Singapore family businesses fail in managing internal conflicts

Nearly half has no succession plan for senior executives.

When it comes to family business success, both family and business should come together harmoniously. However, the findings from a new report by PwC show that respondents in Singapore do not have procedures to manage conflict within the family. They also lack successiion plans.

In Singapore, 57% have at least one mechanism to deal with family conflict, far below the global average of 82%.

"Family business must implement conflict management mechanisms to provide a forum where conflicts can be objectively addressed and resolved for business growth and continuity," it said.

Meanwhile, in planning for succession, only 12% of respondents in Singapore have a succession plan for all senior executives and a startling 45% have no succession plan in place.

20% of respondents in Singapore indicated that they have incapacity and death arrangements, half that of family businesses globally (40%).

In Singapore, there is an increased desire to have ownership remain within the family while professional management is brought in to handle the day to day operations (30% will pass on
management; 37% will pass on ownership).

According to PwC, the availability of options to pursue their ambitions outside the family business may be a reason, amongst others, as to why family owners are not passing on both management and ownership fully to the next generation.

Ng Siew Quan, Asia Pacific Entrepreneurial & Private Client leader, PwC Singapore concludes: “This year's results on succession show a recurring theme. There's no point having detailed plans for business continuity, if the single most significant risk to this is not addressed. A managed succession process can be a rallying point for the family, allowing it to reinvent itself in response to changing circumstances, but without a plan it is the most obvious ‘failure factor' for the family business. Succession planning is a process, not an event."