Succession gap in Bangladeshi companies
(https://tds-images.thedailystar.net/sites/default/files/styles/big_202/public/media/api_images/2025/10/13/Opinion%20column.jpg)
Succession planning remains one of the weakest aspects of corporate governance in Bangladesh. While multinationals operating here view salaries as long-term investments in leadership pipelines, most local firms continue to treat them as costs. This difference explains why professionals in multinational corporations thrive in structured, merit-based environments, while many of their counterparts in local businesses remain underutilised and frustrated.
Over the past two decades, family-owned conglomerates in garments, cement and trading have experimented with hiring professional managers. Yet genuine success stories are rare. The main reason is the dominance of owners in daily operations. On paper, professionals may appear empowered, but in practice, most significant decisions still flow back to the owner or the family. This stifles initiative, limits professional growth, and reinforces the belief that only the owner can run the business effectively. The result is predictable: talented managers leave, often for multinationals, where decision-making structures are clearer and career progression more systematic.
The contrast with multinational joint ventures is striking. In sectors such as fast-moving consumer goods, telecommunications and cement, professionals typically run operations, while foreign or institutional shareholders focus on governance and strategic oversight. Because ownership and management are clearly separated, managers are trusted to lead and are held accountable for performance. These firms consistently attract top graduates, develop leadership talent internally and maintain competitiveness in fast-changing markets.
The role of the first generation of Bangladeshi entrepreneurs is central to understanding this dynamic. Many of today's business leaders began from modest positions -- some as traders of raw materials, others on factory floors or in small tailoring shops. Through resilience and effort, they built enterprises that came to dominate their sectors. Their strength lay in hands-on experience and instinctive market knowledge. Yet this history also created a structural challenge: when such entrepreneurs employ professionals, they often expect them to display the same level of intuition and resilience that they themselves developed over decades. For most managers, this is an impossible benchmark to meet, fuelling mistrust and disappointment. For them, it is baptism through fire.
The issue becomes sharper when businesses move to the second and third generations. In many family-run firms, successors have studied abroad at leading universities. While this education offers valuable exposure, some heirs return reluctant to join their family businesses at all, while others attempt to impose foreign management styles directly. These models often clash with local realities, whether in garments, trading or manufacturing, creating friction with long-serving employees and undermining performance.
The broader pattern is clear. Family-dominated conglomerates often struggle with succession because authority remains concentrated in founders or heirs, leaving little scope for professional managers to develop. Listed firms and multinational joint ventures, by contrast, institutionalise leadership development and maintain a clearer separation between governance and management. They are better placed to attract and retain talent, adapt to change and sustain competitiveness across generations.
For Bangladesh's private sector to sustain its momentum, a change in mindset is essential. Professional managers must be given time and freedom to grow, without being judged against the lifetime of experience of founders. Owners should focus on strategy and governance, allowing managers to handle operations. Likewise, second- and third-generation successors should not be parachuted into boardrooms but should earn their positions by working through the ranks. Global education can enrich their vision, but only when blended with local experience.
Bangladesh's first-generation entrepreneurs have already shown what can be achieved through resilience and hard work. The next challenge is to ensure these businesses endure and thrive beyond their founders. By learning from the governance practices of listed companies and joint ventures, family-owned firms can institutionalise succession planning, build leadership pipelines and preserve their legacy for future generations. Without these changes, many risk stagnation. With them, Bangladesh's homegrown firms can continue their entrepreneurial journey with greater stability and confidence.
Source: https://www.thedailystar.net/business/column/news/succession-gap-bangladeshi-companies-4008436