Family Business Survey 2014
Date:
26 January 2015
Opening remarks:
Sridharan (Sri) Nair, Managing Partner, PwC Malaysia
Overview of key findings (regionally):
Ng Siew Quan, East Cluster/Asia-Pacific Family Business Services Leader and Entrepreneurial & Private Clients Leader, PwC Singapore
Overview of Malaysia findings:
Fung Mei Lin, Senior Executive Director and Entrepreneurial & Private Clients Leader, PwC Malaysia
Moderator:
Umapagan Ampikaipakan, Presenter, BFM Radio
Panellists:
- Ng Siew Quan
- Lee Kia How, Executive Director, S&M Jewellery Trading
Closing:
Eric Ooi, East Cluster/Asia-Pacific Entrepreneurial & Private Clients Leader and Assurance Partner, PwC Malaysia
Highlights from the event
PwC Malaysia launched its inaugural report on the Family Business Survey to an intimate crowd comprising first, second and third generation business owners.
Titled “Up close and professional: the family factor”, it focuses on the need to professionalise both the business and the family amidst competitive pressures, rising costs and global megatrends like technological breakthroughs and changing demographics.
Sri Nair, Managing Partner, PwC Malaysia, and Fung Mei Lin, Entrepreneurial & Private Clients Leader, PwC Malaysia, both highlighted the critical role played by family businesses as the country’s engine of growth. “It is one of the oldest and most enduring forms of businesses in the world” said Sri.
Attracting and retaining key skills and talent are on top of the minds of Malaysian family firms, along with the need to innovate and to manage succession for the family business.
The local findings lined up consistently alongside the global results in terms of recent commercial performance, optimism for growth, and overall personal and business goals.
Using anecdotes and examples, Fung Mei Lin, Senior Executive Director and Entrepreneurial & Private Clients Leader, PwC Malaysia, illustrated what local family firms can do in setting up good governance practices as a means to professionalise not merely the business but also the family.
The fact that 46% of Malaysian family businesses agreed that it was important to professionalise the business goes to show that our local family firms are increasingly seeing the value of having a ‘safety net’ to sustain the business in the long run.
However, the fact that only 16% have a formal succession plan clearly indicates that there is still more work to be done by Malaysian family businesses around the topic of succession.
The panel discussion, moderated by BFM Radio presenter Umapagan Ampikaipakan delved further into this issue, looking at the need to effectively manage family issues that can hinder business success and getting the next generation to stay hungry.
It was a lively discussion, bringing out the lighter side of both panellists, Siew Quan and Lee Kia How, Executive Director, S&M Jewellery Trading.
Second generation business owner Kia How shared how his ‘boss’ (father) groomed him and his siblings to run the family business and the family values he imparted on them, closely interwoven into their candid conversations during meal times where ‘business talk’ was the norm for the most part.
Various family business issues and challenges were brought to life during the panel discussion including:
- the ‘sticky baton’ syndrome (where the older generation hands over the management of the firm in theory, but in practice retains complete control over everything that really matters)
- the 3 gaps threatening to derail family businesses - the generation gap, the communications gap and the credibility gap
- the 4 D’s– Death, Disability, Divorce, Disagreement, usually will trigger conflicts. Pre-empt potential conflict by identifying your succession plan
- the 4 key skills needed to run a family business – learn business, learn the industry, learn to lead and learn to let go
It was indeed a very fruitful discussion, raising quite a few provocative questions from the audience, including how to manage shareholders who are not in the family business, what’s the best exit strategy, and where do the daughters figure in the grand scheme of passing on the family business.
Eric Ooi, East Cluster/Asia-Pacific Entrepreneurial & Private Clients Leader and also the survey sponsor, ended the event with a quote, ‘business success cannot make up for family failure’, which aptly reinforced the need to get family governance right, together with the equally important corporate governance structure.
He also stressed the importance of starting to think about potential conflict and succession in the family saying, “there is no better time to build a new roof, or for that matter mend a leaking roof than when the sun is shining".
Quotes from the event
46% of family businesses agree on the need to professionalise which augurs well. Ties in with need to recruit talent.
Establish family rules & succession plan. Bar is higher for next gen as they have to prove themselves to employees.
'Nose in, fingers out’ an apt way to describe it.
It’s not the products that gel the family business together. It’s the values and these need to be passed on.
Baby boomer founder: life= work & work=life; Gen Y son: life=fun & fun=work
Look after the family, put structure in place, plan your succession early.
