Ensuring 100 years of unity and growth (part 1)

Every family business comprises a mixture of individuals who are more likely to hold different opinions on a particular matter

What comprises natural conflict? I’ll start with the most pressing issues that are regularly amplified in my governance engagements in Asia.

Generational transition and the ensuing conflict between generations can cause irreversible damage to relationships

All too often, the senior generation leaders believe they have done a great deal in generating wealth for the next generation only to falter in the end game because the “passing of the torch” was never planned well. There is no success without succession.

Family members between generations have different values and varying degrees of personal and business goals

When these goals are not articulated in a proper forum or is not aligned with the overarching values of the family, this can transform into unnecessary stress and open the flood gates for more conflict situations.

Personalities are totally different

When ignored, set aside or worse, a bad behavior is rewarded by the business leader, this can naturally lead to intense rivalries. The result can cause severe harm, not just to the business, but in relationships all the way to the succeeding generations.

Family member expectations related to employment, entitlement, perks, promotions and ownership vary

These expectations must be addressed immediately. If the business leader continues to set this aside, it will negatively impact family and business harmony and challenge the long-term survival of the business.

No employment entry and exit rules

Expect regular fireworks when any family member crosses over from the family to the business without clarity. Who gets to work? Who gets what position? Promotion? Titles? Perks? In-law employment? Treatment of family member, as an employee or as an owner? When the business leader ignores these issues and does not initiate a formal employment process, your natural tendency to employ family members by virtue of bloodline can turn into a nightmare.

These are natural conflicts in family owning businesses. Every family business comprises a mixture of individuals who are more likely to hold different opinions on a particular matter. For some families, disagreements can either be strategic or tactical which is acceptable in the ordinary course of preparing your plans for the future.

But in really difficult cases, some of the conflicts I have resolved comes from deep-seated resentment and anger dating back from years of indifference and neglect.

When these issues continue to be ignored or not managed, expect tension to build up causing many business failures and untold misery.

On the bright side, I have identified Asia’s oldest family-owned businesses that have breached 100 years. What are the “secrets” to their longevity? What made them overcome crisis after crisis? What made them accomplish so much?

In the Philippines, I can only count a handful of family-owned businesses that are still operating today. The most enduring of them all is the family behind the 184- year-old Ayala Group of Companies. The group was founded in 1834 and is presently under the care of the eighth generation stewards, Jaime and Fernando Zobel de Ayala.

Out of a family of seven, they were both handpicked to co-lead the conglomerate. With a target EBITDA of more than $1 billion this year, they must be doing something worth emulating.

Presently, three ninth generation family members are occupying positions in different industries to prepare them for future leadership. But just like ordinary employees, these young descendants have to go through the rigors of occupying entry-level positions to gain the experience and think like professionals with accountability so they can earn the respect of their non-family co-employees.

To be continued...