Many family business owners say they face major challenges in succession planning due to personality and mindset differences between generations.
This view was expressed by business owners at a workshop on building trust in maintaining family businesses on June 13. According to Mr. Pham Dinh Doan, Chairman of Phu Thai Holdings Group and Chairman of the Vietnam Family Business Council, businesses should adopt a joint stock company mindset, be transparent and have a family governance structure to build trust.
According to him, many family businesses in Vietnam are facing major challenges in succession planning due to differences in personality and thinking between generations. "Without a suitable transition plan, when urgent events occur, it can lead to the weakening of the business," said Mr. Doan.
A survey conducted by consulting and auditing firm PWC Vietnam with 36 domestic family business owners from October 20, 2022 to January 22, 2023 also showed that 64% of Vietnamese family business owners said conflicts often occur but have not focused on building trust between the current and next generations.
Only 28% of respondents considered this an important factor. When asked about the level of trust between family members, 42% said there was a lack of trust between the next generation and the current generation.
Recognizing this reality, Mr. Tran Van Thang, Director of Audit Services at PWC Vietnam, said that family businesses are special in that members not only work together but also share the history, values and vision of the future of the business. However, all of this is often taken for granted.
And when family members do not trust each other, conflicts and lack of cohesion can easily arise, leading to business failure. This may explain the result that 64% of respondents said that family conflicts in business often occur, much higher than the global average (30%) and Asia-Pacific (29%).
Most family businesses in Vietnam do not focus on trust among family members. Source: PWC Vietnam Survey.
This challenge was also faced by Ms. Vu Le Quyen, Director of Binh Tien Consumer Goods Production Company (Biti's) when she became the company's director in 2018. "I admit that I am not a good child in the family. I often challenge my parents and ask myself why I have to do this," Ms. Quyen said.
When taking over the business, as the next generation of leaders, Ms. Quyen said she changed the misunderstood management beliefs of "must be afraid to work" to "must be happy to work".
And to keep the family business running smoothly, she says, the company creates a space for each member to speak and be heard. However, she also admits that strengthening trust among family members has not really been given much attention.
Mr. Kao Sieu Luc, General Director of Asia Bakery Company (ABC Bakery) also commented: "Starting a business is difficult, but maintaining your career is even more difficult."
A family business, he said, cannot be considered successful if it has not found a suitable successor. Fortunately for ABC Bakery, according to Mr. Luc, his children are both capable and have the desire to take over the business. "Luring children back from abroad to take over the business is an art," Mr. Luc said.
Accordingly, he must show his children a bright and worthy path in Vietnam, to convince them to return compared to the very prosperous living conditions abroad.
Businesses conclude that a smooth transition to the next generation requires patience, effort, sharing the values of current generation leaders and treating successors equally.
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