Why Fights Erupt In A Family Business

Why Fights Erupt In A Family Business

By: PROF. ENRIQUE M. SORIANO IT’S one of life’s ironies that folks who love one another can end up having far more acrimonious business relations than people who are unrelated. As one popular saying goes, “Must we always hate the ones we love?” Business can bring families together or pull them apart Some of the very things at the center of a family–loyalty and love, affection and acceptance–can help a family business prosper, or doom it to failure. A key finding of positive psychology is that happiness depends in large measure on relationships. Our families are our primary relationships, yet we spend almost no time trying to improve them. The challenges typically faced by family businesses, e.g., sibling rivalry, in-laws, marital discord, succession dilemmas, can be successfully navigated but often overwhelm family business, destroying the business and relations among family members. In my experience, unnecessary or “non-revenue” conflict actually occurs frequently in family businesses than non-family businesses. Why is that? The answer is simple. Fights in family businesses break out because they can. In non-family businesses, there are barriers to keep things from escalating. Owning the business removes many of these barriers. Once a conflict starts, it can easily spiral out of control. Draw clear management lines It isn’t that the causes of conflict are any different in family and non-family businesses. In all types of companies, people disagree about issues related to policies, money, and authority. But there is a fundamental difference in the two types of companies as to what stops conflicts. The difference, in a word, is boundaries. Rules and processes may exist, but most don’t apply...
Soriano: When Generations Collide: Securing Your Legacy

Soriano: When Generations Collide: Securing Your Legacy

THOSE are powerful words coming from Bill Gates about his thoughts related to his children and their inheritance. A wake-up call for senior generation leaders to prepare and formalize an ownership and succession plan for the next generation leaders. Gates, who cofounded Microsoft in 1975, is once again the richest person on the planet, a title he’s held for 16 out of the last 21 years. He recaptured the top spot in March 2014 after a four-year run by Mexico’s Carlos Slim as No. 1. Forbes estimated his net worth in 2015 at $80.3 billion, close to six times more than estimated net worth of Henry Sy Sr., the country’s wealthiest taipan. To continue with the article last week, I have identified seven of the 12 most powerful and time-tested steps to ensure the growth and sustainability of the family business: 1. Decide if the enterprise will follow a business first or family first model. The key is determining what business model or template to follow. Having a mix of family in business is a recipe for disaster. It is already tough managing the business in itself; mixing emotions and entitlement in the workplace can ignite unnecessary conflict among family members. Family managers must make a very important choice: should they prioritize family over the business or vice versa? The Aboitiz and Ayala families are wonderful examples that we can emulate. They decided more than a generation ago to pursue a business first model. 2. Never stop communicating with family members. Talking is the most obvious prescription and the most relevant. When family members stop talking, they stop solving....
Soriano: Daughters Are Underutilized Resources In Family Businesses

Soriano: Daughters Are Underutilized Resources In Family Businesses

By Prof. Enrique M. Soriano In my column last week, I talked about women having particular qualities that can be vital to the survival and success of a family business. I also highlighted successful 2nd generation women leaders led by Tessie Sy Coson, Josephine Yap and Vivian Que Azcona making their mark in the world of business. We have also heard of single mothers rearing their children while they pursue on growing their careers at the same time. In my coaching work, I have advised women founders and visionaries who are strong willed and are very good with owning businesses. It is amazing how they do it! Dilemmas and Threats Against Women in Family-owned Enterprises However, those who work in and for family businesses need to be aware of the dilemmas and conflicts that affect women. A barrier to women leaders also often occurred if the family business was in an industry thought of as more “masculine oriented,” such as automotive parts, manufacturing or construction. In traditional setups, the sons automatically inherit the family business. There is nothing to talk about it. So, if you are a woman, and you would want to be the next head of the company, you would probably be seen as overly ambitious! It is as if the male gender is the only one that could naturally demonstrate outstanding performance in the family business. Choosing the family business’ successor and/or other senior level players can be a tremendous issue, especially when the members of the family are not open with the idea of gender equality. In a family that is composed of male and female siblings, cousins,...
Soriano: Most Powerful Women Leaders Running Family Businesses

Soriano: Most Powerful Women Leaders Running Family Businesses

By Prof. Enrique M. Soriano “STUDIES have shown that women-owned firms outperformed the male-owned firms on many levels, including return on investment.” All over the world and predominantly in Asia, family-owned enterprises have been dominated by men. We refer to this right of primogeniture as the exclusive right of inheritance belonging to the eldest son. Wikipedia defines primogeniture as a right, by law or custom, of the first-born male child, in preference to siblings. In the absence of children, inheritance passed to collateral relatives, usually males, in order of seniority of their lines of descent. Time and market complexities favoring women leaders In one of Prof. Alderson’s articles about the role of women in family businesses, the percentage of women taking over management and ownership of their family business has increased significantly in recent years. Alderson adds, “In the past, it was common practice for the business to be passed on to the oldest son upon retirement or death of the founder. Women, until the last 20 years, were not usually considered to LEAD the family business. This is especially true in countries that have male-dominated cultures. Only if there were no male successors were women considered.” The most influential 2nd generation women leaders: An inspiration In the Philippines, there has been a noticeable change in the role of women leaders in family-owned businesses. Highlighting this change is the entry of next generation women successors managing the country’s biggest conglomerates. I have listed three of the most powerful women successors with the objective of inspiring and challenging women in family-owned businesses to continuously raise the bar as they move up into positions...