In this interview, Veronica Yepez,* founder of Perpetum Consulting, a California-based consultancy serving high net worth families in Latin America and the United States, argues on the basis of her experience of more than 15 years that a child can really never be too young to get involved in a family business. This interview transcript has been made available to EmergingMarkets.me by marcus evans, a global corporate marketing and information company.
When should wealthy families involve their children in their business? When is the best time and why?
It is never too soon to talk about the family business; whether the children decide to join or not, learning about the family business is a good training on life and work skills. It often happens unconsciously at a very young age simply by watching and listening to their parents at home.
The decision to invite the children to be part of the business is often very emotional. Such a decision is one of the most important family transitions and in the best scenario, the business will already have clear rules to determine when and how children are allowed to join.
The senior generation must evaluate the current developmental stage of the business, its future, and determine if the business shall continue as a family business for another generation. They must make sure that the business requires someone with the set of skills, talents and interests their children have.
The rule is that the business should be treated as a business and every member should live his or her dream. It is fundamental to determine if they are a good fit for each other.
How should they engage the new generation? What strategies would you propose?
The senior generation must define the kind and level of engagement they want to offer their children. Based on such a decision, different strategies can be crafted that may include an internship, employment, sharing income, sharing management, transferring legal ownership or granting voting powers.
It is crucial to (i) have a robust family governance structure which includes the rules for hiring, talent retention, promotion, compensation, communication and (ii) to create a career plan for the members of the new generation.
What are some of the issues they run into? How could they be solved?
One of the most common and detrimental is the inadequate preparation of heirs. It is important to design a strategy that takes into consideration an early beginning, a long-term vision, learning to communicate, managing clear expectations, working under the principle of merit and managing entitlement.
What is the role of the patriarch in the family?
The patriarch has a pivotal role and most likely he will be the one defining the greater purpose of the family business. In consequence, it will be up to him to determine if the business is meant for future generations.
At home, the patriarch will define the role the business takes within the family dynamics and through his parenting he will help the children develop fundamental abilities. Some of those abilities may eventually be their greatest tools at work, such as the ability to communicate, to think outside of their own interests, to make decisions, to seek consensus, and to want fairness and justice for others.
*Veronica Yepez was one of the speakers at the Latin Private Wealth Management Summit Spring 2017, an event that was organised by marcus evans and held in Ciudad de Panama in Panama on April 27-28. Similar issues will be raised at the marcus evans-organised Latin Private Wealth Management Summit Fall 2017, to be held in Cancun, Mexico, on September 8-9.