations.
As a family business expands across generations, aligning the expectations between the current generation and the next generation will be key so that the future direction of the family business is aligned. This means that both generations need to explicitly communicate their aspirations and what each generation can accept in moving the family business forward without creating conflict.
Panel discussion (left to right): Fung Mei Lin, Alvin Ang, Peter Tan and Ng Siew Quan
Perhaps the single most important thing family businesses should do is define who constitutes the family, taking into consideration the various relationships and changing family circumstances including new members joining the family through marriage (first or second marriages), divorced and estranged family members.
This issue featured prominently during the panel discussion, moderated by Mei Lin. Panellists Alvin Ang (a fourth generation member in the family business) and Peter Tan (who has years of experience working with family businesses) shared compelling stories of how their respective businesses addressed the ‘elephant in the room’ particularly for issues like being clear about the roles each family member plays in the business and ensuring accountability across the business.
Too often, family businesses fail for family reasons, emphasised Siew Quan during the panel discussion. What’s decided in the boardroom may be overturned at the dinner table, and this shows that the issues that family businesses need to tackle are personal and certainly more complex than other types of businesses.
As such, a family business strategy must fit well with its family structure, values and strengths, taking into account the risk tolerance of its family members, said Mei Lin.
In terms of succession planning, the pain of discipline might not be as severe as the pain of regret, which might very well be the case if the succession process is left to chance. Personal, family and business goals need to be aligned to promote longevity for the family business.
The next generation have an increasingly vital role to play in the strategy setting process and in responding to new trends like digital disruption. The challenge is for family businesses to empower, engage and support them in seizing the opportunities around them to take the business to greater heights.
PwC Malaysia Markets Leader Nurul A'in Abdul Latif delivering the opening remarks
Asia Pacific Leader for PwC's Entrepreneurial & Private Clients practice Ng Siew Quan sharing the global findings
PwC Malaysia Entrepreneurial & Private Business Leader Fung Mei Lin sharing the local findings
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