Surviving generations

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While market demand, human talent, and the right facilities help keep a business going, there’s no denying that good governance is one of the essentials for an enterprise to achieve success and attain sustainable growth. This is especially true for family businesses like rural banks where lines between business and family interests become blurred, and major decisions require family interventions and the need to settle personal differences.

Speaking on this topic during the Rural Bankers Association of the Philippines’ (RBAP) Annual Convention, Professor Enrique M. Soriano 3rd of the Ateneo Graduate School of Business urged rural bankers to prepare for the inevitable family succession issues by putting in place corporate governance structures.

Prof. Soriano noted that while family enterprises represent 80 percent of all businesses, 95 percent of them do not get past the third generation due to inadequate preparation.
“It is not a curse but a consequence of a lack of preparation for the next generation. For them to survive, governance systems must be in place,” he said.

The first step toward professionalizing the business, Prof. Soriano said, is making the decision whether to prioritize business or family. Should they choose business over family, management must make a conscious effort to uphold a formality within the firm and keep emotions out of the picture. By doing so, transparency and sound management is guaranteed and the business goals of the family are better pursued.


Under such a setup, personal relationships, although undeniably important, are also set aside for the welfare of the business; employment is awarded by merit and competence, and promotion is earned not through birthright but through productivity and performance.

RBAP is promoting this kind of business culture across the industry by developing corporate governance workshops that seek to educate bank officers and directors on their role as decision-makers and their accountability to their shareholders, employees and the communities they serve.

Macro-economically speaking, good governance is also a requisite for a nation to attain inclusive and sustainable growth. In a recent forum on the Asean Corporate Governance Scorecard, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. enjoined the financial sector to “strive for high standards of governance to ensure sustained and inclusive growth for our people.”

History has proven that lack of good governance could send an economy into turmoil, such as the case of the Great Recession in the West in 2007. It is therefore important to look inward and assess the foundation of one’s business before taking on the bigger challenges of expanding and exploring new horizons.

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