Brave face of fam­ily feuds

For­tunes don’t come easy, so when rel­a­tives are in­volved it is worth heed­ing ad­vice, finds Ron Clark

The Herald Business - - Sme Focus -

BLOOD is cer­tainly thicker than wa­ter, which per­haps ex­plains why it makes such a mess when it is spilled. And nowhere is there more po­ten­tial for the knives to come out than in fam­ily busi­nesses, which ac­count for 73% of Scot­tish com­pa­nies and 50% of the pri­vate sec­tor work­force in Scot­land – as well as a quar­ter of the top 100 largest Euro­pean busi­nesses.

The re­ceived wis­dom is that own­ers, di­rec­tors and share­hold­ers of fam­ily busi­nesses should avoid per­sonal feud­ing at all costs and smooth over any dis­putes with the sweet syrup of col­lab­o­ra­tion and co-op­er­a­tion.

The fact is that most of them do. They con­sciously erect struc­tures and sys­tems to purge the danger­ous in­fec­tion of emo­tion from de­ci­sion-mak­ing. Like aero­planes, you only re­ally hear about the ones that crash.

How­ever, when they do, dis­putes which in the main­stream cor­po­rate world would be dealt with by a few ju­di­cious sack­ings can spill over into snarling, back­bit­ing, long-last­ing vendet­tas. While th­ese are a great spec­ta­tor sport for out­siders, they can do ir­repara­ble dam­age to the busi­ness.

The leg­endary Nar­dini ice cream fam­ily of Largs were a case in point a few years ago. When an out­sider was brought in to help turn the busi­ness around, it sparked a bit­ter dis­pute which drove broth­ers Aldo and Peter ir­re­vo­ca­bly apart and alien­ated other fam­ily mem­bers.

The out­sider, lo­cal man David Hendry, said at the time: “There were just too many peo­ple at the trough. There were too many dif­fer­ences ... and too many peo­ple pulling in dif­fer­ent di­rec­tions.”

Vet­eran busi­ness­man Ray­mond Miquel cer­tainly found him­self go­ing in a dif­fer­ent di­rec­tion from his son Clive, who he had brought on to the board of mac­a­roon bar maker Lees – out of the door, in fact.

Miquel, who made his name at whisky maker Arthur Bell and Belhaven Brew­ery, con­tin­ued with a ma­jor dis­agree­ment over strat­egy in a board­room rift which put fa­ther and son on op­po­site sides and, as a re­sult, was told un­equiv­o­cally to take the long walk – al­beit with com­pen­sa­tion of more than £200,000.

Suc­ces­sion has al­ways been a thorny is­sue in fam­ily con­cerns. As Amer­i­can fam­ily busi­ness le­gend Leon A Danco put it, many com­pany founders view re­tire­ment as slot­ting in some­where be­tween cas­tra­tion and eu­thana­sia.

And some fam­ily bat­tles go right down the gen­er­a­tions. Gina Rine­hart, the min­ing heiress and Aus­tralia’s rich­est woman, whose for­tune is north of £29 bil­lion, bat­tled ex­ten­sively with her fa­ther Lang Han­cock be­fore be­com­ing em­broiled in a vit­ri­olic and long-run­ning le­gal bat­tle with her chil­dren over con­trol of the Han­cock Trust.

Deal­ing with in­ter­nal fam­ily is­sues within the con­fines of a busi­ness is a skill set of which Lisa Barry and her brother Marc have had 20 years ex­pe­ri­ence. She is man­ag­ing di­rec­tor and he is di­rec­tor of stair lifts and mo­bil­ity equip­ment com­pa­nies SSL Ac­cess and Stair­lifts Scot­land, which em­ploys 20 peo­ple in the East End of Glas­gow. The com­pany was founded by her mother Morna, who still works in it along with Marc’s wife Linda.

Lisa Barry said: “The ad­van­tages of work­ing with fam­ily in­clude in­her­ent trust and the re­li­a­bil­ity fac­tor. You don’t have to ex­plain your, or their, re­ac­tions be­cause you know them so well.

“How­ever, the busi­ness can in­vade other fam­ily func­tions if you let it and you need to be very self-dis­ci­plined and group-dis­ci­plined so that doesn’t hap­pen – 20 years down the line, it is a lot eas­ier for us, and that comes from ex­pe­ri­ence, as well as learn­ing tech­niques and strate­gies to han­dle it.

“It’s amaz­ing what can up­set fam­ily mem­bers com­pared to dis­putes in a nor­mal busi­ness. How­ever, we are tremen­dously strong: we are not glued to­gether by profit-seek­ing. In­stead, it’s to do with sup­port­ing each other and keep­ing our busi­ness sus­tain­able be­cause there are so many of us in­volved in it.

‘IT’S AMAZ­ING WHAT UP­SETS FAM­ILY MEM­BERS COM­PARED TO DIS­PUTES IN A NOR­MAL BUSI­NESS’

“That has con­sid­er­able ap­peal to cus­tomers. There are some hugely suc­cess­ful fam­ily busi­nesses such as John­son & John­son and Grant’s Whisky, and of­ten when fam­i­lies have come out of the busi­ness, the en­ter­prises have lost some of their in­her­ent strength.”

Martin Ste­pek, chief ex­ec­u­tive of the Scot­tish Fam­ily Busi­ness As­so­ci­a­tion, has been up close to more fam­ily busi­ness dis­putes than most. He pointed out that they can be cor­ro­sive, but with a bit of thought, they can be avoided.

He said: “A fam­ily I know of sacked their son as man­ag­ing di­rec­tor – the fa­ther still had all the shares de­spite hav­ing re­tired from work­ing in the busi­ness – and re­placed the son with a non-fam­ily friend.

“The fam­ily re­main com­pletely di­vided some 10 years on with one half not talk­ing to the other. The busi­ness col­lapsed as a re­sult of the en­mity and was sold for a pit­tance com­pared to its pre­vi­ous value.

“On the other hand, I know of sev­eral suc­cess­ful sec­ond gen­er­a­tion fam­ily busi­nesses which are co-owned and run by sib­lings. They used to squab­ble all the time and the is­sue was re­solved by giv­ing each one shared power but re­spon­si­bil­ity for en­tirely sep­a­rate and au­ton­o­mous parts of the busi­ness, thus do­ing away with the need for much con­fronta­tion.”

Ste­pek agreed with Barry that the ad­van­tages of fam­ily are im­plicit trust and com­mit­ment, lead­ing to quicker and sim­pler de­ci­sion-mak­ing.

The disad­van­tages in­clude as­sum­ing you know what the other per­son is think­ing be­cause you have known them all their life and not re­tain­ing the nor­mal pro­fes­sional cour­te­sies.

He coun­selled against em­ploy­ing sons or daugh­ters un­less they have proved them­selves out­side the busi­ness and rec­om­mended hir­ing an out­side fa­cil­i­ta­tor along the lines of con­siglere Tom Ha­gen in The God­fa­ther.

Ste­pek said: “Mostly it’s a mat­ter of rais­ing aware­ness that dis­putes are a nor­mal, in­her­ent ten­dency in fam­ily busi­nesses, then train­ing in good com­mu­ni­ca­tion and clear think­ing to re­solve them.”

The oil busi­ness was far from slick for the Ewings in

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Martin Ste­pek ad­vises own­ers to look at fam­ily mem­bers’ skills be­fore ap­point­ing them

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