Succession in family businesses: How SASCO Group went from one generation to the next

Tarek and Alaa Sryo (Photo courtesy of Endeavor Egypt)

Established in 1975, SASCO Group is a family business currently run by second-generation brothers and Endeavor Entrepreneurs Tarek and Alaa Sryo. Today, the company has five factories, each with a different production line in the stationary sector.

In collaboration with Endeavor Egypt, Business Forward sat down with the brothers to find out more about succession planning in SASCO Group, the firm’s restructuring process, transitions management and inter-generational dynamics.

Q: How did you start getting involved in the business?
A: The passion for the business came from our father involving us at the beginning, mainly in the design process. We had a small studio in the factory and we used to go there on Saturdays while we were still enrolled in school and used to help design notebooks. It was very rewarding for us to see our classmates carrying around the notebooks we had designed. This was the first thing that emotionally tied us to the family business.

Later, when we first joined the business after graduation, we didn’t have an office or position at the company at the beginning; we used to sit wherever we could. That’s when Tarek found his passion in product development, sales and marketing, and Alaa got into finance and production. We divided the work amongst us based on where to best allocate our input.

The passion for the business came from our father involving us at the beginning

What was the main challenge you faced during the succession period?
Proving ourselves and meeting expectations set for us. To address this, we looked at what the company had and how we could take it to the next level and so far, it has proven successful. Initially, we were working under the Reynolds brand, but now we came up with our own brand that has surpassed the sales rates of Reynolds in the market. Also, the company’s business model has always been B2B, operating as a wholesale company, but now we decided to sell directly to retail. This completely turned the company upside down. The cost for us is higher now, but in the long-term, we will be in control of our own distribution. At the beginning, our father did not understand what we were doing, but eventually, he got it.

How did you undertake the restructuring process of the firm?
When you are two partners, you need to complement each other. We wanted to take SASCO to the next level, so we halted the company for a bit and sought eye-opening experiences through going to entities like Endeavor Egypt and consultancy firms to broaden our perspective.

The first thing we needed to do was restructure the team, which is very hard in a family business that has been around for 50 years. We had to change some of the positions and hire a lot of new people. This is very critical because someone who has been working in a certain way and within a specific comfort zone is unlikely to change the way they work when you tell them to. We maneuvered it well – psychologically and financially.

The first thing we needed to do was restructure the team

Through the restructuring and new work processes we are implementing, we realized that some employees were not actually doing anything or were unqualified for the positions they held. But we knew that this would happen, so naturally our turnover is very high at the moment. Currently, the company has 800 employees and is expected to reach 1,000 at the end of next year.

In parallel, we’re expanding in the notebooks, pens and filing verticals, and this – too – requires new hires, machinery and production lines.

What is your father’s role in the company today?
Our father is currently the chairman of the company. He’s not involved in the day-to-day operations at all, but rather in the bigger picture. It took him some time to let go and give us the reins, but we were lucky because he is phenomenal in that regard. Other family businesses have a lot of problems amongst generations but we were very lucky and he’s comfortable now so he gives us a lot of space. Over the years and given our strong involvement from very early on, he also saw how we operated within the organization and got feedback from the people working here on how we were performing and acting, so he always kept a close eye on us.

The resistance doesn’t come during the launch of a new product

How resistant was the previous family generation to the restructuring plan?
The resistance doesn’t come during the launch of a new product but rather in the governance and the process of the company’s business. The main resistance from the first generation came when we started changing the ‘old guard’. It got quite emotional there, and that’s the worst part of a family business. However, at the end of the day we are a family so even if we disagree, there will be a conflict but once we’re out of the office, we go back to being a family.

How involved is the next generation of the family?
We – as partners – want to pull out of the operations process in the company, which is why we’re hiring as well and why we put a third partner, who is not blood-related, in charge of operations.

With the current structure, it is completely up to any member of the next family generation to get involved. We’re trying to take the company to an institutional level and we do not want to dictate to our children that they have to take over one day. We also do not want to depend on that. We were lucky that we always enjoyed the work, but our children may be different. We’re just focusing on building a strong base for the company for it to remain a backbone of the family, but whether it is later managed by a family member or someone else, that doesn’t really matter.

What ensures a successful succession plan?
It’s like a surgery. You have to be very slow and consider every little detail. It  will never go well unless there is a clear understanding among all stakeholders. If there is only one person that is going in a different direction, it will not go well. Communication amongst the family and employees is very important. And once the succession takes place, the previous generation still needs to be involved in the changes.

What is the main difference between running a startup and running a family business?
A family business is like a mountain that already stands there and that needs to be fixed from within without collapsing. A startup is built from the ground up, so maneuvering is easier. Also, the word about any minor change in a family business spreads like wildfire; it is very sensitive.

Since we are the ones leading the change, we are accountable and responsible for any hiccup, and some lifelong employees are expecting us to meet their expectations.

What is the importance of family businesses for the economy?
Family businesses in the region are the most important and there needs to be more awareness about how family businesses need to be supported differently because they grow and push the economy forward. In China and Japan, the governments focused on family businesses and worked with them so they grew to another level.

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