When family and business collide

Part 3

By Prof. Enrique Soriano

What are the major causes that can lead to intense family and sibling rivalries? In my personal experience mediating family conflicts in Asia, I see a pattern that appears to be a universal event:

  • The primary love language of a family revolves around money
  • Parents and worse, absentee parents are not united
  • No formal communication venue to raise issues
  • There is power struggle between the father and his children and or among the siblings themselves
  • There is tension over money
  • There is a growing hostility and feelings of unfairness between active and passive siblings
  • Unclear job descriptions, a relative or in-law working in the family business can also add fuel to the fire
  • Founder procrastinates and delays or sets aside succession planning
  • There is a lack of entry and exit rules for family members
  • Wrong ownership and shareholding structure and
  • No governance agreements like the Family Constitution and Shareholders Agreement
  • Death of the Founder

These conflicts may appear similar but every family has its own set of circumstances and qualified family consultants must resolve these issues in a unique way depending on family dynamics, culture, founder and other individual personalities involved in the drama.

When death comes knocking 

Many years ago, a common friend arranged a meeting between me and a business owner— we will call him George, mid 60’s and owns many businesses with a combined workforce of more than 7,000 employees. His wife and children including several relatives plus a handful of trusted managers that have been with him since the start (more than three decades ago) are well placed in his group of companies.

George was extremely proud of his group’s reputation especially in the communities where his businesses operate. On top of providing jobs, he was also recognized for his many philanthropic contributions benefitting many schools and medical institutions. The only problem? He was terminally ill. Terminally ill is a medical term that refers to a person who has a disease that cannot be cured and that will eventually lead to the death of the person.

“How long can you hold?” I asked as we were having tea in his house. He shook his head and stared down into his almost empty tea cup. “My doctors have given me a year or more,” he said with a sigh. “But I’m still hopeful. I really wish I can extend for five more years. That’s the reason I wanted to speak to you in person. If you can guide me and my children throughout the succession process including alignment and repairing past hurts between me and the kids and making sure my business extends to my grandchildren at least, I would be grateful. I am scared that if I am no longer around, my children will fight, disrespect their mother and compromise the business and its employees. I cannot even imagine it happening and honestly I just don’t know where to begin. That has been my biggest regret, I should have started this transition many years ago.”Visibly confused and distressed, George is struggling to come to terms with the inevitability of death. I told him we will do whatever it takes to complete our mission of preparing the next generation to be responsible stewards of his business. But I warned George, transitioning and aligning the family towards governance and succession is a journey and never an event.

In this case, it is clear that George is overly identified with his business that he can’t bear to face the harsh reality of his situation. Sadly, time was no longer on his side when we met. A few days later, we met again and this time, I explained to him my plan of intervention and provided him with a certain level of assurance. George was relieved. He was a little bit confident that he can make up for lost time and be able to face the hard family business and ownership continuity issues head-on.