Family Companies / Corporate Management / ERP Triangle

40% of the world’s top 500 companies are family companies. We talked with Levent Sılay from Login Software about what lies beneath the success of these companies that can survive for generations and where family members are still in the management structure.

First of all, could you please describe briefly what distinguishes these companies from others?

No doubt, there are a number of reasons why the most successful companies in the world are family members. It can be suggested that the primary reason is prudent investments. It is also a fact that focusing on the main line of business, protecting strong values, long-term performance and strategic perspective and maintaining corporate management system are effective on this.

What are aspects of family companies that need improvement?

I believe that it is necessary to evaluate advantages and disadvantages to arise from the association of family and company concepts properly. It is beyond doubt that the most important advantage is the ability to increase success with each generation based on experience passing from one generation to the other. One of the most important points to consider is the ability to think business and family concepts separately. Generation difference brings along a bolder attitude about innovation and one should remember that only 3% of family companies in the world can be transferred to a generation after the third generation.

How can it be understood that corporate management problems are an issue in family companies?

Corporate management problem in a company is not a point to miss. But this is a more delicate matter in family companies. It is possible to face problems such as the fact that other family members hold fewer stocks although they are in the management of family company, borrowing from company’s account or giving priority to kinship with regards to promotion etc. As you can see, corporate management problems of family companies are much more delicate than other companies and one should make more efforts in this regard.

Could you please further explain family management concept?   

We can define family management concept shortly as family organization process in order to ensure that family and company interests are in the same direction. Could you tell us briefly about interrelation of family, corporate management and shareholding concepts? First of all, I should say that different targets of generations may easily lead to conflicts. This is one of the reasons that cause family companies to tear apart. Thus, all family members should agree in advance on joint targets in line with their family opinions and corporate goals.

What family companies in Turkey lack?

It is possible to say based on deep experience that:

Older family members in many companies still avoid transferring authority.

Audit culture has not been well-established in many family companies.

Putting shareholding with management is one of the biggest obstacles before institutionalization.

But, on the other hand, there are many family companies with highcorporate maturity level.

Well, finally, could you please give some brief information about ERP perspective in family companies?

The need for ERP has started even to be noticed by companies that used to ignore this. But as you can imagine, it is possible to say that second generation is leaning towards ERP. Thus, once second generation passes to the management,the importance of  ERP for company becomes more evident.

With ERP projects, all business processes can be reviewed in detail, thus, the reviewed processes can be improved and new generation family members that join the company later can get more detailed information about these processes. New generation family members who can make decisions that the founding partners, who built their company with great difficulties and came to these days thanks to their intuition, easily with the help of the system and reduce the burden on older family members and increase the quality of their life.