Keeping it in the family: the key to making succession planning work
An open-minded father is needed to make succession planning work even if children consider it their duty to preserve the family business.
Clara Chan Yuen-shan, the chief executive of Hong Kong-listed metal trader Lee Kee Holdings, credits her father's support and mentoring as the driving force behind her and her two siblings' ability to work together well in their family enterprise.
"I am lucky because my father is very open-minded and very supportive, allowing me, my brother and my sister to suggest new ideas. He gives us very good advice but then lets us have the freedom to run our part of the business," she told the .
"For a family business to be successful, it needs two generations who are willing to listen to each other and make compromises. If founders insist on running everything their own way and not accepting any suggestions from their children, it will be hard for them to inspire their children to work in the family business. They would simply walk away to do their own thing."
The Chan family hails from Nanhai, Guangdong province, which is known for its metal factories. The company was established by Clara's great grandfather, Chan Chak-hong, in 1947 shortly after the end of the second world war as a scrap metal trading firm.
The company has come a long way and listed in 2006. It is now a member of the London Metal Exchange. It sources metal from around the world and delivers it to manufacturers in China.
The business was passed from Clara's great grandfather to her grandfather and then her father Chan Pak-chung, who took the helm in 1970 and is now chairman of the company.
Clara is the eldest of four children and was the first to join the firm in 1995 after leaving school.
She worked in various departments before becoming chief executive, leading the firm in its public listing. Her young sister Lillian also joined straight from school and now is the director of procurement. Younger brother Patrick was a pilot for 10 years before quitting flying to join the firm and is now an executive director handling development in the firm. Another sister opted to be a housewife and did not join the business.
"My father let us decide on what jobs we wanted to do but we all liked our family business as we grew up with it and appreciated the family value in it," she said. "My father is our mentor, who insisted we would all need to start from the bottom to learn the basics about metal trading and settlement."
It was not always smooth going for Clara.
"But we have always discussed things and made compromises to find solutions that we can all accept," she said.
As her father is much more experienced, she said he did not initially feel comfortable giving her a free hand.
I told my father that if I do it in my own way and get it wrong now, he is able to help me correct my mistakes
"But I told my father that if I do it in my own way and get it wrong now, he is able to help me correct my mistakes," she said. "If he insists on holding my hand now, when he becomes too old, he will not be able to help me when I make mistakes then."
Her father accepted her argument, letting her and her two siblings introduce new concepts, including allowing the company to go public.
For a family to work together, she said it was important for the parent and the children to trust and understand each other. But they also need to have other independent professionals around to help.
"Our chief financial officer, chief operating officer and many technical heads are not family members. There is an equal opportunity for all staff and we promote the best talent," she said.
One rule they have is they do not talk about business during weekend family gatherings.
"Although we see each other every day, we still have family gatherings at weekends as my father likes to see his six grandchildren," Clara said. "They are still young so it is hard to say if they are likely to be the fifth generation to run the family business. But yes, there are six potential candidates."
