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Opinion

Family wars

BREAKTHROUGH - Elfren S. Cruz - The Philippine Star

The literature and the studies on family business continue to be widely read up to this day of globalization and ever changing technology. In the book “Family Wars: Stories and Insights from Famous Family Business Feuds” by Grant Gordon and Nigel Nicholson (Kagan, 2010), the authors cite three reasons why people outside the secretive world of family business still continue to care about them.

The first is that family business, because of their big share in the economy, continues to remain the backbone of almost every economy in the world.  This means that the wealth of almost all nations depends on them.

The second reason is that most of the major corporations of the world had family business origins.

The third reason is that understanding family business can lead to a greater understanding of what it takes to make a large company feel like a small family business. It should be noted that even in the largest corporations in the world, management always tries to say that the environment is similar to a family environment.

The ideal has always been that corporations should retain the elements of the better qualities of a family business while avoiding the worst elements. There are evidence that family businesses can outperform nonfamily businesses.

A study of the top 500 firms in the US by Standard and Poor found that those with family ownership outperform those without it. Studies of European companies have also confirmed this trend.

Some of the world’s oldest companies have stayed in family ownership. This includes a 40-generation Japanese business founded in 575 AD that repairs temples; an Italian vintner company founded in 1141 and a French paper maker founded in 1326.

Many of the world’s largest and successful companies retain strong family identities. These include Walmart in the US, Samsung in Korea, LVMH in France, BMW in Germany, Clarks Shoes in the UK and Ayala in the Philippines.

Almost all books on family businesses talk about the highly successful family businesses and their successes.

The book “Family Wars” is different because it focuses on the conflicts or the dark side of family businesses. It tells the stories of 22 family businesses in the world that were destroyed or almost destroyed by family conflicts. Among these stories are the Koch Industries in the US; the Reliance Group and the owner family, the Ambani of India; the Gallo family of California and the world’s second largest wine producer; the Guinness family, a historic Irish-based brewing company founded in the late 18th century; the Los Angeles Times and the Chandler family and the Pritzker family.

Although many of these companies still continue to exist, the original family who founded them are not the present owners anymore because of family conflicts.

Why is a book about family conflicts and failures worth reading? According to the authors: “But as the history of art, science and politics tell us, there is more to be learned from failure than success. Frankly, it is also more interesting. We could have written a recipe book for good governance and best practice. There are plenty of these already on the shelves of business bookstores. Few books systematically explore the origins of conflict and conditions, hence, the journey we have taken in this book.”

In their book, before discussing the 22 case studies, there is a chapter on the roots of family warfare. Basically, they try to explore ideas under five headings: 1. What is the nature of family warfare and how does it come to afflict family firms? 2. How does conflict arise and grow in many of life’s situations and how susceptible are family firms? 3. What has blood got to do with it?  What are the special sources of conflicts and cohesion in families as a function of how people are related? This is what we call “gene politics.” 4. What are the key dynamics of families and what impacts do these have when translated into a business environment? 5. How does culture affect the key themes of these sources of family wars? What role does personality play in the inception and control of conflict?

After the initial chapters, the authors describe in some detail the conflicts and causes in 22 families and the family businesses that they control.

The last two chapters are also very interesting. One discusses 20 classic warning signs of potential conflict: behavior change; perceived unfairness; frequent errors; communication gaps; procrastination by family members; process disagreements; no consensus; unclear goals; disconnection between family members and the business; privileged positions for certain family members; hanging on; nepotism; risk ambiguity; ivory tower or absence of independent voices; inequity; lack of planning; absence of open dialogue; executive instability; bad gossip; factionalism.

This is a book worth reading by members of the families in family businesses and also by employees working in a family business. The common conclusion is that family businesses are here to stay and they have many advantages over non-family businesses. Therefore, it should be noted that there are conflicts in both family and non-family businesses, although the root causes and the solutions may be different.

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Our sole December writing date: Dec 10, 2-3 pm., Young Writers’ Hangout with facilitator Roel SR Cruz.

Contact [email protected] 0945.2273216

Email: [email protected]

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