Generations in dialogue: The Belgian family business in transition

Experts emphasize the importance of open conversations and effective governance for sustainable growth and continuity.

In brief:

• Belgian family businesses highlight the importance of open communication on sensitive topics for successful business management.
• Experts stress the necessity of balancing emotion and rationality, crucial for effective governance in family businesses.
• Establishing a family charter not only facilitates rule-setting but also encourages dialogue between generations.

Talking about sensitive topics is not in the Belgian nature. Yet, it’s essential in family businesses, say experts. For instance, discussing what the new generation wants to change and what the old one wants to preserve.

“Corporate governance in a family business is useless without family cohesion,” begins Philippe Haspeslagh. “You need that social fabric: family members who respect each other and enjoy spending time together. Governance is primarily about separating emotion and rationality.” The former dean of Vlerick Business School speaks from experience. Until 2021, he chaired Ardo, his family’s frozen vegetable company.

Sense of belonging

“The emotional and the rational are the yin and yang of family enterprises,” says Eric Van Hoof, EY partner specializing in family businesses. “They oppose each other and have different dynamics. In some family businesses, family involvement in the company is greater simply because one is more open to external management than the other. Also, in family and external communication, one must always consider the emotional and rational side.” Liesbeth De Ridder compares this delicate balance to the British royal family. “In a way, it’s a business, the Firm,” says the secretary-general of GUBERNA, the knowledge center for good governance. “As Prince Harry once said about his grandmother, Queen Elizabeth: ‘She’s my boss.’ There’s the first in line who's the figurehead and a second who might feel somewhat disadvantaged. There are spouses who sometimes don’t do exactly what’s expected of them. Yet, for the outside world, the family is a familiar and stable entity. This is often the case in a family business too. Customers have known the grandfather or seen the CEO grow up on the shop floor. There’s a sense of belonging.”

Family Constitution

Van Hoof sees two trends contributing to the realization that it’s the younger generation’s turn. “The first is the ESG story of sustainability, societal impact, and good governance. Concepts the older generation may not be entirely familiar with. The same goes for digitization. Think, for example, of the rapid changes in communication, such as social media.”

In practice, there should always be a reason to start thinking about professionalization and family governance, he notes. “It can be a difficult situation, like a death or an accident. But it can also be because more is being talked about, for example, through our Family Business Award. Additionally, the baby boomers are reaching the end of their professional career. This is a potential trigger that will gain importance over the next five years.”

A good example of family governance is the drafting of a family charter. This is a kind of 'constitution' that includes, among other things, the conditions for who may and may not join the company. “Of course, that’s about the elaboration of rules,” says De Ridder, “but it primarily teaches you to talk about sensitive things with each other, something that doesn't necessarily come naturally to Belgians.”

Haspeslagh underscores the importance of these conversations. “During a transition between generations, it’s about what should be preserved from the company’s roots, values, and vision, and what should change. I think the older generation is sometimes afraid that the younger generation wants to change everything too quickly. The younger ones also don’t always express what they appreciate from the past and what they want to preserve. They should talk more about that with each other. Then the older generation can let go more easily, I think.”