Succession plans and mistakes of our past business magnates

In the history of Nigeria, quite a significant number of very successful business entities have been established by families and governments but, are today, no longer in existence. In most developed economies again, a lot of globally acclaimed conglomerates (multinationals) that are thriving and currently making waves in different continents of the world, were established over many past decades and even centuries, and are still in existence. One can sit back to reflect, and ask questions like: what makes the difference in both climes?  What actually went wrong? Where and how did they get it wrong? Who or what was the cause of the total business collapse and failure, such that the concerns went extinct? When were such mistakes made? As a matter of fact, so many questions could be raised while searching for solutions, including how it all happened; and what or how to do it differently. Starting with a probe to unravel the causes and process of failure of such enterprising organisations and well recognised businesses of huge magnitude, which suddenly went under and became moribund.

This challenge falls wholly under management tasks. Management on its own revolves around a process (administratively) of controlling people or dealing with things, and giving direction for efficient outcomes at the end of a targeted purpose and goal (in other words, achieving the objectives of the organisation). Poor succession plan is a case that can be viewed from diverse dimensions in addition to the management process. It could be attributed to cultural implications, governance skills and leadership style. In some parts of the globe, families businesses are traditionally run exclusively (strictly) by members of the family (no matter how large or successful the entity is; or minding how it is tending to in the near future) without involving an element of corporate structure to strategically reposition the imminent business growth for sustainable expansion. The strongest reason for failures that constantly arise (as observed) from such a setting is lack of trust by family members to involve or hire professional hands to manage the businesses successfully, on behalf of the family. This observation is tied to the ineffective coordination of interdepartmental interactions (that is, internal control not working simultaneously) along horizontal lines, with management functions by all departments (like administration, sales/marketing, production, operations, finance, and others) in the organisation’s chart. This noticed gap creates the chances and risk of imminent or possible criminal-minded departmental heads taking undue advantage to perpetrate fraudulent acts against the organisation (hence, the fear and the presumed “lack of trust” by family members against hiring professionals that should have adequately done the right jobs in their respective departments). A good example is the long standing sustainability of the Guinness family business that was established in 1759.

A weak corporate structure, therefore, affects the effective administration of relevant departments that make up the functionality and sustainability of family business operations. These noticeable deficiencies with leakages along the daily administrative procedures in coordinating the business entity inefficiently on a daily basis, have enormous negative impact that amounts to an unsustainable business. This cumulatively implies an invariable manifestation of unsustainable succession within the business enterprise; on the grounds of total lack of well-defined criteria for identifying potential successors within the family, at the board level (once such need arises, either through death of the founder of the family business or an urgent need for fresh breath in the leadership). It eventually exposes favouritism, decisions made subjectively by the board, and the eventual wrong choice of who ought to have been considered to play key roles for the sustainability of the business. 

This is the pointer to the identifiable mistakes of past business magnates who unprofessionally ran their business empires (in ignorance) as a “one man show” affair. These founders also defaulted by not being proactive, to train their prospective successors on the job. That would have offered the family an ample opportunity to effectively equip successors with skills, passion and experience on the job. However, successor-prospects could over time start picking interest to enjoy the job, which might not have occurred with a complete lack of interest from an emergency trainee/prospect/family member in the daily business procedures and regular business chores, had there not been enough time to afford persuasive and adequate grooming of such family successors.

Another smart way of maintaining sustainability in family businesses that is worthy of emulation because of its innovative expansionary opportunities and growth, is to have the family members at the board level, to effectively encourage and compensate employees at every level with very attractive conditions of service that definitely spur every hired staff to go the extra length with zeal and enthusiasm for higher productivity. This is based on the strategy of inclusivity for all within the organisation, to always feel a sense of belonging as part and co-owners of the business (no matter the insignificant and infinitesimal worth of such stake). This is done by way of share-holding privileges offered the workers, based on their excellent performances. A very good example is the human resources package practised by the global entity called Google, which offers an opportunity to involve its valuable staff as part of the business. These and more possible variables may be employed towards doing things differently, for the improvement of poor succession plans.

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