An action research on addressing ineffective management succession of a family business through formalization

• Main Author: Ang, Charisse Jollins Z.
• Format: text
• Language: English
• Published: Animo Repository 2019
• Subjects: Family-owned business enterprises—Succession; Entrepreneurial and Small Business Operations
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/6422; https://animorepository.dlsu.edu.ph/context/etd_masteral/article/13488/viewcontent/ANG__Charisse___IAR2.pdf
• Institution: De La Salle University

This action research intended to address the focal issue of ineffective management succession from first to second generation of a family business, the Philippine HardwareHouse Company Incorporated (PHCI). In this study, PHCI was diagnosed to find out what factors are hindering it from its objective towards management succession. As the literature presented evolving family business frameworks, the case of PHCI was analyzed on how it is positioned, so we, together with my collaborators of managing family stockholders can understand where our company can be heading to next. Walsh’ Family Business Succession Planning Framework provided a clear set of activities toward effective Management Succession. These are; Setting up Family Communications, Grooming Successors and improving Management Processes. Moreover, as realized from the process of Participative Action Research, the lack of formalization was found to be the most imperative factor in order to address the issues presented in this project. It was also clear that this is the intervention that provides a guideline as we go through the sensitive process of Management Succession. Hence this project has set the following objectives: Establish regular family business meetings; have a new organizational structure that establishes clear scope of authorities for the 2nd generation; formalize job descriptions in-line with the new organizational chart and; formalize PHCI’s Management processes. Given the objectives of this project, the company is expected to go beyond 2 cycles of Action Research as we purposefully refreeze series of small sections in the company. For the interest of this action research project paper, the scope focuses only on the first two critical Action Research cycles of the organization’s change process. During the period of first two cycles, regular family business meetings and new PHCI organizational structure were in place. Following the foundation established during the first cycle, job descriptions and management processes were formalized according to ISO standard formats. However, despite completion of initial objectives in establishing meetings and formalized documents, the action research project proceeds with more spirals of AR cycles until the full integration of the 2nd generation into the family businesses. As the AR project was implemented during the business expansion and increasing number of participating family members, values and techniques in conducting an Action Research were being adopted spiraling upstream and downstream of the organizational structure. It is foreseen that a culture of Action Research-oriented organization is possible as collaboration continues to branch out to sub-cycles of Action Research in smaller units of the company.