As part of the IFERA series on “Family Businesses in Times of Crisis”, we are pleased to share with you the interview of Rania Labaki, associate professor and director of EDHEC Family Business Centre, with Alessandra Nishimura, third generation member of the shareholders council and head of family governance of Jacto Group. With a history that started in 1948 in Brazil, Jacto is currently present in more than 100 countries. Its activities cover logistics, health care, industrial cleaning, polymer processing, manufacturing high-technology agricultural equipment and machinery, portable manual and battery-operated equipment, and innovative solutions for precision agriculture.
The COVID-19 pandemic had a ripple effect on the world economies and societies. How has the family business been particularly impacted?
In Brazil, our businesses have first shot down in March for around two weeks. As we operate in the “essentials” industries, such as food, logistics and health, our businesses re-opened while facing the challenge of ensuring safety conditions for our employees. We operate in different States in Brazil and in other countries such as Argentina and Thailand and we have commercial offices in the US and Mexico. So, when the Covid-19 hit we had to think both locally and globally. We had to adapt the measures depending on the evolution of the pandemic in each location.
At the same time, while we know of some industries hugely impacted by the crisis, our health and Agri businesses were impacted to a lesser extent and in some cases flourished with an increasing demand. So, our focus was really to decrease the impact of the crisis as much as possible on our employees.
In addition, a past economic crisis taught us the advantages of being debt-free: “We don’t take money to grow; we grow with what we have”. This certainly makes it easier for us to go through the current crisis.
On the family side, we have also learned about the importance of a united family. This crisis reiterated that and had a positive impact on the frequency and quality of interactions among and across generations.
How did these changes translate into initiatives or strategies?
Dealing with the unknown is the hardest thing. Usually, we take decisions based on information that is reliable. We first investigated how companies in other countries were handling the crisis. As shareholders, we have put together a crisis committee that met on a weekly basis, then bi-monthly.
Our priority was to provide support to employees and to ensure their safety rather than the continuity of the activities. We started even to consider these questions prior to the lockdown. During the two weeks in lockdown, we created many videos and manual guides and banners for the factories to share information that we trust. These included explanations on the steps to follow starting from the time the employee leaves home until reaching the workplace and the behaviors to follow at work. All the material was translated in the country’s language and disseminated through our social media platforms.
We also did polls to check whether our employees would feel safe to come to work, by measuring their emotional level. If they were not feeling safe, we would not obligate them to come. In Brazil, most of them felt safe given that our locations were poorly affected by Covid-19 as compared to other places in Brazil and other countries. In the US for example, we had employees working from home whenever their job permits.
Family businesses are known for their values of social responsibility, acting as ambassadors of the territories in which they are rooted. How did these manifest themselves in your country?
We are indeed very engaged in the community, locally and throughout Brazil. We did look after our communities by donating disinfectant sprays as well as sanitizing material to use at home and in hospitals. We used our machines and equipment, originally employed for agriculture, to carry the liquids and alcoholic gels. In a way, we also turned the traditional negative view of our spraying machines on crops into a more positive one against Covid-19.
We have a foundation providing elementary and high schools which had to close while shifting quickly online. We are still adjusting as we never had such an experience before. This allowed us to learn how to better work together to organize the teaching material in a time where this online experience poses a challenge for parents. Besides the foundation, we have a volunteer program supporting elderly women to do extra activities outside home, such as ceramic or greenhouse projects. We also have an “oasis” which is a place where children from 4 to 18-year-old can learn and practice different activities such as arts, music, dance, and sports. We have also a Family Development Institute sponsoring and providing workshops for better families, such as strengthening couples’ relationships, preparing the arrival of a child, parenting, managing household financials, career orientation for the children, youth, and adults.
Many of our volunteer activities were based on in person group work activities. With Covid-19, we had to change them to online mode.
The past months gave your family business a good opportunity to stop and reflect. How is it possible to leverage this crisis as an opportunity and prepare for the post-crisis phase, in line with medium or long-term challenges the family business will be facing?
Business diversification is one of the future options that could be sought of following these crisis times. Digitalization brings also new opportunities after being considered as a challenge in the past. So, the future presents a good opportunity to leverage digitalization both for the business and the family.
On the business level, the crisis showed us that working from home works well. To protect the employees from overworking, we have set up our communication system, such as WhatsApp, to stop at 6 PM. We can now also consider reducing the onsite space, with smaller plants or factories, and perhaps providing more jobs from anywhere which could be as efficient.
On the family level, our meetings were always done in person as the older generation was skeptical about holding them online. Family members are dispersed geographical, so our meetings where sometimes not fully attended. When the Covid-19 hit, the online meeting alternative was considered more seriously. This opened a new door for the family and allowed more members to attend. These meetings went amazingly well and were more frequent. We have even held our retreat online. The third generation is now working together with the other generations on taking care of the legacy that was passed on to us to the next 100 years and on involving and developing the fourth generation.
Family members need to find a balance so when a crisis hits, they can make decisions in the name of “we” rather than “I”. For this endeavor, we have already several governance practices in place.
Going back to my grandmother, she was the wisest person making a difference by managing relationships and emotions while my grandfather was running the business. She has originally set up the ritual of family gatherings on Sundays that we adapted to the changing family structure over time. In a way, I took over as the Chief Emotional Officer of the family, even operating via digital platforms with Covid-19. We also hold a family retreat once a year with different themes. We have themed newsletters and the “Global Report Integrated” to communicate about the news and actions relative to the family, the business and the foundation. We have developed a relational covenant, a kind of agreement that defines the rules of behavior and attitudes expected from family members, to keep the family emotional health.
When a crisis comes, we know that “if the family is not in peace, the shareholders are not in peace and cannot solve the business issues”. A good governance structure provides the right platform to talk about difficult things and bring peace to the family and to the business. Still, family governance does not bear its fruits by magic. It is a non-stop work on challenges to overcome.