Inherited wealth and the Cains and Abels

By: Prof. Enrique Soriano

THE book of Genesis provides a virtual running commentary on sibling rivalry and poor succession planning. Cain and Abel are rivals because Cain is jealous of Abel’s favored status in the eyes of God. Consequently, Cain murders Abel. These two biblical brothers birthed the family feud. According to the story in Chapter 4 of Genesis, when God favored Abel’s sheep offering over Cain’s garden sacrifice, an enraged Cain killed his brother, thus introducing murder to the world.

The sibling relationship is the longest relationship of life. They enter our lives—without our choice—long before our spouses and usually they outlive our parents. In a GoMentor article related to the topic, “siblings generally spend more time together during childhood than they do with parents. The sibling bond is often complicated and is influenced by factors such as parental treatment, birth order, personality, and people and experiences outside the family.

Sibling rivalry is particularly intense when children are very close in age and of the same gender and/or where one or both children are intellectually gifted. It usually begins in childhood and can continue throughout the siblings’ life.”  If the parents and the siblings do not take steps to resolve the issues early, the likelihood of conflict will manifest into adulthood.

 

The World’s Most Famous Sibling Rivalry

In a Time magazine report about sibling rivalry, two of the world’s most renowned shoe companies were birthed from a case of bad blood between siblings. In the 1920s, German brothers Adolf and Rudolf Dassler launched a shoe company together in their mother’s laundry room. Their business boomed after Dassler shoes adorned the feet of gold-medal-winning Olympians in the 1930s. But as their sales spiked, it soon became apparent that the siblings had different personalities, and tensions between the two came to a boiling point during World War II.

World War II proved the breaking point in their relationship. While no one is sure what caused the riff, it was said to be a result of miscommunication. After an Allied bomb attack, Adolf and his wife took cover in a bomb shelter already occupied by Rudolf and his family. “The dirty bastards are back again,” Adolf said, apparently referring to the planes, but Rudolf thought the comment was an attack against his family.

The brothers split in 1948, and Rudolf Dassler founded the company that would become Puma. Adi formally registered Adidas in 1949. It’s said that the brothers never spoke again, and their bitter rivalry even divided the town, where they built their competing factories on the opposite banks of the town’s river. Rudolf died in 1974 at age 76, Adolf in 1977 at 78 and never reconciled. They were reportedly even buried at opposite ends of the same cemetery.

It is natural for siblings to vie for senior generation’s attention. However, if these rivalries continue without defining the roles and responsibilities in the family business these can result into intense, bitter conflicts

In the case of the Yanson/Ceres/Vallacar family dispute, among the many issues that caused the rift, sibling rivalry appears to be the major head in this brewing conflict. Sibling rivalry created competition and animosity among siblings and from a business perspective, the Yanson siblings who worked in management may have access to the purse over and beyond their salaries. They have signing authority on practically all forms of purchase orders, capex budgets and special allocations.   Additionally, those who worked in the business are often reluctant to share their salary level and perks with the passive shareholders. Unless these financial arrangements are well defined, open and transparent and constantly subject to audit, there is inevitable finger pointing, doubt and mistrust.  Worse, when there is uncertainty and suspicions of wrongdoing in the manner the business is being run, the build-up of suppressed feelings mothballs into real, unimaginable disruptive often destructive conflict.

 

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This August 31, a Saturday, I will be sharing the stage at Manila Marriott with prominent Governance Leaders / family business owners in the biggest Family Business gathering in the Philippines. The public event entitled, “Can Family Run Businesses Last Forever? I will share the secrets in building 100-year old enterprises. Seats are limited. To reserve, please call Aira and register at 09228603186 or events@wongadvisory.com

 

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Prof Enrique Soriano is a Book Author, World Bank/IFC Governance Consultant, Senior Advisor of Post and Powell Singapore and the Executive Director of Wong + Bernstein Family Advisory Group, a research and consulting firm in Asia that serves family businesses and family foundations. He was formerly Chair of the Marketing Cluster at the ATENEO Graduate School of Business in Manila, and is currently a visiting Senior Fellow of the IPMI International School, Jakarta.