Polish family-owned companies established largely 30 years ago are now in the phase of transferring power to the next generation. However, as research shows, neither the current owners nor the successors are yet ready for generational transformation and change. What are the key issues related to company succession?
According to estimates, there are about 1 million family businesses among entrepreneurs running a sole proprietorship. They constitute about 36% of Polish enterprises, generate 10% of GDP and employ about 50% of employees. Preserving the potential of family businesses is extremely important - such companies perform better on the market and enjoy high customer confidence. They are also characterized by " greater sustainability". The reason is that their holders identify with their company and frequently make a double effort to achieve success and prevent failure.
Surveys of family businesses in Poland indicate that the majority intend to continue their activities by transferring ownership (74%) and power (70%) to the next generation. However, only 40% of the founders are ready to step back and remain a minority shareholder in the company. Only about 18% of family business owners are ready to move away from the running of the company and eventually leave the office after the succession.
From the point of view of successors, the picture is even less optimistic, as only 8% of adult children of family business owners are interested in taking over their family business.
Challenges related to the first generation change, which, if properly carried out, will strengthen family businesses and private capital in Poland. Failures in this area will reduce the competitive ability of Polish companies and may have a negative impact on private capital growth in Poland.
An important element in the transformation of ownership and power between the generations in family run companies is the development of a plan in which the nestor and his successors define together:
(1) ideas for further growth of the Company;
(2) legal aspects of succession, including any succession issues which, if not properly addressed, may contribute to the deterioration of goodwill,
(3) instruments for the utilisation of family business assets
(4) the way succession is communicated,
(5) successors’ competence gaps associated with company management and ways of closing them
(6) methods to professionalise family relationships, including the implementation of business and family governance schemes. The awareness of family-run businesses in Poland about solutions facilitating business management such as business and family governance is very low. Such instruments are used in other countries supporting: communication between the family, distribution of responsibilities and work, setting up employment policy within the family, division of shares and ownership
The future of family-run businesses will be largely determined by their ability to carry out the succession efficiently, including an adequate combination of the experiences of the business founders and the energy and ideas of the new generation.
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