Governance gaps driving collapse of household companies – LBS

Poor governance and weak succession planning threaten the survival of many family-owned enterprises, Lagos Enterprise School has warned. It referred to as on household companies to undertake governance constructions to assist construct lasting legacies.

In an announcement, the varsity acknowledged that formal governance frameworks would assist household companies set up clear roles, expectations, and decision-making processes, enabling them to transition efficiently throughout generations.

Talking at a webinar titled ‘Subsequent-Gen Prepared: The Household Enterprise Success Blueprint,’ organised by the LBS Household Enterprise Initiative, the Director of the initiative at Lagos Enterprise School, Dr Okey Nwuke, warned that almost all household enterprises collapse after the founder’s era resulting from weak governance methods.

“Over 70 per cent of household companies globally don’t survive past the second era, and those that do share a standard trait—intentional governance and structured succession planning,” he mentioned.

He careworn that governance remained the lifeline for household enterprises in search of long-term sustainability, including, “A household enterprise and not using a governance framework is a ticking time bomb. Good governance isn’t just a enterprise instrument; it’s a household philosophy that ensures concord, accountability and continuity.”

The director of the LBS initiative famous that enterprise homeowners should transfer from casual decision-making to formal methods that information each household and enterprise operations.

“Governance is a deliberate course of that strikes households from the kitchen desk to the boardroom. Enterprise homeowners should set up formal constructions that outline roles, expectations, and decision-making processes inside each the household and the enterprise,” he mentioned.

Nwuke asserted that many Nigerian household companies rely closely on emotional relationships and casual decision-making, which frequently change into liabilities as enterprises develop. “The absence of construction breeds confusion. Governance offers course, protects relationships, and ensures that each the household and the enterprise flourish collectively,” he mentioned.

He urged founders to start documenting household values, imaginative and prescient, and behavioural pointers, even when it begins with a easy doc, noting, “It’s not sufficient to achieve success. What issues is that success may be sustained.”

Additionally talking in the course of the session, the Chief Govt Officer of Development Kaiser Restricted, Igbuan Okaisabor, mentioned governance performed a vital position in constructing sustainable household enterprises.

“Governance doesn’t have to start out massive. You may start informally, via common conferences, documentation, and involving trusted folks in decision-making. What issues is that the method is intentional,” Okaisabor mentioned.

He famous that governance frameworks assist household companies handle conflicts, make clear dividend insurance policies, and construct transparency in monetary choices.

“When everybody understands the course of the enterprise, how earnings are reinvested, what capital is for progress, and what’s obtainable for distribution, there’s much less pressure. Transparency builds belief, and belief sustains continuity,” he mentioned.

Okaisabor warned that poor governance had destroyed many once-successful household companies, including, “I’ve seen grandchildren of billionaires change into tenants. When the enterprise disintegrates, the household typically follows.”

He additionally emphasised the significance of merit-based participation for members of the family working in household enterprises.

“In my very own firm, we make it clear that when members of the family be part of, they achieve this based mostly on competence, not sentiment. You’re not becoming a member of as my cousin or nephew; you’re becoming a member of as an expert who should ship outcomes,” he mentioned.

Talking on succession planning, Okaisabor mentioned organisations ought to groom future leaders internally to make sure continuity. “Each key place in our firm has no less than two successors being skilled. We expose them to administration conferences so that they perceive the enterprise deeply.”

He added that governance frameworks must also include clear guidelines on appointments and exits, stating, “While you formalise roles and phrases of engagement, eradicating or changing a director turns into a matter of process, not emotion. Good governance ensures that folks know when to return in and when to step out.”

In her closing remarks, the Senior Programme Supervisor of the Household Enterprise Initiative at Lagos Enterprise School, Oreoluwa Adeyinka, invited contributors to the Third IFBC 2026 Convention scheduled for March 26, 2026, on the Ecobank Pan-African Centre.

She mentioned the convention would give attention to governance and organisational tradition as foundations for constructing enduring household companies.

“What we’re advancing here’s a deeper dialog about legacy. By means of sturdy governance and shared values, household companies can transfer past survival and place themselves to thrive throughout generations,” Adeyinka mentioned.

Reiterating the significance of proactive governance, Nwuke urged household enterprise homeowners to not delay placing constructions in place.

“God forbid isn’t a technique. Solely deliberate governance and proactive succession planning assure sustainability,” he mentioned.