The better the question
How do family firms foster a culture of ownership?
Succession planning unlocked a new management structure at Baterias Moura and united its growing number of family stakeholders.
The remarkable rise of battery manufacturer Baterias Moura is a South American success story. From its beginnings in a remote town with just a single car and no power or running water, Baterias Moura has risen to become one of Brazil’s most improbable triumphs. A dream that began as a backyard project for chemical engineers and dynamic husband and wife team, Edson and Conceição Moura, is an unprecedented success 65 years later. Today, the firm they founded is the leading manufacturer of car batteries in South America, producing 10 million units a year and employing 6,500 employees, including 3,200 locally.
The firm has achieved international renown, putting the small town of Belo Jardim in north-eastern Brazil on the map and collecting a stack of awards for the supply of batteries to many of the world’s leading automotive brands. But success also came with its own challenges. The family’s second generation, who were responsible for establishing the firm’s international reputation for reliability and quality, were concerned that the transition to a new generation was fraught with risk. While their father’s wish was for his grandchildren to run the business on a day-to-day basis, brothers Sérgio, Pedro and Edson and son-in-law Paulo Sales, reconsidered the approach. With a growing family between them that today numbers 14 grandchildren and 21 great-grandchildren, they considered whether the outcome could be “chaos.”
Their fears were justified. In Brazil, family firms are in the majority, although just one in 10 worldwide survives to the third generation. “The first generation starts a business, the second generation runs it, and the third generation ruins it” goes the saying, while in Brazil there is a similar expression: “Rich father, noble son, poor grandson.”
With their business solid and growing, but in the knowledge that many family business failures take place after the handover to a new generation, the Moura family turned to EY to negotiate a new path. With the company’s third generation also spanning a 24-year age range, Baterias Moura’s four business leaders reached a bold decision. The next generation would be prohibited from taking up roles in the day-to-day management of the company. With the decision made, as the time to begin the transition approached, the firm called on EY to help the generations work together as family board members, while granting the firm’s management team greater autonomy.
The better the answer
Turning a potential succession crisis into an advantage
In developing the collective governance skills of the next generation, the Moura family also empowered a trusted team of employees.
“We knew it wasn’t possible for us to make the transition to the new generation happen by ourselves. In fact, it was very important, we didn’t do it,” says Sérgio Moura, the Chairman of the manufacturing company’s board. Instead, the company called on Cristiane Amaral, EY Consumer Products & Retail leader for Latin America.
Succession planning is often overlooked in family business discussions because of the sensitivity of the subject matter. As part of the engagement, EY ensured all discussions among the wider family group were handled discretely and carefully. “Succession is a difficult issue. There are often family taboos and topics that are difficult to discuss,” says Mariana Moura, a third generation family member and leader of the Family Council in the firm, and now a consultant on family business governance.
“Family members can easily become concerned about a loss of power and it can be challenging emotionally, but you need to persevere and move on,” she says.
A three-step approach was developed and executed by EY to facilitate the transition. This included educating and involving younger family members, building a new corporate governance structure, and employee empowerment. Younger family members were provided with training in how to enhance the purpose, strategy, performance and long-term value of the company, to be prepared to take on board leadership roles in the future. Over time, the firm also developed a new corporate governance structure with three boards, including one each for the firm’s manufacturing and distribution businesses, as well as a Board of Shareholders and a Family Council.
As part of the new corporate governance model family members were ruled out of management roles. This opened up a new array of career options for the third generation, enabling them to pursue their chosen careers, rather than be obliged to join the family business. The change has subsequently seen family members achieve considerable professional success in their chosen professions including medicine, law, business governance, the finance and credit industry and dentistry and psychiatry. “If you’ve grown up with the expectation of working in the family business, it’s liberating to be able to choose your own career,” Mariana says. “It changed our outlook and left us free to become more flexible as individuals and to develop a common vision of the future as a group.”
If you’ve grown up with the expectation of working in the family business, it’s liberating to be able to choose your own career.
Manuela Moura da Fonte led the development workstream for the family as coordinator of the education committee. Now a coordinator of the firm’s People and Culture committee and a member of both business boards, she says, “I knew it was important to create a sense of belonging and an integration with the company and EY was incredibly valuable and impartial. That was vital, because in the decision-making process you have to understand different perspectives from differing generations.”
To align on a combined vision for the future, the family’s younger members also joined together with members of the second generation in a strategic project called Moura 2030. This project set out to anticipate the future of the business, its products and its evolving governance model, including the transition to the electrification of transport and the development, manufacture and marketing of lithium batteries.
Today, four members of the third generation sit on the firm’s business boards as well as leading two committees that support the boards. Manuela, now a managing partner in one of Brazil’s leading law firms, recalls, “In some ways we were lucky because our founders were not centralizing people,” she says. “One of the advantages of the culture at Moura is that we’re very good at working in teams on all levels.”
The better the world works
A successful generational transition can unlock future success
By detaching the founding family from day-to-day management, Baterias Moura encouraged a wider sense of belonging amongst its employees.
“In making the transition to the future and the third generation, we wanted to share what Baterias Moura had accomplished and encourage a culture where the company not only belongs to family members, but to everyone,” says Paulo Sales, Chairman of Baterias RM, the distribution firm’s board.
“We wanted to create a core value of an ‘ownership spirit’. A structure where everyone thinks as owners. Once you put our logo on a battery it stops being a commodity. It has 65 years of history and everybody involved with the company contributes to what the firm is now,” he adds.
Today, the family firm often leads the lists of the longest lived and most successful family enterprises. And although the transition to the third generation isn’t yet complete, the evolution to a new governance model has had a positive impact on Baterias Moura’s bottom line.
We wanted to share what Baterias Moura had accomplished and encourage a culture where the company not only belongs to family members, but to everyone.
Revenue has increased six-fold over the past 14 years reaching R$2 billion (US$380m) in 2021.
“We’ve been able to make everyone with the brand transmit what Moura is about, its culture and its energy,” says Paulo.
Sérgio adds, “It took us 20 years to educate and prepare the professionals from within the company to become the current managers. Today, we have 17 directors, who were all hired when they were very young at 22 and 23 years old. They are all still here without exception. We trained them and now they run the business very well.”
Now, Baterias Moura has a management team that knows the company and how the business is run and family members who hold the values and the long-term business strategy.
“That’s the benefit. It makes me very optimistic about the future,” says Sérgio.
The views of third parties set out in this publication are not necessarily the views of the global EY organization or its member firms. Moreover, they should be seen in the context of the time they were made.
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