Family businesses lead to family drama
— -- Family-owned companies have long been the stuff of prime-time soap operas (Dallas and Falcon Crest are two dishy examples) and, more recently, reality shows such as the ones featuring Trumps or Hiltons.
Well-known family businesses have long been part of the American vernacular: We stay at Marriotts, wear Gucci and Adidas, drive Fords and love or loathe Wal-Mart, named for founder Sam Walton.
After all, as Grant Gordon and Nigel Nicholson write in Family Wars: Classic Conflicts in Family Business and How to Deal With Them, "Family businesses are the backbone of the economy of just about every country on Earth, and the wealth of nations depends on them."
Although well-known family businesses may appear to be bastions of tradition, success and wealth, they often are marked by deep and damaging conflict.
This "dark side" fascinates Gordon and Nicholson. Gordon is director general of the Institute for Family Business, a U.K. non-profit organization. Nicholson is a professor of organizational behavior at London Business School.
Gordon's family founded William Grant & Sons in the late 1800s. The Scottish distiller was transferred to non-family ownership in 2000.
The pair studied family businesses from around the world to identify patterns of conflict, highlight potential trouble spots and suggest tactics for companies that wish to tap their history to better understand family relationships.
The families profiled include the Dasslers, whose battling brothers founded Adidas and Puma; the Schoens, who created U-Haul. Families with iconic names such as Ford, Guinness, Gucci and Gallo are also explored. The authors developed 24 case studies that chronicle what the featured families did right — and where they went wrong.
The authors take pains to emphasize that not all family businesses are hotbeds of drama and scandal. But alongside descriptions of business deals can be found stories of romance and treachery.
Take the Guccis. The family's business dealings were characterized as a "tragic Italian opera." Paolo, grandson of founder Guccio Gucci, sent tax authorities documents showing his cousin Maurizio had evaded taxes. Maurizio had to sell his shares, which angered his ex-wife, Patrizia, because this action deprived the children of their inheritance. The unhappy ending: An unrepentant Maurizio was murdered in 1995 by an assassin Patrizia hired. She went to prison.
The rivalries and power struggles in the featured families were heightened by the emotional entanglements that can result when relatives spend time together. Disputes can intensify when a family is at the helm of a business that lacks clear, documented guidelines for succession and ownership.
The authors' approach is well organized. Each chapter focuses on a particular challenge such as sibling rivalry, hubris or denial. Case studies illustrate the consequences of problems and offer advice for businesses struggling with similar problems today.
A theme: the importance of outside advisers. Many of the family businesses in this book suffered from reluctance to consider new ways of doing business, usually to the frustration of the younger generation. Many didn't retain advisers (accountants, succession planners, lawyers) until legal advice was required to settle a dispute.
Ill-advised parenting decisions were another cause of strife: "Many of the protagonists in our cases lack essential elements of effective parenting or control," the authors write. "We are entering Shakespearean territory where foolish old kings make a hash of the handover of power."
The authors' talent for storytelling, and willingness to share the corporeal as well as the corporate, makes Family Wars worth the time.
Ultimately, Gordon and Nicholson remind readers that not all conflict is destructive. "Family conflict will always be with us," they write, "but it doesn't have to turn into warfare and pull the house down."
Many of the companies profiled survive and thrive today.
Linda M. Castellitto is a freelance writer based in Raleigh, N.C.