When Family and Business Collide!

By Prof. Enrique Soriano

Jaime 39, John 37 and Jane 34 are siblings. All married and working in the family business. They are being groomed to take over the business started by their parents. Typical of many Asian family enterprises where the eldest becomes the natural successor, Jaime will most likely assume the leadership role when his parents retire. The father has categorically made it clear that he will retire when he reaches 70.

To manage their tax exposure and upon the advice of their accountant and lawyer, the founders who are in their late 60’s have agreed that each child be given 30 percent of the stock and the remaining 10% retained by them. This ownership structure looks good on paper. But Jaime, John and Jane are not equal in either talent or commitment. Jaime is more laidback, John is aggressive and Jane is more focused on a single department and appears to be enjoying her role as a mother of four children. When they joined the business more than a decade ago, second son John had always been the one that has driven the organization forward, leading his sales team, conceptualizing new businesses, exploring new territories and spending an enormous amount of time thinking about the business. His mother even admonished him several times not to bring his work in the house but he can’t seem to stop feeling excited about the business. “In a way, it’s admirable as his level of commitment reminds me of my struggling startup days. I can say I am quite pleased with John’s performance and work ethic” his father once said.

Jaime on the other hand was mostly in the head office handling administrative work. There are times he deliberately avoids joining meetings when the venue is outside the office. He has time and again shown his dislike for field assignments and prefers clocking out at 5 pm every day. His father complained, “I would prefer Jaime showing leadership skills and not just be content sitting at his desk doing non-revenue work. On many occasions, he has demonstrated a lack of passion and a reluctance to take responsibility for the business. The managers are aware of this and it is a growing concern. Some actually wish that John be the one to succeed me when I retire. It is a dilemma for me and my wife.” As for Jane, she was assigned in the accounting department where she reported directly to her mother. That has been her role since joining the business. And every time  she is needed at home due to her motherly duties, she would drop everything during the day and never come back. The founders have tolerated this after she gave birth to her first child and she has been unfairly taking advantage of this family “privilege” to the dismay of the siblings and non-family executives.

When I had a one on one session with John, he was relieved that finally something concrete would happen. He was clearly worried that once his parents are no longer around, the business will suffer. He acknowledges the tremendous support of his father but he is scared that things will be different when “papa is gone.” He also read out a laundry list of concerns that have been troubling him for years. Among them was his unfocused brother Jaime. He calls him lazy and uncommitted. John continues, “Don’t get me wrong, I love my brother dearly, it’s just that family matters must never be a consideration in business. Business is hard work, survival and 100% focus. If we want our managers to respect us, then we should work as hard or even harder than our managers! I recognized that Jaime is a family man. I don’t question that but he must devote more time to the business. We need all hands on deck!”

To be continued…