Small Business

He Ain't VP, He's My Brother


A lifelong career in the family business isn't always the right choice. Witness the recent highly publicized stories about Rupert Murdoch and his son, Lachlan. Although the Murdochs' problems were complex, their story does call attention to a rather basic question: How does one exit a family business without exiting the family?

Several years ago, I worked with "Kate" and her three brothers in their high-profile business. Their last name was instantly recognizable in the regional community. Kate's mother, who founded the company, died suddenly and left equal shares of the business to the four children.

TARDY AND REMISS. Kate shunned the notion of planning, while her brothers talked openly and kept in sync with one another on personal, family, and business goals. The brothers devoted their careers to the business, worked well together, and built it into a big success.

Prior to her mother's death, Kate had been in and out of the company several times. In her words, "I never seem to find the appropriate role for myself. I'm just not certain about what I want to do with my life." In her brother's words, "Kate simply does whatever she wants at the moment. She arrives late, leaves early, never follows through, and isn't respected by co-workers. She sets the wrong example in the workplace."

Shortly after their mother's passing, Kate wanted to enter the business again. Her brothers met this request with frustration and responded by asking Kate what she thought might be different this time. Kate said she now felt a sense of obligation to share in her mother's legacy and urged her siblings to give her another chance. Despite my advice to the contrary, the brothers reluctantly acquiesced.

LOST RELATIONSHIP. Within six months the brothers came to the realization that Kate should exit once again. Tensions rose as Kate refused to acknowledge the inappropriate fit. When her brothers offered to buy her shares, Kate stopped talking to them. She hired a contentious lawyer who convinced her that the business was worth a small fortune.

Then the predictable occurred. The brothers hired their own lawyer. Bills mounted, and the relationship between Kate and her brothers grew more acrimonious. Ultimately, they all managed to strike a deal, but Kate and her brothers remain estranged.

Another client, Cliff, joined his dad in business shortly after college. As family members and business colleagues can attest, they are two peas in a pod. They have the same value system, compatible styles, and a shared vision for the business.

A SQUARE PEG. For their first 10 years working together, their retail clothing business enjoyed double-digit growth, and they had a harmonious family relationship. Things changed, however, when brother Clyde expressed an interest in joining the company.

Dad enjoyed his working relationship with Cliff so much that he thought it could only get better with Clyde on board. So he offered him a job.

Seven years younger than Cliff, Clyde did not exhibit the same mellow style his dad and brother possessed. Clyde could best be described as edgy. He jumped from project to project, never completing one before moving on to the other. He often let details languish, leaving Cliff to pick up the pieces.

LENDING A HAND. Further, Clyde was abrupt and critical, even caustic at times in his attempts to effect major change. When he wanted to add a line of women's clothing and open an additional location, which Cliff and Dad resisted, tension mounted both in the workplace and at family events.

After much discussion, the family members decided that some distancing might help -- not only to restore peace to the family and the business but also to give Clyde the opportunity to come into his own. Sensing his younger son's entrepreneurial spirit, Dad helped him start up his own store. Cliff even worked to help his brother build buying relationships, and the family dynamics readily improved as Clyde achieved his own success.

The need for a family member to exit the business isn't always about incompatible styles, competence, or competition. Sometimes it has to do with having a passion for something else. And frequently it's simply about finding a career that produces a sense of happiness and personal reward. (Isn't it curious how seldom performance appraisals include a question that asks if employees are happy?)

OPEN DIALOGUES. Current research shows that, on average, people in their 20s and 30s will have as many as 10 or 12 different jobs -- in as many as 3 or 4 entirely different careers -- in their lifetimes. A far cry from generations past.

Based on these stats, one might expect more exits from family businesses than ever before. Lots of open dialogue, including discussions on goals and expectations, coupled with a solid shareholders' agreement (the business equivalent to a prenuptial), can help. And supporting family members in pursuit of their own dreams can not only lead to individual fulfillment but also preserve family relationships.

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