“We knew it wasn’t possible for us to make the transition to the new generation happen by ourselves. In fact, it was very important, we didn’t do it,” says Sérgio Moura, the Chairman of the manufacturing company’s board. Instead, the company called on Cristiane Amaral, EY Consumer Products & Retail leader for Latin America.
Succession planning is often overlooked in family business discussions because of the sensitivity of the subject matter. As part of the engagement, EY ensured all discussions among the wider family group were handled discretely and carefully. “Succession is a difficult issue. There are often family taboos and topics that are difficult to discuss,” says Mariana Moura, a third generation family member and leader of the Family Council in the firm, and now a consultant on family business governance.
“Family members can easily become concerned about a loss of power and it can be challenging emotionally, but you need to persevere and move on,” she says.
A three-step approach was developed and executed by EY to facilitate the transition. This included educating and involving younger family members, building a new corporate governance structure, and employee empowerment. Younger family members were provided with training in how to enhance the purpose, strategy, performance and long-term value of the company, to be prepared to take on board leadership roles in the future. Over time, the firm also developed a new corporate governance structure with three boards, including one each for the firm’s manufacturing and distribution businesses, as well as a Board of Shareholders and a Family Council.
As part of the new corporate governance model family members were ruled out of management roles. This opened up a new array of career options for the third generation, enabling them to pursue their chosen careers, rather than be obliged to join the family business. The change has subsequently seen family members achieve considerable professional success in their chosen professions including medicine, law, business governance, the finance and credit industry and dentistry and psychiatry. “If you’ve grown up with the expectation of working in the family business, it’s liberating to be able to choose your own career,” Mariana says. “It changed our outlook and left us free to become more flexible as individuals and to develop a common vision of the future as a group.”