Aysha Anas Iftikhar

Clarity at the Helm Family business success begins with clarity. Yet, many founders lack clarity on the future of their children within the family enterprise. Inducting the first member of the next generation into the business is akin to raising the first-born. Founders often feel uncertain about the best approach. Most families fall back on legacy methods, simply replicating how previous generations joined, or they look around for “best practices” from other firms. Many get it right; some, unfortunately, get it wrong. A common mistake families make is inducting the next generation as they were inducted. Previously, the approach to induction was often to ‘get into the business, make sense of it, and carve your own path’.  Although this approach encouraged resilience, it lacked structure and mentorship. The Context Has Changed In contrast, today the next generation cannot be expected to enter the business without clarity at the top. The effective approach is to begin with the end in mind and ask questions that help develop clarity: What is the greater purpose of this family business? Is it only guaranteed employment, irrespective of fit or performance? The Cost of Mixed Messages A clear goal changes the family’s orientation. When founders are unclear, they risk sending mixed messages. For example, when business is booming, founders naturally see a bright future and may encourage their children to join. Conversely, during challenging cycles a founder’s anxiety might unconsciously result in discouragement. Such short-termism, driven by changing business cycles and personal moods, negatively affects the engagement of the next generation. To avoid this, it is critically important to look at the business beyond the short term. When the purpose of the family business extends beyond the  family’s immediate  needs, its  orientation changes. Purpose becomes larger than  limited existence. Begin With the End in Mind The purpose should include: The family legacy: Upholding the values and history associated with the family name. Giving back to society: Recognizing the contribution of the business to the community. Stewardship: Viewing the business not just for the current generation, but for future generations. When the family starts with a cohesive purpose, it effectively positions children within this greater purpose. Final Thought Clarity aligns generations and creates intentional action. It guides decision-making, roles and responsibilities. Most importantly, clarity of purpose helps the next generation contribute meaningfully to the legacy beyond individual gains. By embracing clarity and a larger purpose, a family business can transform next-gen induction into a successful transition for the benefit of both family and business.

Why Do I Work With Family Businesses? Family businesses aren’t only about profits; they are about a shared purpose, people, and impact that transcend generations. Over 70% of businesses in the world are family-owned, yet only a small fraction make it beyond the second generation. This statistic was simultaneously shocking and humbling for me. I began to think about what helps a family business thrive across generations. The pursuit of this answer has guided my journey as a governance advisor. Entry into the world of family businesses My background and entry into the family business are rather eventful. After completing my MBA, I married into a third-generation family business. Naturally keen to understand the family business and its workings, I was in for a surprise. My entry coincided with a period of transition. What I witnessed were typical family business challenges; as is often the case, business issues would unwittingly slip into family issues. Both the family and I were unprepared to deal with these, resulting in stress and uncertainty. The Turning Point: Governance Education Luckily for us, we enrolled in a family business course. The sessions were eye opening for us. We realized that what we were facing was not isolated to our family, rather it was something all families faced. While successful families in business excel at doing business, they often struggle with family related issues such as engagement of the next gen in the business, managing relationships, etc. Governance education was a game changer for us as a family, making us realize families need governance education more than they need business education. What is Governance Education? Governance education is the process of teaching and implementing the frameworks, policies, and structures needed to effectively manage and govern a family business. It goes beyond traditional corporate governance and focuses on the complex intersection of family relationships, business, and ownership. The key features of governance education include learning how to: Define roles and responsibilities to help establish clear boundaries between family and business. This prevents confusion and conflicts over decision-making authority. Craft a family constitution that outlines how the family intends to work in the present and in the future. Create and manage communication forums such as a family council or a board of directors, to ensure that both business and family are heard. Governance education is a proactive tool that helps create a system for dealing with the challenges of working in and belonging to a family business. Legacy, Not Just Advisory The future of family businesses matters to me because of the impact they have on the economy in terms of GDP, jobs, taxes and sustaining communities. The economic impact of a failing family business is not just the loss of the business itself, but the ripple effects it creates. Although the challenges family businesses face are unique, they are not entirely unsolvable. Families in business can learn to navigate these with awareness, preparation and courage. Governance education is the foundation for ensuring families realize that the intersection of family, management and ownership do result in dilemmas and paradoxes. My mission as an advisor is to champion governance for family businesses. To facilitate building frameworks for harmony and sustainability by helping families turn conversations into actionable plans. My experience founding Pakistan’s only next gen education program at the IBA, Karachi further strengthened my belief in the power of governance education Stories of next gen transforming the family business keep me inspired to continue championing governance education. I work with families in businesses because I believe stronger families lead to stronger businesses and ultimately stronger communities. For me, the work I do is not just advisory, It is legacy building. Link: https://www.familybiz.solutions/family-business-engagement-program/

Why Governance Education Matters For Family Business? Family businesses evolve with a blend of family dynamics, business operations, and ownership, leading to blurred lines. This may result in unique challenges, paradoxes, and dilemmas. In the absence of governance, these issues often escalate into conflicts. Unaddressed conflict may cause both the family and the business to suffer to the point of disintegration. Disintegration may be avoided by the adoption of early governance education and structures. What is governance education? Governance education revolves around understanding: Principles of fairness, accountability and transparency. Family governance structures such as the Board of Directors, family councils, constitutions, employment policies, and other key policies. Decision-making processes, conflict resolution mechanisms, and ethical standards. Clarifying the expectations of family members regarding roles and responsibilities. How does governance education help? Governance education helps the family: Appreciate the nuances of the family business. Build clarity around roles and expectations resulting in reduced conflict. Better prepares the family for responsible stewardship by encouraging merit-based participation and accountability. Improve decision-making by learning to separate business needs and family needs. Holistically, governance education empowers the family with the knowledge and skills necessary to handle the many challenges that come with being part of a family business. How do families receive governance education? Families can receive governance education through both formal and informal approaches, depending on a family’s needs, stage of business, and generational composition. Formal approaches are structured and facilitated by external experts such as advisory firms, university programs, and networking organizations. Informal approaches may include creating a culture of learning by sharing family business best practices and networking with well-governed families. When is the best time for governance education? It is never too early to start educating the family on governance. The cost of neglect is often paid in fractured relationships and poor business performance. For family businesses, now is the time to create a governance learning culture. Not sure where to begin? Start the conversation at [email protected] or consider enrolling in our upcoming Family Biz Next Gen Engagement Program to empower your family with the necessary knowledge and skills for a sustainable business.