80 ARTIGO | ARTICLE | ARTÍCULO The predominant form of business worldwide, including Brazil, family run organizations make up a large part of the economic and social fabric. And one of the biggest concerns for their leaders is the survival of these organizations. It is a dream for many people to make such businesses a lasting success through the generations. After all, for most people the two most important things in life are family and work, which makes the power of those organizations that combine both easy to understand. When the leaders are relatives, their traditions, values and priorities spring from a common source. Transferring these characteristics to future generations is a key point in the succession process. Heirs need to understand and incorporate each of them in order to continue the consolidated management model. The reason for the failure of many family businesses is that heirs disregard all this work already done, believing they can renew it. Certainly, a second generation has experience to add to the business but innovations that can create new opportunities have to be reconciled with the perpetuation of the positive image of the company built by the founder. The whole organizational culture must be understood and put into practice by the successors in order to perpetuate the attitude that the company assumes with employees, the market and the community. To do so requires effective communication which repeatedly presents the bases of the business to the new generations and to all those who are part of the organizational context. The first step towards good succession and professionalization, therefore, is corporate governance - which corresponds to the system by which companies are directed and monitored, involving relationships between partners and directors. In the case of publicly traded companies, it also involves independent auditing. Good corporate governance practices increase the value of the company, facilitate access to capital and contribute to sustainability. It can also be understood as the structure of relationships and corresponding responsibilities of partners, advisors and executives, defined in order to encourage companies to make economic performance the main objective. It is value, even though it does not create it by itself - which occurs when, alongside good governance, there is efficient, effective and effective organizational management. Each company has its own work methodology and culture. They must be not only cultivated, but respected. In family-owned companies, the family’s values are passed on to the organization. They should be maintained and the efforts modernized over time to suit the market the organization is part of. Corporate governance is based on the fact that any organization - family or otherwise - is governed by a mechanism of transparency and trustworthiness that prevents the fundamental values of corporate dynamics from being corrupted over time. Transparency, equity and accountability by the founders, partners and heirs help avoid the unpleasant consequences of many typical family business conflicts over time. It is estimated that more than 80% of companies face such problems today. The lack of corporate governance leads to conflicts and often jeopardizes the very survival of family businesses, which sometimes suffer from a lack of unity in understanding of the business by relatives who are outside the company’s administration. Other times, some family members are not accorded the same rights or not held equally accountable for results. Good corporate governance provides partners with strategic management and effective monitoring of executive direction. The main tool ensuring ownership control of management is the board of directors. There are, therefore, many advantages of adopting good corporate governance: It reduces the risks in the succession process It controls and manages family businesses through a board of directors, assuring the founder the right to move gradually away from operations without compromising the company’s performance and continuity It develops successor training through their membership of the board and provides more stability for the company and business, eminently not depending on the founder It provides the main partners with the conditions to work and participate in management, not necessarily being involved in the operations conducted by professional teams It improves the quality of management through the contribution of family counselors and qualified external counselors, recognized in the business environment It improves the company’s image on the market - banks, suppliers, partners, multinationals and the government - who do not look favorably on family businesses when they reach a certain stage of stagnation and suffer family conflicts. In order to ensure that the succession process is adequate and effective, in any case, a successor preparation process is required - preferably conducted by the founder - and clear rules are needed to minimize conflicts between relatives, such conditions as can be found in corporate governance. Professionalization and succession By Domingos Ricca, consultant who specializes in family businesses and is a partner at Ricca & Associados Corporate governance plays a key role in smooth and healthy succession in family businesses
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