Stewardship matters for successful and enduring family businesses. Stewardship is a defining hallmark of businesses that achieve success, significance and sustainability.
In crux, stewardship encapsulates the essence of responsible and meaningful value creation in a sustainable way to benefit stakeholders, as well as the larger community that they are a part of. It underscores the importance of an ownership mindset, a long-term perspective and an inclusive approach.
These stewardship elements undergird and reflect the business leaders’ motivation and commitment to nurture and grow what they are entrusted with, such that it can be handed over in a better shape to successors.
Stewardship is particularly pertinent to family businesses, which form a key component of economic activity around the world. This is especially relevant in Asia, where family businesses remain the mainstay of business ownership, and families continue to be influential players in the business landscape, as owners as well as managers. Successful and sustainable family businesses create wealth and growth for the family across generations. In their stewardship journey, such great and lasting family businesses leave a rich legacy, contributing significantly to the multiplier effects such as knowledge creation, economic development and capacity building of human and social capital to benefit society in the long run.
Family businesses are very diverse in nature – ranging from small, medium local enterprises to huge conglomerates that operate across industries and countries. For our purpose here, we broadly define family businesses to include companies with the presence of family members as shareholders as well as board members and managers who are able to influence strategic decisions. We use the term family businesses to include family companies, family firms and organisations.
Notwithstanding their diversity in scale and nature, family businesses in general face some common challenges:
Responding and adapting to the vortex of disruptive changes stemming from the global and local fronts,
while still maintaining the sense of purpose that propelled them to success
Maintaining coherence and harmony as ownership becomes more fragmented over time
Attracting, retaining and “professionalising” talents that constitute the human capital essential for family businesses to maintain their competitive edge
Transitioning successfully during periods of leadership renewal, especially for firms where the influence
of the founder-leaders dominate
Guarding against the pitfalls of hubris and complacency on one hand, and a reluctance to adapt due to
inertia to changes on the other
Upholding high standards of resource management and corporate governance
Faced with such challenges and an increasingly demanding business environment, stewardship has become all the more relevant and important. Well-stewarded family firms emerge over time as engaged, forward-looking and adaptable enterprises. They are able to leverage their inherent strengths and competitive advantages.
Guided by their values, such family businesses remain resilient in the face of changing times and disruptions, overcoming adversity and outperforming their competitors.
Stewardship is, however, always a journey. Every generation of family business faces unique circumstances, challenges and opportunities. A family business with a successful stewardship experience in one generation does not guarantee its continual success into the next. Hence, for family firms striving towards success, significance and sustainability, a resolve to continually imbibe, propagate and reinforce stewardship concepts and actions is vital, and remains relevant and timely.
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