Around the world and in our country, we see that the management of many companies is in the hands of families. Families' influence in the companies they founded continues for as long as the companies do. However, it does not seem possible to defend the idea that families will exist in companies for as long as families exist. When you look at century-old companies in Türkiye, we see their number does not reach twenty. Although Turkish companies show structural similarities when compared globally with their rivals, it is assessed that the country's economy has an important effect on these structural characteristics.

The means and abilities of company owners and managers — in meeting financing needs, in building capital accumulation, in transitioning to corporate governance and in securing a qualified workforce — are closely related to the country's economy. For this reason, when seeking answers to the questions "why can't our companies institutionalize?" and "why is our companies' life curve shorter than their global rivals'?", a macro analysis is required. Evaluating the effects of the factors in a business's competitive and wider environment must undoubtedly be taken into account. In this article, however, we focus on the rules families must follow for family businesses to live long.

While evaluating from a macro window, on the other hand, evaluating and developing the organizational structure within the business is a critical matter. In particular, "family companies entering liquidation after the first generation — at best surviving three generations" is the biggest problem to be tackled.

The rules family companies must follow in their structuring to solve this problem:

The first rule:
If family members are not as talented and hardworking as non-family employees, they should not be in the firm.

Rather than giving insufficiently competent and hardworking family members some simple role, paying them a salary and keeping them outside the company will be better for your company. Because whatever role they hold, a family member is the boss in the eyes of employees. They will therefore inevitably be shown privilege and treated as if they were their manager. In this case, your competent employees and managers will most likely become pessimistic about their career plans at your company and will eventually leave. And while they remain at your company, you may well find you are not getting sufficient productivity from your competent employees. Therefore, family members must constantly strive to be more competent and more hardworking than the most competent employee in the company. While everyone runs, family members must run ahead of them with even greater effort. Otherwise, a drop in performance as a result of lost motivation in the organization is inevitable.

The second rule:
Even if there are qualified, hardworking family members in company management, people from outside the family must also be given roles.

Having non-family people in top management, able to take independent decisions, is very important in two respects. First, employees can perform with the highest motivation, in the belief that they too can have a career path where they may one day have a say in management. Second, having someone effective in management who was not raised under the influence of the family culture will help objective and rational decisions be taken. In such a structure, the interests of the company — not the family — will be treated as the priority.

The third rule:
In family companies, for key positions, family members — however talented — can fall short. Professionals are needed for these positions.

Because today, key positions require more expertise than ever.

The four basic organizational structures — marketing, finance, production and human resources — and all the other departments derived from them cover job descriptions that grow more technical and more specialized by the day. And what is expected of the workforce that will fulfill these job descriptions keeps increasing.

Continuous improvement in workforce quality is expected in business life. Therefore, employing competent professionals in the positions that will ensure the workability, effectiveness and efficiency of the processes that are the business's key positions is essential for having a sustainable business system.

Establishing an organization with family members alone, and managing the business that way, may be possible in practice, but it is not sustainable.

The fourth rule:
To ensure the company's sustainability, it must be decided to whom management will be handed over.

The problems that will begin when the first generation withdraws from the business must be foreseen and the steps to be taken planned in advance. Looking for a solution once the problem has appeared means being too late. Given past cases, it will not be hard to predict the problems family companies will face regarding their management structure. Therefore, every family company setting out a family constitution and plan — including the rules we have listed above — will allow them to walk their path more effectively.

One of the topics of the family constitution is succession planning. While the problems that arise in the management of a business usually co-owned by two siblings can be solved through a culture of compromise, when it comes to handing over management, both may insist that their own child become the company's general manager. This matter must absolutely not be left to the day the generational change takes place. Succession planning should be handled by taking the next generation's wishes into account and viewing it as an investment in human resources. The education of those in the next generation who wish to continue their careers at the company should also be planned, and their long-term adaptation to the company ensured. If family disputes arise in succession planning, seeking the opinion of someone the family respects but who is not from the family can be adopted as a path to resolution.
Besides the rules we have listed, the most important approach to be embraced for family companies to achieve success is this:

"The family must absolutely think of the company as one of the family members. The company, too, is a separate person, like each member of the family. If this legal person is to exist to benefit the family members, then the family members must strive to look after it and keep it alive. For this reason, at the center there must always be the word 'Company', not 'Family'."

Author: Atakan Genç