Posting by Amy Pengidore and Ed Kopf
Closely-held, family businesses are in the news less often than their public counterparts – even though they comprise a major segment of the economy, so I try to keep an eye out for the occasional account that comes along and provides a window into these very private entities. There may be some lessons we can draw from these stories.
All too often, family business disputes spill into the courts and, then, into the newspapers. While family feuds are great for the newspaper’s circulation, they wreak havoc on business and family relationships. They also convey the mistaken impression that family businesses are doomed to descend into conflict, decline, and eventual failure. Consider the following recent items – starting with the Bad and proceeding to the truly Ugly:
Tom Keane reported in the The Boston Globe on an ongoing dispute in Boston:
In another recent story, this one in The Washington Post, Ken Otterbourg shared the story of the litigation that has consumed the Graves family, owners of Luray Caverns in Virginia. He wrote:
The Demoulas and Graves stories are Bad enough. Now for the truly Ugly. Sadly, litigation is not the worst outcome, as evidenced in a story from The New York Times last year, “Killing of a Top Magnate, Reportedly by His Brother, Stuns India.”
But Mr. Chadha, who was in his mid- to late 50s, was killed on Saturday, shot in the chest, reportedly by his younger brother Hardeep, who was also killed, after an argument escalated into a gunfight at a luxury farmhouse outside New Delhi. The Shakespearean overtones were inescapable: the brothers had been fighting over the family business since their father’s death last year. They converged at the farmhouse with retinues of armed guards, and soon the bullets flew.
The public impression of family businesses engendered by this coverage is distinctly negative (if not risible). It is probably inevitable that it’s usually the negative experiences of family businesses that make it into the papers. After all, “if it bleeds it leads.” But occasionally, there is a positive story about a Good family business. Here’s one from a, perhaps, unexpected place.
Avidan Milevsky, writing for The Huffington Post, highlighted a family business success in “The Success of the Next Generation of Trump: A Lesson for Family Business.”
What is the Trump family’s secret? Three important features according to the authors: each sibling has their own identity outside of their role in the business, Donald doesn’t play favorites, and the Trumps spend time together as a family doing activities they enjoy. Milevsky says, “The lesson for family business owners is clear. In addition to working on developing in your children a work ethic, a sense of responsibility, and an understanding of the business, make sure that they have a close sibling bond amongst each other.”
Can we learn any lessons from this small sample of family businesses: Good, Bad and Ugly? I think I can discern a common thread. It’s a conclusion that Josh Baron and Rob Lachenauer recently also reached in their blog on “Why Fights Erupt in Family Businesses” at Harvard Business Review’s HBR Blog Network. They describe how family businesses often lack normal business discipline and interpersonal boundaries in the way they manage relationships among the family members. They conclude that “Once we understand that intense conflicts result from the relative absence of formal boundaries on behavior, we see that they can be avoided through an infusion of greater structure into the situation.”
Contrary to their public image, it would appear that the Trumps have operated by a set of family disciplines and rules that consciously create a framework for better relationships. The other families we’ve observed clearly set few boundaries in the way they interact. And the difference is telling.