Executive Summary
The underlying motivation behind undertaking this research is to identify some of the key processes and initiatives that successful New Zealand family businesses implement to ensure their successes and human capital are passed down through the generations effectively. Conversely, I was also interested in clearly identifying some of the common issues which arise in family succession plans and ways in which these issues may be avoided.
This topic is important to me having lost my father in 2012, and being the oldest child, I feel a certain level of responsibility to provide leadership within our family in the hope that our family business continues to prosper in a sustainable and risk averse manner. My long-term vision is an ‘intergenerational family business’ which creates employment and investment opportunities within our family and the next generation to come.
Initially, the context in which I planned to undertake my research was more in a broad sense focusing on family owned businesses across the primary sector. As my research progressed, I decided to narrow my focus and apply my topic to family businesses involved within the kiwifruit industry.
My hope for this research, is that it will provide some benefit to other industry families and encourage them to ‘think bigger’ and openly communicate around succession planning. I hope that this research will also provide some framework around how to govern a family business effectively and that it will benefit family businesses for the better.
We live amongst an increasingly busy world, and I am therefore mindful that people, including myself are becoming increasingly time constrained. For this reason, I have chosen to prepare my report more concisely than recommended in the project guidelines focusing on the salient points of my research. By taking this approach, I hope that it will encourage more people read this report.
The thing I enjoyed most about compiling this research paper was the opportunity to sit down one on one, face to face with some highly successful key industry participants who openly spoke about their family owned businesses. They each willingly shared with me the challenges they had faced along the way, mistakes they had made and what they had learnt from them. These are people who have walked the walk, and their knowledge and shared experiences in my opinion, is significantly more valuable than any other information source available. I found this part of my research to be highly inspiring, and reiterated to me how great the kiwifruit industry is and what a privilege it is to be a part of it. Effective leadership highly revolves around people, and it became obvious to me that the success of the kiwifruit industry is a result of great leadership from key industry personnel, some of which I have been fortunate enough to engage with.
The issue of succession planning for family businesses can potentially be an emotional one, or not depending on a number of factors which I have attempted to identify throughout this report. ‘A change of ownership and/or management is inevitable for every business – everyone exits eventually. But moving out of a business is often harder than moving in.’ (McLeod M. , Farm Ownership & Transition Workshop Resource Book., 2014). Every family business is unique and faces its own challenges around different personalities within the family and different needs, wants, ideas, opinions and aspirations of each family member. There is no one size fits all, and I believe it comes down to leadership within the family to co-ordinate and govern a family business successfully. Succession planning within families is about open communication from the beginning, including the ability to sit down and listen to each family member’s goals and aspirations. From a governance perspective, I also believe having strong discipline around separating family time and business is paramount in governing a family business whilst still maintaining strong family relationships.
One of my survey participants believed a family culture and identity was one of the most important factors in a successful family business, as well as installing the right values into children from a young age. For family succession to be successful, he believed it was highly important to include children in the business from a young age and for it to always be referred to as ‘our business’ rather than ‘Dad’s business’. Another survey participant emphasised the importance of having clearly defined roles within a family business, reflective of each individuals strengths and capabilities rather than ‘as of right’. For a family business to be successful, he also strongly believed in ‘grass roots’ training to ensure a thorough understanding of the business from the ground up. Michael Hill expresses a similar opinion in his books ‘Toughen Up’ and ‘Think Bigger’ where he emphasises the requirement for children to prove themselves within the business without receiving special treatment because they are a family member.
As kiwifruit orchard prices continue to rise underpinned by strong industry confidence, it becomes increasingly difficult for the younger generation to acquire orchard ownership and become involved within the industry as a grower. For those families well entrenched in the kiwifruit industry, I believe succession planning is now more important than ever if those families wish to continue into the future and achieve longevity and future prosperity for their existing businesses.
Effective family succession planning and governance – Dylan Barrett
