There are many articles and research studies on institutionalization in family businesses. In the previous article, we discussed the fundamentals of institutionalization. It should be noted that the fact that this issue enters the literature as a separate title is a statistic indicating that only 20% of family businesses in the world successfully pass on to the second generation and 8% to the third generation. This situation shows that even institutionalized family businesses face problems and serious disadvantages in the transfer of authority and responsibilities between generations. Therefore, when addressing the family issue, not only business and partnership but also succession plans for long-term continuity should be taken into consideration.
In the first stage, it should be determining the requirements for Owner-Shareholder and Manager positions. For this, timing should be paid close attention to initially. Then, other related segments such as existing candidates, spouses, children, partners, etc., should be clarified. In the next stage, consensus should be reached on all revolving and fixed assets. It is crucial that everyone has a clear understanding of the valuation and amounts of all these.
Another key element is to gather information about the desires, concerns, and problems by consulting with individuals. It should not be forgotten that the common point in this study is the Human, and all of these have psychological, sociological, and political aspects as well as economic aspects. In this context, expectations and goals of individuals in their own lives are more important than the company's goals, and the ability to differentiate between them can be seen as part of this succession plan.
One of the most important issues is to establish a connection between the expectations from the business and the personal expectations of the family in the Expectations from the Business section. For this, issues such as retirement benefits, profit shares, year-end cash contributions, etc., should be clearly included in the Succession Plan.
The issue of roles and potential constraints associated with them should be discussed clearly, and the separation of Shareholder and Manager roles should be ensured. At this stage, the principle of not creating competition with family affairs and/or businesses should be adopted without restricting personal entrepreneurship.
The Succession Plan should be documented and approved by everyone. The content of the plan should include sections such as organizational chart, action plan, financial plan, training plan, and problem-solving plan.
After completing all the stages mentioned above, legal advice and financial consultant should be hired to formalize the activities for the issues that need to be done in the businesses.
Thus, it is understood that presenting a long-term plan with the participation and approval of everyone, without problems arising, providing clarity of minds of individuals, avoiding unnecessary communication and prejudice problems, and most importantly, ensuring sustainability for both the family and the business are indispensable for family businesses that have reached a certain maturity and a certain degree of institutionalization.
Dr. Bilinç Dolmacı
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