Avoiding the Biggest Nightmare for Family Businesses

Four decades ago, Peter Woods, founded a modest grocery business. Throughout the years, his tireless effort turned the business into a strong organisation led by his family. For the past fifteen years, his sons Charlie, Paul and Jean have been running the company, which employs more than a thousand people with stores across the country. For the three sons, it was a natural step to come to work in their father’s store after they graduated. Even now, in their late fifties and early sixties, they look back at their choice to join the business with no regret.

From the beginning, the siblings were united in their agreement that they didn’t want to repeat their father’s mistakes: He devoted all of his time to the business and nothing but the business. In little time that he spent at home, he restricted his relationship with his sons to business-related talk. Thus, the second generation decided to ban discussing work at home and to let their children enjoy their parents by keeping their private lives separate from the business. The idea was to protect their children from an over-fixation on the business, to let them look after their own lives and leave the business to their parents.

This arrangement worked well both for the family and company for many years. But a year ago, Charlie (the elder brother) began to talk seriously to his siblings about the succession of the company after recovering from a heart attack. However, there was an issue that none of them wanted to bring up: not a single one of their children (ages twenty to thirty-one) had ever shown any interest in the family business. In fact, there was little the third generation had done at all in their professional lives. Some were finding it difficult to complete their studies at University, as many of them had never faced real responsibilities. As it turned out, many members of the third generation had been living their lives thinking that their parents’ company would ensure their financial security, and the parents came to realise that they were suddenly in the worst case scenario, where the children were neither fit successors nor fit to work in any other environment.

This is a case that illustrates the reality of numerous family businesses around the world. In a situation such as this, the lack of communication between family members often enhances the conflicts they face. Attempts to create moments of coherent conversations about the shared heritage often end up in heated discussions between parents and children, who have a different perspective of the same reality. Maybe we live too fast, and do not spend enough time cultivating personal relationships; so when we try to have a conversation regarding the future we want to share, we are more concerned with expressing what we think and feel ourselves than hearing what others have to say.

One of the main objectives when working with or in a family business is to help create conditions that allow effective communication between the leaders of today and tomorrow. These conditions are imperative and help the members discuss, analyse and propose different scenarios to address the future of the heritage they have shared so far. The initial conversation should then determine if the family wants to truly continue on with this heritage in the future. That approach will lay the plans, strategies and projects to be undertaken by the family to achieve their goal: should they go on together or separately? If the family or its members wish to separate, they should enable mechanisms to negotiate favourable terms for the parties. But if the family wants to follow through together, they must first of all build spaces, conditions and rules to enable effective conversation between generations, for the sake of balance and harmony.