Early History:
Mr. Tahar Benjelloun and his wife Rita are from Casablanca
and have been living there since their childbirth. Mr. Benjelloun’s father had
a small construction business and passed away when h was in his early
20’s. Tahar took over his father’s
business since he was the only child; made it grow and was very successful in
doing so. He is now one of the top 5 major construction companies in Morocco
and has been specializing in low cost apartments these last 15 years, due to an
increase in demand for cheap apartments. The government encouraged businessmen
to invest in the low cost construction sector by making taxes cheaper and
increasing subsidies in order to help getting rid of the slums. Mr. Benjelloun
stepped up and took this opportunity to grow his business even further and has
been very successful in this sector.
Tahar and his wife raised their two sons and
daughter in Casablanca. The two sons names are Amine and Hicham; Amine is currently
35 years old and has been working with his father for the last 10 years in the
construction department after he finished his studies in the USA in Suffolk
University. Amine is married and has two young sons aged around 6 and 4 living
in their separate home. Hicham is 26 years old, very smart and is about to
finish his MBA in UPN, which is the best university in the world for business
studies. His goal is to come back and work for the family business. The
daughter’s name is Kenza and she is 33 years old, married and currently taking
care of her three children since they are still at a young age. She went to the
USA taking a business major and a minor in photography.
Plot:
Tahar unfortunately has been
diagnosed with a late state brain cancer and is predicted to live for another
year. Tahar now is thinking of giving a CEO position to one of his sons,
however giving the children the same amount of shares (20% each) and the mother
40%. Tahar’s concern is not the number of shares, but the management of the
company and who should lead the firm. Tahar is somewhat pleased with what Amine
is doing for the company by going to construction sites making sure deadlines
are met and so forth. However, Amine is not exceptionally smart or bringing any
extra input in the company but he is loyal, hard working, and has great human
skills. Tahar sees more potential in Hicham because he has graduated from UPN
and currently finishing his MBA in the same university. He has also worked for
the two biggest construction firms in the USA for around 3 years. He has been
also offered an important position in one of the companies after his completion
of the MBA. He is clearly more qualified for being the next elegible CEO of the
firm even though his lack of experience in field compared to his older brother.
Tahar’s concern is that the older brother might be unpleased if he gives the
CEO position to the younger one because he has been devoted to his father’s
business. However, Tahar is thinking what would be the best decision for the
company and who would be most eligble for developing the company even further.
Tahar
has not yet mentioned his sickness to his children or his wife. He is gathering
everyone for a family dinner in order to tell them about his cancer and what he
has planned to do with his succession plan. Tahar officially makes his youngest
son Hicham the next CEO after he finishes his MBA in the USA and simultaneously
giving his eldest son vice-CEO position.
Phase 2:
Issues:
There are a couple issues that Tahar is facing by
choosing the most eligible successor of his business and the effects that it
will have in the family as well as the business in the future.
Firstly, he is not sure if his eldest son, Amine would
be able to be successful in developing the company as the CEO. It would be
problematic because it’s been ten consecutive years that he has been working
with his father in the construction department. The father knowing that it
might hurt his feelings to give the reigns of the company to some stranger or
to his younger brother. However, the
father believes there is a chance that Amine would prefer the reigns were
handed over to someone in the family rather then someone who is not.
Secondly, another issue is to give Hicham the
position of CEO because he is still very young and lacks experience in the
field, considering the fact that things work differently in the USA then in
Morocco. Hicham might struggle with some of the issues that might come up in
the future. However, considering his brother has been working these last 10
years in the company and that the succession plan goes smoothly, he would be
able to support his younger brother in that sense.
Thirdly, if this succession plan fails because Amine
is not happy of his father’s decision of giving CEO position to his younger
brother and giving him a position that is inferior to Hicham’s. This would
destroy the relationship between them and would cause a lot of pain for the
family and the business because of 3 main reasons. The first one would be that
there would be no more sense of unity in the family, which is a very important
aspect when dealing with family businesses in the second generation. Secondly,
that might push Amine to leave the company and decide not to help his younger
brother manage the company by giving his view and experience in the field.
Thirdly, the worst case scenario is that Amine decides to sell his shares and
invest on something on his own. That would create a problem because no one in
his family would be able to pay him the full amount at once. This would then
stop being a family business and would therefore change the dimensions of the
family business.
Phase 3:
Phase 3:
Succession
is one of the most important areas in a family business because it ensures
continuity into the next generation. If not properly handled, the issue of
succession can mark the beginning of a slow but gradual death of any family
business irrespective of its size and years of existence. The following three
theories, therefore, help analyse the issue of succession in the case presented:
Systems Theory: This
theory looks at family businesses as three overlapping and interrelated
sub-systems that include the family as a system, ownership and business as
other related systems that partly cover (Poza,
2009). In the context of this theory, the father, Mr. Tahar, should not
only look at skills but have a holistic view of the three sub-systems that
jointly constitute his family business. From the family point of view, Amine
should take over because of his position as the elder son and for his decade
old service to the family business. Despite his lack of proper training
comparative to his brother who holds an MBA from UPN, it must be understood
that Amine has something more valuable than skill; commitment to family goals.
For the 10 years of his dedication to the construction company, he has shown
nothing but commitment to growing what his father inherited and nurtured and
this drive coupled with his hands on experience, would make him a suitable
candidate.
On the basis of systems theory, Mr Tahar
should bring a balance between family and business. He has already done an
exemplary job at dividing ownership equally among his three children and
leaving 40% to his wife Rita. All he now needs to do is avoid an eminent fall
out by ensuring that family hierarchy is not breached in the business to escape
the possible conflict between Amine and Hicham. Amine should on this basis;
therefore, be CEO with Hicham taking over as CFO to compliment his elder
brother’s lack of skill as Amine brings family leadership as the first son and
vast experience in the business.
Game theory: This
is a useful tool in decision making especially when there are two or more
variables involved. It looks at the many factors to be taken into account and
the outcomes of the possible choices.
Even though the theory is mathematical, it takes into account emotional
undertones, decisions and behaviours which make it applicable in handling
succession within family businesses (Osbourne, 2003). In the case presented,
there are factors of experience and skill as they relate to the construction
business in question. The theory will, therefore, factor Amine’s experience and
Hicham’s skill as well as prior experiences outside the family business in
relation to how these will affect the business in question. An expert can be
hired to come with the possible empirical model on the basis of game theory and
test its validity so that a final presentation is made to Mr Tahar before he
decides on who becomes the next CEO. Having a purely scientific approach will
give Mr Tahar an objective insight into the possible outcomes of choosing
Hicham so that his decision is not made on the basis of experience and how he
feels, but backed by empirical data. If his current fears of fallout between
the sons should he choose the youngest is confirmed by this theory, then he has
sufficient ground to have a change of heart and make Amine the new CEO.
Complexity theory:
Family businesses have the most basic traits of complexity theory through the
interaction of three extremely related sub-systems that are: Family, Ownership and Management. These
three sub-systems according to Marion and Uhl-Bien (2001) are so complex that leaders
who are accustomed to traditional command and control styles of leadership are
likely to be frustrated in creating effective organizations. Mr Tahar has a successful business but by
looking at this theory, the complex relationship between its three fundamental
characteristics of family, ownership and management are likely to destroy its
future success. It is at this point that the current issue of succession
between its two sons has the potential to not only fragment his family, but
also bring down his business and the legacy he inherited from his father and
built to new heights. The future of this family business depends largely on who
becomes the next CEO. Should Amine find reason not to support his brother if
Mr. Tahar makes him CEO, then his vast experience and hands-on model of
operation will be missed and the company will most likely not grow to the next
generation as envisioned by Mr. Tahar. Should Hicham accept his elder brother
as the new CEO and compliment his experience with the MBA AND OTHER educational
skills he acquired, then three things will happen; the family will remain
united around a common vision, the business will grow stronger and Mr. Tahar’s
legacy will be carried to the next generation. The future of the three pillar
of this family business depends on how the issue of succession is handled and
the outcome of such a decision.
References
Poza, E. J. (2009). Family business 3E (3rd
ed.). Mason, OH: South-Western Cengage Learning.
Osbourne,
M. J. (2003). An introduction to game theory. Oxford, England: Oxford
University Press.
Marion, R., & Uhl-Bien, M. (2001). Leadership in complex
organizations. The Leadership Quarterly,
12(4), 389-418. doi: 10.1016/s1048-9843(01)00092-3
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