Property entails obligations – across generations
Property entails obligations. This is set out in the German Constitution. Property also refers to ownership of businesses and shares. Therefor the Constitution addresses shareholders as business owners. The awareness of the role shareholders play specifically in family businesses and of their relevance has changed considerably in recent years. Competent shareholders may be valuable to a company and contribute to its survival, just as incompetent shareholders can jeopardize the company with bad decisions and lack of expertise.
Family shareholders frequently perceive their share in the business as borrowed heritage which they cultivate, preserve and develop with a very special sense of loyalty and concern.They need a wide range of specific core competences to perform their role as shareholders properly and do more than just rubber-stamping decision papers and receiving dividends. This expertise, these skills and abilities are required to successfully manage and preserve the family business and assets on a long-term basis.
Shareholder competences and their development are relatively new issues for family businesses and business families but nevertheless of great relevance in ensuring the survival of this type of business and successful transfer to subsequent generations. Little practice-oriented research has been conducted so far to these important and urgent topics. The purpose of the study at hand which is unique and the first of its kind in Germany is to highlight these important issues and underline the tremendous value which owner families may generate through systematic training and further education of owners. The study examines the following aspects:
- requirement profile of shareholders in family businesses, and the challenges involved
- specific competences and functions of active family shareholders, and ways to prepare them for the representation of their owner interests
- existing experience with targeted training in and expansion of shareholder competence in business families
- demands on competence training for shareholders, and how to meet them
The results of the study cast a positive light on attitudes regarding shareholder competence and measures initiated in family businesses in the German-language area to strengthen such competence. Most of the family businesses have realized the significance of shareholder competences and taken the required steps to promote a competence development. But the structures and degree of organization and professionalization of competence development are still not very pronounced in many of the owner families analysed in this study. This applies in particular to mature and old family businesses who seem to have the biggest backlog demand for competence development. This is why we offer suggestions for improvement and recommendations for action.
We hope that you will enjoy reading our study.
The complete english study is available for download in our Working Paper section.