2. Family Business Succession Planning
Unleashing The Key Factors Of Business Performance
Presentation by
Nargis Perveen S2022277011
Nadia Zafar S2022277005
Shumila khan F2021277006
M.Imran S2022277010
Hafiz Iftikhar S2022277009
Gohar zaman S2022277025
DR Waheed Asghar
28 th DECEMBER 2023
3. INTRODUCTION
• Global economic growth and employment are greatly impacted by family
enterprises that foster cross-generational talent, loyalty, and strategic
commitment (Poutziouris , 2001; Miller & Le Breton-Miller, 2005).
• Only a third of family businesses effectively transfer across generations,
making effective succession essential to their survival (Poutziouris , 2000;
Wang et al., 2000).
• Malaysian family companies with over $1 billion in sales, such as Adabi and
Hong Leong Group, are essential players in several industries ( Norlela ,
2007; Azrain , 2010).According to a 2002 survey (SJGT survey), 72% of
Malaysian family firms made large investments, while 62% refused outside
assistance.
4. OBJECTIVES
1. To explain the importance and benefits of succession planning.
2. To highlight the significance of communication and collaboration for a
smooth transition.
3. To promote the training and development of successors.
4. To understand and address the impact of family dynamics and conflicts.
5. To seek impartial advice and guidance from external advisors
and consultants.
5. PROBLEMS OF THE STUDY
Challenge of Survival
A crucial survival difficulty is that only around one-third of family enterprises successfully span generations
Unique Family Business Obstacles
Family companies confront particular difficulties, such as managing relationships, negotiating succession experiences, and the
complexity of successor training.
Family Management Conflict
Family members controlling a firm can lead to conflicts that affect survival rates and impede seamless transfers.
Leadership Intelligence Required
Family company owners need to be wise leaders who can navigate complex family relationships and generational shifts.
Evaluation of Cultural Interpretations
Excuses based only on cultural issues are criticized for being too easy and straightforward to comprehend the intricacies of
family businesses.
Inadequate Research in Kelantan
There is a significant knowledge vacuum about family enterprises in Kelantan, which led to the investigation of critical success
elements and complexity in the research.
Legacy as a Difficulty
The examination of succession concerns and experiences is crucial for effective family company continuity, as cross-generational
ownership succession emerges as a key obstacle.
6. GOALS OF THE STUDY
• 1. To acquire insight into the complexities of family businesses in Kelantan in
terms of family enterprise profiles, successor profiles, competencies and
management styles
• 2. To identify key factors that shape family business performance and
consequent cross-generational family business continuity in kelantan
• 3. To examine how critical succession issues and experiences affect the
relationship between key success factors and family businesses performance
8. KEY FINDINGS
Family Business
Definition and
Dynamics
Management
Activities, Styles
and
Characteristics
Relationship,
Values Beliefs,
and Successor
Training
Succession Issues
and Experience
9. EXPLANATION
Family Business and Dynamics
According to Chua, Chrisman, and Sharma
(1999), family businesses are owned and
managed by at least 50% of the family with the
goal of being sustainable over several
generations.
Distinctive factors impacting performance
disparities are influenced by intersecting
interactions among family members, the family
unit, and the business (Habbershon et al., 2003).
Management Activities, Styles and
Characteristics
"Paternalistic" and "professional" management
philosophies were contrasted by Dyer (1986).
According to McConaughy and Phillips (1999),
descendent-controlled businesses have better
managerial standards.
In first-generation family businesses, decision-
making is typically more centralised (Dyer, 1986).
10. EXPLANATION CONTINUED
Relationship, Values Beliefs, and
Successor Training
Relationships, values, and efficient successor
training are some of the factors that influence
succession transitions.
Communication, trust, disagreements, and sibling
rivalry affect how stable a business is (Barnes &
Hershon, 1976; Handler, 1991).
According to Stoica & Schindehutte (1999) and
Alvarez & Lopez-Sintas (2002), founder values have
a major impact on company culture and continuity.
The degree of readiness of successors, including
their abilities, attitudes, and knowledge, determines
their level of success (Doescher, 1993).
Succession Issues and Experience
Planning, grooming, and other issues are factors
that impact succession (Chung & Yuen, 2003).
Fears include an authoritarian owner, a board
made up exclusively of family members,
partiality, a lack of understanding, poor
experience, poor communication, incompetence,
and more.
Succession Experience: Make a distinction
between the efficacy and quality of the
experiences that follow (Handler, 1990; Kets de
Vries, 1993).
11. KEY HYPOTHESIS OF THE STUDY
• H1: Family business management has a big impact on output.
• H2: Successful performance is the result of centralized decision-making,
non-family engagement, and paternalistic management.
• H3: Business performance is positively influenced by strong connections
and preserved principles.
• H4: Successor training has a major impact on the performance of family
businesses.
• H5: The association between important success variables and family
company performance is mediated by succession difficulties and
experiences.
12. METHODOLOGY
Sampling techniques
Snowball Sampling Techniques
Sampling process
The researchers collected data from the successors of family businesses situated in the following
districts
Questionnaire structure
Questionnaires were distributed to the heirs/successors of the selected companies . the
questionnaires were self-administered, and to promote comprehension, questions and statements
were translated into two languages.
Data analysis
Correlation and regression analyses were conducted to examine the relationships between
constructs used in the study. reliability coefficient alpha values and zero-order correlations for all of
the variables. coefficient alpha values are high for all of variables, ranging from 0.515 to 0.915,
13. KEY VARIABLES
Dependent variable :
Family Business Performance Levels: This variable is used to measure the performance and
longevity of family-run enterprises.
Independent Variables:
Management Activities, Styles, and Characteristics: Examines the influence of paternalistic
management cultures, non-family member involvement, and centralized decision-making on
family business performance.
Relationships Between Members, Values, and Beliefs: Explores the impact of strong
relationships between family members, upheld work and family values, and shared beliefs on
family business performance.
Successor Training: Assesses the influence of effective successor training in terms of business
skills, managerial capabilities, and company knowledge on family business performance.
Succession Issues: Addresses challenges and concerns related to succession planning, grooming,
and various factors affecting the transition process.
Succession Experiences: Evaluates the quality and effectiveness of the succession process,
considering personal experiences and judgments by others.
14. RESEARCH FRAMEWORK
Management activities,
style and
characteristics
Relationship among
family members
Job and family
values
Preparation level of
heir
Business
performance
Succession
experience
Succession issues
15. PROBLEMS AND CONCERNS
Board of directors for family members only
Lack of working knowledge to run the
business
Communication problem between family
members
Lack of competence and capability to run
the business
Lack of interest
Lack of proper training
Ability to develop talent and resource
Father expectations on business different
from son
Father working style different from son
Can share visions and goals with business
owner
Trust between family members
Has a mentor in the family business
Decision making by family members only
16. KEY FINDINGS SURVEY
0 5 10 15 20 25 30 35 40 45
Male
Female
Malay
Chinese
Indian
Less than 25 years old
26–35 years old
36–45 years old
46–55 years old
More than 55 years old
Count
Feature
Gender, Age, Ethicity
0
10
20
30
40
50
60
70
80
Single Married MCE / SPM STPM / Sijil Diploma Bachelor
degree
Master
degree
Martial
Staus
and
Education
Male Female Count
Education and Martial Status
17. 0%
0%
22%
14%
64%
PREPRATION LEVEL TO TAKE OVER BUSINESS
Not all prepared Minimally prepared Moderately prepared
Well prepared Very well prepared
0
10
20
30
40
50
60
70
80
90
100
Job and Business Experience
18. CONCLUSION
• Family business studies are becoming more pervasive in Malaysia, and
several studies have focused on factors that shape family-owned business
performance levels.
• Succession planning issues, and specifically the succession issues and
experiences of second or third generation family business owners have not
yet been explored at length
• The emphasize the unique family business profiles, the unconventional
selection criteria for successors, the prevalence of participatory
management cultures, and the critical role of family relationships and
values in ensuring successful transitions.
• The contradictions to traditional recommendations and the challenges
faced by owners across generations add depth to the narrative.
19. REFERENCES
Alvarez, E., & Lopez-Sintas, J. (2001). A taxonomy of founders based on values:
The root of family business heterogeneity. Family Business Review, 14(3), 209–
230.
Alvarez, E., & Lopez-Sintas, J. (2002). Socialization patterns of successors in
first to second generation family businesses. Family Business Review, 15(3),
189–203.
Aronoff, C. (1998). Megatrends in family business. Family Business Review,
11(3), 181– 185.
