With nearly 3500 patrimonial or family businesses, France has an excellent lever for innovation and economic performance. However, these very specific companies (in terms of values, long-term vision and entrepreneurial culture…) are regularly confronted with crises of governance and succession.
Our medium size enterprises (MSE), although performing in France and abroad, have a higher failure rate than their European counterparts (Germany, Italy). It is also found that less than 20 % of ceded French patrimonial MSE remain so against 60 % in Germany and 80 % in Italy.
Two main reasons justify this conclusion:
>> Transmission difficulties
The lack of diversity, with a pervasive or overrepresented family, often induces strong emotional issues and a lack of projection and preparation. The company therefore tends to remain fixed on a medium – term strategy that is sorely lacking in ambition.
>> Managerial renewal difficulties
With an aging population of managers, with 34 % of managers over 60 years and 18% over 65 years, the problem of managerial renewal arises regularly. The management of our patrimonial MSE should open on the outside to acquire and develop new skills. Corporate functions (HR, Finance, Purchasing, IT,…) are also too often neglected and considered as “secondary” asset. Today, these functions play a key role in structuring and development of the company.
ARROWMAN KEY INSIGHT
To preserve the DNA of the company for the future Philippe MILLOT advises to anticipate the succession by establishing appropriate governance:
- ? a board, more open to independent advisors, anticipates and secures the transmission periods and makes some decisions easier;
- ? a legal form adapted such as Management & Supervisory Board can also help to secure historical shareholders of the company while gradually renewing its management.
Philippe Millot also recommends paying special attention to “soft skills ” in the evaluation of managers required to drive change within patrimonial MSE. Leadership, listening, ability to understand the most complex and emotional dimension of patrimonial MSE are among the essential skills for these new leaders.
Philippe Millot believes that the General Management must be able to rely on Corporate skills for structuring companies.
- ? The CFO occupies a key role for managing the company, evaluate flexibility and generally securing the growth of the business (financing, cash management,…).
- ? The Human Resources Director plays a crucial and leading role in the social transformation of the company (transmission, cultural renewal, skills development, anticipating social conflicts,…).
The general goal is to support the changes of a company that has to grow and evolve without losing marks and fundamentals that have made ??it successful.
Philippe Millot is one of the Directors of ARROWMAN Executive Search, in charge of the development of Corporate Functions and Business Development practice.
Figures Sources: BPI France studies