Istanbul Gelisim University - “The transition to the third generation of companies that favor relatives is low”

“The transition to the third generation of companies that favor relatives is low”

Making explanations about her memo on the problems experienced in family companies, Asst. Prof. Canan Tiftik says, "Family businesses, providing employment opportunities to many people and contribute to the country's economy, may come to the brink of bankruptcy due to the death of their founder, inheritance quarrels, and disagreements between siblings.” Tiftik indicates that the rate of transition to the third generation is very low, especially for family companies that favor relatives.

Participating in the ISARC 1st International Hasankeyf Scientific Research and Innovation Congress with her memo titled "Problems in Family Companies from a Management and Strategic Planning Perspective", from Istanbul Gelisim University Department of Management Information Systems Asst. Prof. Member Canan Tiftik talks about the details of the memo. Stating that family companies have a management and strategic planning structure that aims to increase the continuity, growth and profitability of the company, as in every business, Tiftik says, "The realization of these goals can only be possible with the creation of management structures that are suitable for the current economic conditions."

“LOW TRANSITION RATE TO THE THIRD GENERATION”

Stating that family companies are of great importance due to their prevalence in both the world and the country's economy, Tiftik says, " Family businesses that provide employment opportunities to many people and contribute to the country's economy, may come to the brink of bankruptcy due to the death of their founder, inheritance quarrels, and disagreements between siblings.” According to the results of a study, 24% of family businesses in the UK are in the second generation and 14% are in the third generation. In another study, it is stated that entrepreneurial firms live an average of 25 years, only three out of ten enterprises pass to the second generation and one to the third generation. The fact that the rate of transition to the third generation is very low indicates that the transition between generations is the most important challenge faced by this type of business.”

“TRANSFERRING TO THE SECOND GENERATION PROVIDES IMPORTANT EXPERIENCES”

Indicating that the successful transfer of family businesses to the second generation facilitates its transfer to the next generations, Tiftik says, “Therefore, the transfer of the business from the first generation to the second generation brings important experiences to the family. It is possible for a family business to survive, grow and ensure its future, and therefore survive for generations, with its sustainability capability.”

“WORKERS' PERFORMANCE DECLINES”

Stating that companies should avoid nepotism practices in order to be successful in the long run, Tiftik says, “It is recommended to benefit from professional managers to do so. There should be ethical committees within the company that will prevent practices such as bribery. It has also emerged that there should be members and commissions to audit professional managers and family members independently and impartially. It is necessary to establish a structure that will allow future career planning for workers within the company. Workers underperform in companies with high turnover and favoured by family members or close relatives. In addition, it is possible to achieve high performance with strategies that will provide workers with social opportunities and make workers a part of the organization. Employees who feel secure and do not fear being fired show more self-sacrifice and commitment to the companies they work for. Measurable and transparent criteria should be introduced in the recruitment and dismissal of workers.”