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Family Business in the News: The Bad, the Ugly and (Once in a While) the Good

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:

The Bad:

Tom Keane reported in the The Boston Globe on an ongoing dispute in Boston:

The Demoulas clan is at it again, with name-calling and bad blood spilling into the public realm as the owners of the regional Market Basket supermarket chain gear up for another legal fight. The enterprise had its origin in Lowell in 1916 as a humble store selling fresh lamb. The two sons who bought it from their father in 1954 made it big and profitable. But the death of one in 1971 triggered a war for control and money that persists to this day. One rip-roaring lawsuit in 1994 featured fistfights and the disbarment of two lawyers; now the Demoulases are back in court, expletives and all.

 
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:

On one side are sisters Rebecca Graves Hudson, Katherine Graves Fichtler and Elizabeth Graves Vitu, known as the older siblings. John Graves, Rod Graves and Cornelia Graves Spain, the younger siblings, are in the other camp. None would talk, but a working account of their disagreements takes up several feet of space in the Page County Courthouse, a handsome brick building set on a hill overlooking downtown Luray. Reading through the files, there is a sad and sedimentary quality to their fighting, layers upon layers of complaints built up over time — like the flowstone in the Caverns — then slowly fused into one solid and tangled block.

 
The Ugly:

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.”

Gurdeep Singh Chadha was one of India’s most powerful businessmen, a liquor and real estate baron whose influence was intertwined with his money. Known as Ponty, he was a mysterious figure, described in the media as an “invisible man,” even as his political influence protected him.

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.

The Good:

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.

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