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Sunday, 9 September 2018

Family Businesses, a Curse or a Blessing?

There is an interesting quotation that I found recently as follows:

Children today love luxury.   They have bad manners, contempt for authority; they show disrespect for elders and love chatter in place of exercise.”

It could have been added that they think more of social media to the exclusion of pretty well everything else but it would have been an unlikely comment at the time of writing.  It was postulated by the Greek philosopher, Socrates (470-399 BCE).

There are, of course, numberless quotations on the whole subject of change/no change such as:  

What goes round, comes around.

Plus ca change, plus c’est la meme chose” (the more things change the more they stay the same)”

and so on and son o.

It struck me as significant recently when I realised with some surprise that there is a preponderance of family businesses in my Vistage CEO peer group and normally one would expect that the issues they exhibit should be much the same.

Not so, of course.  In one sense they are the same because they are generally rooted in emotional issues rather than rational thinking but in the end they cover a vast array of  issues not normally seen in a non-family business.

My group has three members who are sons of former members of Vistage groups and that says a great deal for the value and power of the peer group system.

In fact there are only four members of the group who are not involved in family businesses and even then one of them is a salaried Director of a family controlled company.

To repeat then, the issues around family businesses are almost always emotionally based and seem to be exclusive to the sector.

For example, there is the vexed issue of shareholdings especially where the father is the founder of the company and is very reluctant to give up control.

The upshot of this is the feeling by the next generation that however well they are recompensed they are still only employees.

The group has experienced a variety of issues around this problem sometimes solved quite simply and sometimes made worse by  the shareholder deciding to distribute the shares “fairly” to siblings when only one of them is actually involved in the business.

There have been some strange issues as well.  For example the major shareholder when it was suggested that a third generation of the family should join the company said that “we have enough family members in the company”.  

In another case the group member wanted to use his father as a sounding board, quite rightly, and was constantly told “You decide, you are doing a good job!”  Encouraging but not what is wanted.

These are all issues that are emotionally based with the founder often wanting to “do the right thing” and failing to understand the implications.

There are a couple of examples of iconic brands that have been almost decimated by family arguments, among them the Aldi/Lidl fracas when two brothers decided to split, successfully in the end and worse, the Gucci family that managed to send the son of the founder aged 80 to prison on tax charges.

Fear not, the vast majority of family businesses are happy and successful so where does the matter of no change/change impact?  Largely it is the need to realise that family matters should be left at the office door. If they do intrude then it must be only for the good of the business and the stakeholders, especially the workforce.

When this happens the family business can and should plan succession so that the older generation can feel needed and the next generation can feel secure.

Above all there is a constant need to try to keep emotion out of the discussions so that the family Christmas lunch will be a happy event with everyone there.

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