It's a family affair: How to successfully lead family businesses into the future

February 19, 2019

Every second company in Austria is family-owned. At the WU EA Lounge on 14 February 2019, which was organized jointly by Mercuri Urval and the WU Executive Academy, owners and managers of leading Austrian family-owned companies analysed how family-run businesses will manage their succession and what challenges they will have to face in the process.

The panel discussion included Petra Reiner (Egger Group), Michael Wardian (Kirchdorfer Fertigteilholding), Marietta Ulrich-Horn (Securikett), Georg Bursik (Baumit) and Tomas Toth (Croma Pharma). The evening was moderated by Doris Hofmeister, Partner and Director International Business at Mercuri Urval, and Barbara Stöttinger, Dean of the WU Executive Academy.

f.l.t.r.: Doris Hofmeister (Mercuri Urval) Michael Wardian (Kirchdorfer Fertigteilholding), Petra Reiner (Egger Group), Georg Bursik (Baumit), Marietta Ulrich-Horn (Securikett), Tomas Toth (Croma Pharma) and Barbara Stöttinger (WU EA)

Austria is a country of family businesses. But not always everything stays in the family. "External Management in family-run Companies" - this topic is perhaps a little unromantic for this special day of the year, but the rush to the WU EA Lounge on Valentine's Day was still great. Under this motto Barbara Stöttinger, Dean of the WU Executive Academy, and Jörg P. Seitz, Managing Director of the executive consultancy Mercuri Urval invited experts and managers to a talk.

The challenge of the next generation

"Around 90 percent of the companies are family-owned; if the individual companies are omitted, the figure is still 54 percent. They earn 58 percent of the total turnover", Günter Handler reported at the beginning of his keynote speech. Not only in his Master's thesis as MBA graduate of the Professional MBA Marketing & Sales Handler examined the succession in Austrian family-owned companies in more detail - he is also the external managing director of the family-owned company and automotive specialist Forstinger. His conclusion: "30 percent of these companies will be handed over to the second generation, only 10 percent from the second to the third generation," says Handler. The first priority is always the handing over of the company to its own children. Only if this is not possible for various reasons would an external manager be sought. The last option would be to sell it.

In the subsequent panel discussion, owners and external managers of leading Austrian family businesses discussed their experiences:

Petra Reiner has been Head of Corporate HR at the Egger Group for three years and was previously Senior Vice President Personnel Development at the listed Schaeffler Group, also a family-owned company, for five years. Both companies have a lot in common: "The owners are visible, you meet them in the canteen. The leadership team is consistent and there are many long-term employees. And many family businesses are at least as professional as corporations." The corporate culture is strongly oriented towards the owners. At the moment, three family members are working for Egger, "like everyone else, they started their career in the company with an internship," said Petra Reiner. The company is managed by an external trio of managers. However, the Egger Group can also compete with international corporations in terms of size: the company employs around 10,000 people worldwide.

Michael Wardian was promoted from CFO to CEO at precast parts manufacturer Kirchdorfer after the owner passed away. "We're not listed, we don't have a hire-and-fire policy," says Wardian. Some other family businesses have already been taken over, but the brands have often been left there as well, as in the case of the Styrian Rauter company, for example. "People know the company by this name, it was important to maintain it." He observed, however, that some owners would give up their scepter too late. "We bought family businesses from owners who were 70 or 80 years old. It is often too late to hand them over to their own children." They would have made their own careers long ago.

Marietta Ulrich-Horn herself took over the Ulrich Etiketten company from her father and has since handed it over to her son. The Global Executive graduate founded Securikett with her husband. "As a family business, you have to be very innovative and flexible. We need to respond to change faster today than we did 20 or 30 years ago," she said. With regard to the takeover of the company by the next generation, Ulrich-Horn recommended: "It is important not to push the children and to separate the roles as parents and as bosses and owners". Ulrich-Horn has already engaged external consultants to find a successor to Securikett. "We want a sustainable, long-term solution."

"As an external manager, you first have to earn the trust of the owners," said Georg Bursik, co-managing director of the Baumit family business. Doris Hofmeister asked whether it would be easier for family businesses to find good employees because of their reputation in their respective regions. Family businesses face similar challenges to corporations: "Good sales people are hard to find everywhere, and that applies to us as well as to corporations," says Bursik.

Tomas Toth has moved from the globally active Mondi Group to the family business Croma Pharma. The difference between the corporate cultures is striking, reported the HR Director: "Our owners see the employees every day, they greet everyone. Today, Valentine's Day, they distributed flowers to the ladies and chocolate to the gentlemen." The relationships are more trusting and closer than in group life. In the open-plan office, however, one must also perform, there is no room to hide in the 350 employees of the small family business with 12 branches on four continents. "When you have an idea, you present it to the owners and get immediate feedback. You need a lot more patience in the group if you want to change something," says Toth.

Doris Hofmeister summed up a decisive difference: "As a group, you primarily focus on shared value and sell when it pays off. Family entrepreneurs have a different "purpose": they do it for their children."

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