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BUSINESS FOR FAMILY BUSINESS: GOVERNANCE

In the many years that we have been involved in business, both

running our own,working in someone elses and advising oth-

ers on how to run theirs, we never cease to be amazed by the

plethora of initiatives, projects and plans undertaken by organi-

sations to bring about change and improve performance. We

have seen appraisals, competence models of managing perform-

ance, through to empowerment and self-managing teams. We have

been involved in outdoor management development through to

the more esoteric mind games approach to management. We have

seen fire-walking, the use of theatre, painting, poetry and even the

army used to motivate and persuade people towards better per-formance. We have seen team building, team development and

team destruction la The Office. We have seen downsizing,re-engi-

neering, total quality, Investors in People and a myriad of other

approaches from vision and mission to corporate culture and the

learning organisation. Organisations of all shapes and sizes have

embraced the change culture, spending millions chasing the elu-

sive answer, looking for the quick fix and hoping the next man-

agement fad will bring the long awaited results.

So what is it all about? Why are organisations interested in

developing people? Organisations want to achieve the best from

their employees in order to boost sales, output and profit.This is not

a comfortable habitat for (mostly male) managers charged with

ensuring maximum performance. Men do not find this stuff easy

much of it is right brai n,intui tive, creative, touchy-feely and scary.

POWERFUL RELATIONSHIP ISSUES

So what has all this got to do with families in business and more

mysteriously, what has it got to do with a Crosby Stills, Nash and

Young song written more than 30 years ago? The song says it all: it

tells us why life in a family business is so different from life in any

other form of business, particularly if you happen to be a member

of the owning and/or managing family. The song suggests its sim-

ple,dont ask questions,dont try to understand the relationship,just

know that it is based on love. Parents are often intrigued by how

closely their children resemble them, physically, emotionally and

intellectually. Children are even more horrified to think that they

may have anything in common with their parents, until well past

their 30th birthday. Parents teach their children and often in the

context of the family business children learn most, if not all of their

knowledge about the business from their parents.

In the context of a family in business,most of the change, quali-

ty, people initiatives will fall at the first or second hurdle if we don't

understand and consider the powerful relationship issues encoun-

tered when engaging with a family in business. It is within these

powerful relationships that many of the conflicts reside, particular-

ly between fathers and sons working together in business.

It is very difficult for a son to emancipate from his father (a crit-

ical task in becoming an adult),when they both work together and

the son does not have his own universe in which to mature.From a

The concept of learning is gaining currency among researchers in entrepreneurship andfamily business. So are disputes in a family business a constructive or a destructiveforce for change? Andrew Godfrey andJohn Tucker explain

CONFLICT IN THE FAMILY:GOOD FOR BUSINESS OR BAD?

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68 Sep/ Oct 2004 Families in Business

BUSINESS FOR FAMILY BUSINESS: GOVERNANCE

business perspective the son almost always has some independent

ideas that differ from the fathers, if for no other reason than a gen-

erational perspective. Given the essentially emotional nature of

family relationships, it would not be surprising if there were con-

fusion about whether a sons actions were a form of rebellion

rather than a reasoned disagreement over business issues. Sorting

though this requires some understanding of the history of the

father/son relationship,as well as the dynamics of the entire fam-

ily constellation.

Research published by Grant Thornton in Family Values in

Family Business showed that During periods of challenge or

change, families and their businesses are supported by their

belief in a set of shared values. These are sometimes described as

lived values, in contrast to espoused values, which may not

always survive the challenge. The report adds: When a familybusiness goes through change such as generational transition,old

habits and vested privileges are frequently challenged.

E mbe d de d, or lived , family values that remain intact can ,

arguably, help to sustain the business during periods of difficult

change. The challenge can also expose the distinction between

espoused values and lived values. These revelations may create

conflict. It is within conflict that values are tested and exposed to

critical appraisal.

TAKE TIME OUT TO LEARN

Families need to take time out to learn how to learn from each

other. The concept of learning is gaining increasing currency

among researchers in entrepreneurship and family business, both

as a driver of research agendas and as an emergent, integrative per-spective for understanding the dynamic nature of entrepreneur-

ship and family business management.A primary advantage of the

learning perspective is that it provides linkages between the com-

plex processes of personal and business development. There is an

emergent consensus that there is extremely complex interplay and

interdependence between these parallel processes of personal and

business development and that these are not adequately explained

within the dominant personality and process paradigms within

entrepreneurship theory and family business theory.

In these terms, the multi-generational family firm is a special

and particularly interesting context in a number of ways.Firstly, the

involvement of the founding generation is often protracted and

overlaps the involvement of younger family members, enabling a

range of possible mentoring roles. Secondly, younger generations

growing up in the family business environment enjoy a lengthyperiod of socialisation, not only into the family and society but also

into business and the specific family enterprise. Thirdly, this sociali-

sation process may be undergone within an environment where

there are powerful and explicit family expectations about future

roles in the business and perhaps eventual management succession;

on the other hand, these expectations may operate only at the sub-

tle, tacit level or indeed be non-existent.

Whatever the nature of expectations of involvement in the

family firm, it is reasonable to suggest that, compared with the

population at large, the formative experiences of children who

grow up in family firms may include protracted and extremely

complex processes of learning about business and management.

Parents

You, who are on the road

Must have a code that you can live by

And so, become yourself, because the

past is just a goodbye

Teach your children wellTheir fathers help did slowly go by

And feed them on your dreams

The one they fix, the one you're known by

Don't you ever ask them why

If they told you, you would cry

So just look at them a sigh

And know they love you.

Children

And you, of tender years

Cant know the fears

That your elders grew by

And so please help them with your needs

They seek the truth before they can die

Teach your parents well

Their childrens help will slowly go by

Feed them on your dreams

The one they fix, the one they're known by

Don't you ever ask them why

If they told you, you would cry

So just look at them and sigh

And know they love you.

Source: Crosby, Stills, Nash and Young

TEACH YOUR CHILDREN

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It is also reasonable to argue that these

experiences set them apart from people

from non-business backgrounds in terms

of the potential preparation for business

careers that their environment provides.

It is also the breeding ground for future

relationship conflicts that often emerge

when parents and children work closely

together.

WORKING WITH CONFLICT

Conflict is not something anybody enjoys

but when it occurs in a family business it

can be even more pro b l e m at i c. T h e

dynamics of a family generally mean thatsaying something critical about another

family member can be difficult so within

a family business delicate issues can be

delayed for fear of offending a family

member. Yet conflict resolution is essen-

tial if the business is to survive and a

degree of objectivity is required to do

this.Conflict need not be destructive if its

aims are beneficial to the business and

u l t i m ately all of its dependents. It is

essential therefore in family businesses to

distinguish conflicts which are personally

based from those which relate to the com-

pany. You may ostensibly be in conflictwith your brother over a decision he

made in the boardroom but is the real

reason you are annoyed the new car he

gave his wife out of company funds last

year? Conflict like this is destructive and

needs to be addressed.

The main relationships that cause con-

flict are parent/son or daughter relation-

ships, sibling rival ry, and relationships

between cousins and other relatives. Oneof the main causes of conflict between a

parent and their child is the father or

mother wanting the child to enter the

b u s i n e s s. H o w ever most parents are

reluctant to give up the reins and want to

continue to run the business and ignore

their childs desire to take control. The

ambitious child may, after years of trying

to introduce their own ideas and initia-

tive into the business, decide to leave the

business altog e t h e r. W h at the pare n t

must recognise that to encourage their

child into the business and then not allow

them to take control removes their motivation and interest and

may, ultimately, put them off the business completely. The

mature decision is to invite the child to participate in the busi-

ness and then establish a fixed period within which the parent

will step aside and allow control to pass to the next generation.

Sibling rivalry is, of course, normal in a family but in a busi-

ness in can have a corrosive impact. The most obvious example

is when more than one child wishes to take control of the fami-

ly business. A decision by a parent to promote one over the other

is difficult and frequently outside help can be used to take the

heat out of the situation.A suitable shareholding structure must

be put in place to ensure all children involved feel motivated and

rewarded for their participation in the family company. You

dont want to see your personal relationships and your business

destroyed so you must negotiate a contract which provides allsiblings with fair rewards and a motive in seeing the business

succeed. This can be done using a variety of motivational tech-

niques including share allocation, places on the board and tasks

allocated to those most suited.

Running a business with a brother or sister means that your

children will be involved in the next generation and, if you have

other brothers and sisters, their children may want to become

involved also. The problem is you may find you have around four

children keen to get involved and a further half dozen cousins.By

the following generation you may have 20 family members keen

to be involved. All are likely to believe they deserve a job in the

family business and at a senior level. It is vital to ensure that this

is resolved. Some shares can be allocated and a general review of

who owns the business and where it is going is essential. You can-not assume that a family business can be large enough to support

every member of your family. What is vital is to ensure that the

children most suited to manage the business are selected against

fair and objective criteria. Frequently it is helpful to involve a pro-

fessional adviser in this decision as it is very difficult for parents to

have to choose amongst their children.

Resolving conflict is difficult but to ensure that it is handled

smoothly you need to consider the following objectives: plan a future together

address critical issues relating to the familys involvementwith the business

articulate core values for the business

do not be put off making difficult decisions

establish continuous processes to resolve conflicts, maintain

communication and monitor progressOnly by re cognising and acting upon co n flicts can yo u

e n s u re that your family business doe s nt collapse into acrimo-

nious disputes.

Consider developing a family charter to address some of the

destructive conflicts that threaten not only the stability of the

family, but often the sustainability of the business. The process

will allow the family to learn together and embark on a journey

of exploration culminating in the production of the charter.s

ANDREW GODFREY is international director of PRIMA, the family

business consulting practice of Grant Thornton. JOHN TUCKER is

head of UK Family Business Serv i ces at Grant Thornton.

www.grant-thornton.co.uk

CONFLICT NEED NOT BE DESTRUCTIVE IF ITS AIMS

ARE BENEFICIAL TO THE BUSINESS AND DEPENDENTS