The Evolving Context of Family Enterprise Consulting in the Caribbean

Thanks to Michael O’Neal for this article extending our understanding of family enterprise and family enterprise consulting in the Caribbean.

The private sector in the Caribbean is comprised of a relatively small number of large multinational and national or regional firms, a larger number of medium-sized entities, and a preponderance of small/micro enterprises [1]. But while, on the one hand, there is a growing recognition of the complexity and significance of family business in the Caribbean there remains, on the other hand, a dearth of research on family business in the Caribbean and the concomitant building of a body of local knowledge which would inform the practice of family enterprise advising.

Much of the existing related research has historically had a focus on entrepreneurship and renowned West Indian Nobel laureate, economist Sir Arthur Lewis’s 1973 statement to the Caribbean Development Bank Board of Governors on “The Shortage of Entrepreneurship” in the Caribbean still resonates in the policy arena as governments wrestle with the challenges of stimulating and supporting entrepreneurship in their countries. A 1992 University of the West Indies seven-monograph series on “Culture and Entrepreneurship in the Caribbean” remains a seminal corpus of scholarship on the subject but is now out of print. Indeed, Trinidadian family business advisor and Family Firm Institute Fellow, Annette Rahael’s more recent essay on family business in Trinidad and Tobago in the Handbook of Family Business and Family Business Consultation (FFI Fellow Florence Kaslow 2006) is an important contribution. As the first person from the Caribbean to have earned the Family Firm Institute’s professional family business advising designation, awarded in 2004, Rahael is also a regional pioneer.

Recent Research and Developments

Whereas, when Rahael’s essay on family business in Trinidad and Tobago was published in 2006, there was no focus on family business at any of the country’s institutions of higher education, that circumstance, happily, has begun to change regionally. A small group of scholars at the University of the West Indies, for example, has begun to research and publish on Caribbean family business, addressing topics such as “Succession Planning in Ethnic Family-Owned Businesses: Evidence from Jamaica” [2] and a course on “Managing the Family Business” is now offered as a component of the University of the West Indies’ Arthur Lok Jack Graduate School of Business’s master of small and medium enterprise management degree program. And in the hispanophone Caribbean, the Babson College Successful Transgenerational Entrepreneurship Practices (STEP) project includes universities in Puerto Rico and the Dominican Republic and a group of participant business families in those countries, one of the outcomes of which is the generation of case studies, which will now stand alongside Prof. and FFI Fellow Ernesto Poza’s well-known case study of Grupo Ferré Rangel, the Puerto Rican business family dynasty [4].

In a related development which bridges the arenas of education and praxis, there is increasing evidence regionally of collaboration between the financial services sector and local NGOs, such as Chambers of Commerce, in mounting family business forums of various sorts and this has provided opportunities for engagement by both solo practitioners and some of the “big four” consultancies operating in the region [5]. In this sphere, the Private Sector Organisation of Jamaica (PSOJ) and its Fambiz Project is particularly notable for both the research that it has supported and the training that it has been offering, in keeping with its mandate to increase the competitiveness and sustainability of Jamaica’s small and medium-sized family-owned businesses with the aim, ultimately, of increasing multigenerational sustainability.

Two Basic Constraints

The accumulating body of research suggests that in the Caribbean, as elsewhere, the critical boundary of family business inheres in two basic constraints – succession induced by generational changes, and limited managerial and financial resources. And there are policy implications in this regard, for – as Williams and Jones (2010) point out in their study of factors associated with longevity of small, family-owned firms in Jamaica – “if small firms are to be the main engine for economic growth and prosperity of Caribbean nations, as most policy-makers generally espouse, then these firms will have to have a longer life span; the mortality rate [of family businesses in the Caribbean] has to be lowered” [6]. And it becomes critical, to underscore Jamaica’s Fambiz’s position mentioned earlier, that appropriate technical support be provided to facilitate enterprise sustainability.

Interestingly, a recent regional survey and “Strategy for Development of the Caribbean Management Consulting Industry” [7], of which family enterprise consulting is a part, also lays emphasis on the need for technical support for the management consulting sector in the form of “tailored business development services”, including, crucially, marketing support. The study, which looked at both the supply and demand sides of the Caribbean management consulting sector, was based on survey findings from the Bahamas, Barbados, the Dominican Republic, Jamaica, Martinique, St Lucia, and Trinidad and Tobago. The resulting industry profile [7, p. 35] of management consulting in the Caribbean broadly can usefully inform family enterprise advisory practitioners in this market as well:

1. On the demand side, there is a two-tiered market for management consulting with a weak middle that prevents a large number of firms from moving up the consulting value chain. This results in a bottleneck for firms at the lower, in value terms, end of the market.

2. The supply side of the industry is dominated by small firms of varying expertise. A minority of these firms are successful consulting practices whereas the vast majority struggle to be profitable.

3. Removing the bottleneck and facilitating graduation from small scale or subsistence consulting will require the following action on the demand side and the supply side of the market:

• Demand side: Development of the MSME market for strategy consulting. This will widen the bottleneck to facilitate the passage of firms up the value chain.
• Supply side: Development of business support services that reflect the varied needs of regional consulting firms. This will equip firms with the tools they need to climb the value chain themselves.

4. To bridge the supply demand gaps and open up opportunities, a central organisation will need to take the lead in coordinating and implementing action.

Some Observations

This general profile of the Caribbean management consulting market prompts a couple of observations regarding family enterprise consulting more specifically.

Annette Rahael in her study of family business consulting in Trinidad and Tobago notes that while local family businesses do engage a variety of professionals from a range of disciplines to provide advisory services, there appears to be some disinclination or reluctance on the part of some professionals (lawyers and accountants are particularly mentioned anecdotally) to engage in the often murky arena of family business systems [8, p. 282]. This is also borne out by my own experience in respect of SMEs in the British Virgin Islands, where I live.

Moreover, I venture to say that recourse to advisory services in this sector tends to take place and to be delivered in functional silos with little or no multidisciplinary collaboration. Relatedly, the regional survey found that the top three areas of procurement by consulting segment were human resources, organizational development and IT strategy with segments more closely associated with family business consulting – business strategy, corporate finance and business planning – lagging behind. A possible explanation might be discerned in the data of the survey, which found that small business owners in particular “often feel that they know their business better than any external expert ever could and therefore are better positioned to guide its strategic development, negating the need to pay someone else to do so“ [7, p. 12]. This underscores both the necessity – and challenge – for family enterprise consultants wishing to serve this market to develop creative ways to engage in multidisciplinary interventions, often in collaboration with existing trusted advisors such as lawyers and accountants who may also serve as gatekeepers.

Closing Thoughts

I close by adverting to the findings of the regional survey with regard to the relative levels of significance ascribed to various credentials in consultant selection and note that professional accreditations and certifications (the Certified Management Consultant, CMC – the designation awarded by one of the sponsors of the study – was especially highlighted) are considered more important than academic degrees by themselves. “It shows that the market has a desire for assurances of quality that come with professional certifications” [7, p.14]. Which, in a sense, brings my narrative full circle, for a decade ago, there was only one person in the region who held the FFI’s professional CFBA designation, and now there are some eleven persons holding FFI professional designations in family business and/or wealth management advising throughout the region, from the Bahamas in the North to Trinidad and Tobago in the South. The evolving context of family business consulting in the Caribbean, manifested not least by the growing emphasis and concern in respect of the quality assurance which professional credentials such as those awarded by the Family Firm Institute confers augers well for the continued development, presence and contribution of FFI and its members to the sustainability and continuity of family enterprise in the region.

Notes and References

[1] Caribbean management consulting survey.

[2] Nicholson, Lawrence, Densil Williams, and Maxine Garvey (2007). Succession Planning in Ethnic Family-Owned Businesses: Evidence from Jamaica. Paper presented at the International Conference of the Institute for Small Business & Entrepreneurship, Glasgow, Scotland.

[3] Managing the Family Business [UWI master’s degree course] – https://lokjackgsb.edu.tt/msmem/about-the-programme/programme-content/8-10-managing-the-family-business.html

[4] The Ferré Media Group Case Study (2004). In Ernesto Poza, Family Business. Ohio: Thomson/South-Western

[5] KPMG Hosts a Family Business Succession Planning Seminar [in Barbados, Grenada, Guyana and Trinidad and Tobago ]- https://www.kpmg.com/tt/en/issuesandinsights/upcoming-latest%20events/pages/familybusinesssuccessionplanningseminar.aspx

[6] Williams, Densil and Oniel Jones (2010). Factors Associated with Longevity of Small, Family-Owned Firms [in Jamaica]. International Journal of Entrepreneurship, Annual, Volume 14.

[7] Caribbean Management Consulting Industry Survey: Strategy for Development of the Caribbean Management Consulting Industry (2010). Nathan EME Ltd. Prepared for the Caribbean Institute of Certified Management Consultants and the Caribbean Export Development Agency.

[8] Rahael, Annette (2006), Trinidad and Tobago. In Florence Kaslow, Handbook of Family Business and Family Business Consultation: A Global Perspective. New York: International Business Press.

About the contributor:

Michael E. O’Neal is senior research fellow at Island Resources Foundation and a family member of Joma Properties Ltd., in the British Virgin Islands. Michael holds the Certificate in Family Business Advising and will receive Fellow status at the global conference in October. Michael can be reached at moneal@surfbvi.com.