Succession management in a family business is a complex process that is key to the survival of the family business.
1) Only 28% of family businesses have a formalized succession plan.
2) The presence of women in decision-making bodies facilitates the formalization of succession plans.
València on December 21, 2021. The Chair of Family Business of the University of Valencia (CEFUV) presents a new Research Note entitled "The difficult step of succession planning: What role does a greater diversity of perspectives play?" prepared by Ana Botella (University of Valencia), Cynthia E. Clark (Bentley University), Patricia Gabaldón (IE Business School) and Alejandro Escribá (University of Valencia and IVIE).
The research note is part of the work and dissemination activities of the CEFUV, promoted by the Valencian Association of Entrepreneurs (AVE), the School of Entrepreneurs (EDEM), the Valencian Institute for the Study of Family Business (IVEFA), the Institute of Family Business (IEF) and the University of Valencia (UV), and which has the sponsorship of CaixaBank and Broseta.
The study analyzes the likelihood of there being a consensus succession plan in 1259 Spanish family businesses, taking into account the composition of their main management or governing bodies (management team and board of directors) and ownership. The conclusion is that succession management in a family business is a complex process that is key to the survival of the family business, and when it happens in an orderly manner, it maximizes the possibilities of continuity and success of the family business. However, despite the fact that it is an extremely important process, available data indicate that only 28% of Family Businesses have a formalized succession plan.
In addition, the publication highlights that the presence of women in the management teams or on the boards of directors of family businesses is more likely to have consensual succession plans. In other words, the presence of women in management and strategic decision-making bodies is positively associated with the existence of succession plans.
Therefore, the research note addresses succession management through two aspects:
- First, the existence of diversity in the company because of the presence of different family branches. It has been found that companies whose management bodies are in the hands of generations subsequent to those of the founder tend to a greater extent to draw up consensual succession plans.
- Secondly, the presence of gender diversity in the company's management and governing bodies. It has been found that the presence of women in management bodies facilitates the formalization of succession plans. However, their role does not correspond to a homogeneous behavior and depends on the position in which they find themselves; demonstrating that, in contexts of complexity, they play a valuable role in decision-making bodies.
As a conclusion, it is highlighted that the consensus in the succession process and also in the existence of a plan to carry it out, increases in the case of companies whose management has passed to generations subsequent to the one that founded the company. Likewise, the presence of women in the decision-making bodies seems to facilitate the reaching of consensus and the formalization of succession plans.
CEFUV RESEARCH NOTES
The Research Notes are part of the publications of the Chair whose objective is to bring family businesses closer to some of the aspects that can help to improve their competitiveness and/or their sustainability.
