Human resource practices and family businesses continuity : The role of succession planning

Abstract

The creation of jobs, the transfer of knowledge, and the stabilization of the economy are just a few of the critical responsibilities that family companies play on a worldwide scale. Family businesses make up 19 percent of the global economy and provide a significant portion of the world's GDP. However, more than 70% of family-owned businesses fail to survive the shift from the founder to the second generation, and of those 30% that succeed, the business shrinks by another 15% when it moves to the third generation. This study's main goal was to evaluate the impact of succession planning as a kind of human resource management on the survival of family businesses. Analysis of the founders' plans and strategies was one of the particular goals. The function of a successor in the succession planning of a family company; to evaluate how the successors affect the succession planning; and the part played in the succession process by non-family members and legal successors. To achieve the desired outcomes, this study used a case study research approach. The sample of six (06) was drawn using the purposive sampling strategy from the forty one (41) family businesses that made up the target population. Interviews served as the primary data gathering method for this investigation. Results indicate that family firms in Nyagatare City continue to have relatively low levels of human resources practices, especially when it comes to succession planning. The results also show that those who try to plan their succession do not choose managers who are not family. The founders often include the legal successors in business operations after selecting them based on their performances and skills. Both academic and practical/policy consequences stem from this work. By presenting findings on succession planning as a human resource component among family businesses in developing nations, the study adds to the sparse body of literature on human resource practices among family businesses. In order to ensure the continuity of the family business, this research also makes advice to family companies on the best methods for succession planning. Purposive sampling was the method used for this investigation (Miles and Huberman 1994:27), thereby not being probabilistic (Guest, Bunce, and Johnson, 2006). Purposive sampling is a sampling strategy that focuses on specific occurrences and/or processes rather than providing a representative sample. They provide an overview of qualitative interviewing.