Successfully steering the family’s business and wealth forward will be on the mind of many a second-, third- or fourth-generation leader.
“When you’re taking on a company, you’re likely aware of your responsibility to run, maintain and grow it,” says Mary Chan, Head of Wealth Planning Advisory (Southeast Asia) at HSBC Global Private Banking and Wealth. “But it’s also expanding upon your family’s wealth and legacy, making your own mark, and considering what the future will look like.”
Whether it’s for 50, 100 or even 1,000 years, planning paves the way for continuity of wealth and an enduring legacy. It’s not just about ensuring the enterprise is successful now, but that it is positioned to thrive for generations to come.
Taking the reins
In 2013, at age 27, Nicholas Ho became head of hpa, the architectural business founded by his father in 1980. He knew straight away that he would need to make important decisions to lead it forward. In addition to managing existing employees – which naturally comes with its own challenges – there was also a mandate to grow into Southeast Asia.
“I learned that it’s essential as a young successor to lead by example, to do the extra work and go the extra mile,” Nicholas says. “Showing that level of commitment and passion in the work is gradually infectious, and that can change the mindset of the older generation but also inspire the younger generation.”
Overseeing institutionalisation will help it to continue generating wealth over the long term. This includes making the most of the capabilities of family members, and setting an example for longstanding employees.
“In the course of my work I'm often in discussion with clients about the process of passing on the family business,” Mary notes. “We discuss who should take control of what, when and how to hand over the baton, as well as ensuring that family members and the key management non-family teams do not feel that nepotism exists.”
Leading it forward
It’s also about embracing innovation to ensure the business’s longevity and future success.
“Sometimes we see that a family business is slower in introducing technology or making a needed change,” Mary says. “Family members may be reluctant because the founder’s formula is working, and the business may be running very successfully as it is.
“But in today's world, the company that is averse to innovation may face more challenges or competition.”
Sharon Kobler, Executive Director and Senior Vice President of GoodBaby, a multichannel retail brand specialising in products for children, spearheaded the creation of its e-commerce offering after joining in 2006.
“At the time, digitisation was taking off in China,” Sharon says. “I didn't jump into the family business until I felt that I knew enough about what I was getting myself into, but I saw the opportunity and I was ready for it.
“As a new generation leader, we always face choices, challenges and opportunities, and they always lie together.”
Mary finds that many new generation leaders are focused on ‘stewardship’ – taking a long-term view, balancing current and future needs of everyone involved – and ‘creation’ – establishing their own legacy and achieving personal goals alongside family-focused objectives.
To that end, Nicholas launched hpa Social in 2015. The platform trains and promotes the development of young architects while serving the needs of the community. Its charitable projects in Hong Kong, Mainland China and Laos involve more than 1,000 students from 40 schools.
“Initiatives like hpa Social help our designers gain a better understanding of who they’re designing for – the human scale. It also helps to attract talent, because talent these days, they want to be impactful.”
Embracing multi-generational thinking
In addition to the here and now, it’s also important to create firm foundations for future prosperity.
Nicholas’s family carved out a family office for a very practical reason: “We found out that as a company, we can push as much as we can, but the industry may not be moving ahead at the same pace. We created a family office and started investing in innovation companies based in Hong Kong and Asia to help them grow.”
A family office can allow the different generations to invest together; serve as a wealth management tool to consolidate a variety of assets as an enterprise becomes more complex and globalised; and pass both wealth and values down to the next generation through an educational process.
“It can facilitate wealth preservation, accumulation and diversification,” Mary says, “providing an alternate avenue for wealth.”
It also can be an important element of succession planning, providing a pathway for future generations. Nicholas’s family has mechanisms in place should any of them want to work within hpa. On the other hand, if they want to embark on entrepreneurship, there’s a mechanism within the family office to provide needed resources and seed start-ups to help them grow.
Attending to the business of the family
Every family legacy is unique as the family itself, and so will be the succession planning process.
“The choices of one generation will affect every generation that follows.” Mary says. “So it’s crucial for older generations to make space for the next to make their own decisions and take the legacy forward.”
For Sharon, this means involving her children from a young age, providing them the right tools and allowing them to follow their own path.
“My parents let me go abroad, see the world, experience new things and make my own decisions,” she says. “I appreciated that, and I want to do the same for my children.”
Whether it’s passing on values – your principles, purpose and culture – exploring new ways to sustain wealth or starting to involve the next generation, having these sorts of conversations today will make decisions easier tomorrow, Mary notes.
“We do often see that families may have quite a wide communication gap. In today’s environment, the key to wealth planning needs to be effective succession planning, as well as an exploration of new ways to sustain wealth. We can help to get the communication started and guide these discussions, using our breadth of global knowledge and expertise.“