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The Secret to Succession in a Family Business, According to AGI's Andrew and Kevin Tan

The Tans talk inheritance, succession, and running a family business.
IMAGE MEGAWORLD
ILLUSTRATOR WARREN ESPEJO
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In Knight Frank’s 2021 Wealth Report, Alliance Global Group Inc.’s (AGI) chairman Andrew Tan and CEO Kevin Tan gave us an inside look at the father-son dynamics that ensure the conglomerate’s success and future. Succession has always been a topic of discussion when it comes to the Philippines’ myriad of family conglomerates, and AGI’s entrepreneurial family shared their insights on achieving success and stability in the present and future.

1| Share the same purpose, passion, and proficiency.

As per Andrew Tan, every situation between self-made entrepreneurs and their children is different. There are a lot of factors at play like the type of business the family is in and the culture and environment of that business. But the bottom line is, succession succeeds when the following is true:

“I believe that a company’s succession planning is successful when the current leaders and the next-generation leaders are both aligned when it comes to three aspects: purpose, passion, and proficiency,” shared Andrew, the patriarch of AGI’s Tan family.

By purpose, he’s referring to the company vision and core values; by passion, he’s referring to the leader's or successor’s commitment to the company; and by proficiency, he means the businessman’s abilities.  

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2| Remove ‘birthright’ from the vocabulary.

It’s easy to assume that family businesses operate like aristocracy, but in this case, blood is not a birthright. This is still a business, and business requires aptitude, not inheritance. He shared how, under his father’s wing, he learned alongside his siblings that education, skills, and work experience are invaluable.

“I truly believe that working in a family business is not a birthright. Being a family member or the next in line does not mean he or she is best suited to take on a specific job or run the company altogether. I think the acceptance and realization of this early on can help set the right context thereby preserving relationships within,” shared Kevin.

3| Don’t force succession.

Andrew shared that he never pressured his four children to join the family business, even as it grew into an empire under his leadership. He let things play out naturally, allowing his children to follow their paths and choose on their terms whether they wanted to join the business.

“My children grew up knowing that I had my own businesses. We would talk about what I did for work. As a father, I believe that it’s my job to make my children interested in the various businesses,” said Andrew. “Having said that, I didn’t pressure my children to work for me—I thought that if they wanted to, they would do so at the right time.

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4| Nothing is guaranteed.

Kevin realized early on that, eventually, he’d have to take up the mantle and follow in his father’s footsteps as the eldest son. But what makes him different is that he saw this duty as a dream, and he had to fight for it like anyone else.

“My dream has always been to help continue their legacy, but I always knew that nothing was ever guaranteed or that things would not necessarily just be handed to me or to my brothers,” shared Kevin. “We work under a meritocracy system both at home and in our companies. So naturally, I've had to work hard over the last 20 years to build my credentials and earn my right to be where I am now.”

5| There must be mutual respect.

It’s clear from the interview that father and son complement—and compliment—each other. Their shared vision makes their succession plans work, all while enhancing their business relationship. The elder Tan notes that the two are often on the same page, and his knowledge and experience guide Kevin when needed. Meanwhile, the younger Tan is bringing innovation and digital technology to the table, which were crucial in helping the company adapt to the new normal.

“Growing up, my father taught us the value of hard work, excellence in everything that you do, integrity, humility, and compassion for those who have less in life. I have always respected his wisdom, and therefore I believe myself to be quite obedient,” said Kevin, who also shared the secret to the elder Tan’s leadership skills.

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“My father does not command people, instead he uses his power to persuade, to make you believe in his purpose and vision. When you are sitting where I am sitting and you are listening to the words that I am also hearing, it is very difficult to disagree with a visionary who has a purpose you are completely aligned with.”

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Anri Ichimura
Section Editor, Esquire Philippines
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