Brave face of family feuds
Fortunes don’t come easy, so when relatives are involved it is worth heeding advice, finds Ron Clark
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.”
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Martin Stepek advises owners to look at family members’ skills before appointing them