The surge of COVID-19 and its disruption of organisational systems has distorted the accuracy of predictions. Other adversities, not just pandemics, can befall organisations at any time because adversity does not discriminate. The severity of an adversity demands businesses to be resilient. Resilience is from an ancient Latin word – ‘resilio’ – which means ‘to jump back’ or ‘to bounce back’.
Family businesses are no exception when it comes to ‘bouncing back’ in response to adversity. Family Business (FB) describes a business that is owned and controlled by two or more family members. The management role of FBs are mostly influenced through active participation, active shareholding, an advisory role, and board membership.1 The adversities that befall FBs can be more complex and have psychological impacts than their non-family business counterparts.
The death of a family business leader, incapacitation of a prominent member of the family from an automobile accident – and any other family-related adversities are events that predispose them to be more resilient. Family businesses may be more resilient than non-family businesses because of the interplay between love and money. Love and money are two powerful forces which embody the FB; these two forces are the main drives to survive an adversity.
Resilience can be considered on both personal and organisational levels. The focus of this article is on organisational resilience, particularly in African family businesses. Again, some characteristics of the FBs that make them more resilient than any other type of organisation will be revealed. Organisational resilience in family business is the ability to avoid, absorb, respond to and recover from situations that could threaten their existence.2
The recovery of FBs from such situations hinges on their key qualities – such as long-term orientation, transgenerational succession, and entrenched family values that can manage negative events.
Entrenched family values
Family firms have a strong system of shared values which enhance sense-making when they come up against difficulties or challenges. People in organisations fall back on values in times of difficulties. Values serve as a guide for an organisation’s survival.
African family businesses’ have various moral and societal values (beliefs) meant to regulate interpersonal relationships and preserve the community’s integrity. For example, harmonious wit by families within the community has been essential for business sustainability. A sustainable African business possesses acceptable values which preclude members of the community from becoming rebellious against business success. African families have these values ingrained in the maxims which are communicated among the family from the breakfast table to bed-time. To enhance sustainability, family businesses, unlike non-family business, do not have a problem with communicating business values to all members.
“Bi a ko ba gbagbe oro ana, a ko ui ri enikan abasere” is a Yoruba proverb meaning that unless we overlook past misdeeds, we will not be able to relate to one-another. The impulse of this African proverb instils virtues of forgiveness, harmony and forward-looking behaviour to overcome negative occurrences from the past. Hurts and disappointments are relational events that destroy organisations. But African family businesses have proverbial values that help them to overlook wrongdoings. Resilient businesses are forward-looking.
Transgenerational succession
Resilience is seen as critical in FB, because many of the owners expect to pass on ownership and management of the firm to the next generation of family members. One prominent Ghanaian FB owner, in the heat of the COVID-19 pandemic, revealed that the lockdown has given her an opportunity to utilise the services of her children to the business’s advantage.
During the lockdown, schoolteachers and other ‘non-relevant’ workers were made to stay home; this was a great opportunity to employ ‘cheap’ readily available hands. Since they were her children, she could easily work with them without observing any stringent social distancing protocol. Though unfortunate, non-family business workers who were to be compensated by law were made to stay home for the period to cut costs. Involvement of the next-generation in business activities was a result of the cost-cutting strategy for survival. It is easy to compensate children, who just have basic needs (food, shelter, care and assurance) in tough times. The intention of the FB owners to pass their business to the next generation is a default for them to employ their services in hard times. Unfortunate events draw the next-generation closer to the business.
A Nigerian ‘techpreneur’ explained to me that: “Sometimes it is better to involve the next generation of children or family relatives in an African environment where property rights protection is weak”. He said this in light of an Akan proverb that states “blood is thicker than water” and that you are more (although not totally) safe with a relative in terms of business security and information protection.
Many businesses have been victims of information-loss or leakage by employees to opponents, and even to the media. It is unlikely that family members would sell information for personal gain. The next-gen will keep the company in safe hands in order to protect or safeguard the ‘work, sweat and tears’ of the senior generation. Indeed, the next generation’s involvement in the family business contributes to continuity.
Long-term orientation
When it comes to business continuity, family businesses have futuristic lenses. They think about the longer-term. They associate conscientiousness and persistence with an enduring commitment to the business strategy. They tend to plan and forecast the long-range consequences of business decisions. A long-term viewpoint drives resilient systems, and FBs have that to their advantage. Typical decisions that depict long-term orientation in the family businesses include longer tenures for CEOs or founders, patience through tough times and non-economic goals.
Few founders or CEOs of family businesses delegate control of their businesses to others. Some studies have proven the negative effect of long-serving founder-control on business continuity, while other schools of thought see the opposite. It is my belief that resilience can be improved by a long-serving leader.
The moderating role of visionary leadership (one which has a long-term focus) on the relationship between long-serving leader and organisational resilience must be emphasised. The long service of a visionary family business leader is invaluable. Some nations with visionary monarchs have seen tremendous development and thrived through the COVID-19 pandemic. Resilience can be affected when there is a power-struggle in a business, but resilience may be optimal with forbearance in a family.
In times of crisis, non-economic goals keep organisations going. The ability to forego immediate gratification to achieve a desired future state is particularly important for family firms. Delayed gratification enables FBs to balance economic goals of the business with non-economic goals of the family. With patience, business families can embrace the positive emotions which are associated with an imagined future event – even in bad times. Many family businesses in Ghana gave back to the community with household necessities like food items. Corporate social responsibility (CSR) has been the norm throughout the COVID pandemic, without any expectation of financial gain.
Family and non-family firms are not the same
Family businesses in Africa have strong value systems, invest in transgenerational succession and long-term orientation in times of crisis; such qualities make them different. The contribution of family businesses in Africa cannot be understated. Their unique structure must be embraced by owners and managers in order to build stakeholder confidence. Their inherent characteristics differentiate them from their non-family counterparts. African families are built on deep family values that are passed on from one generation to the other. These are tried and tested, and have been proven to make the family thrive in adversity. An African family business born out of this system will stand the test of time.
The writer is the Chief Executive Officer, Ravens Consulting GH (Family Business Consultancy) Email: [email protected]
References
- Poza, D. (2014). Family Business. New York: South-Western: Cengage Learning.
- Lengnick-Hall, C. A. & Beck, T. E. (2005) ‘Adaptive fit versus robust transformation: how organizations respond to environmental change’, Journal of Management, 31(5), 738–757.
