Family Business United is delighted to be able to offer Carbon Literacy training to the family business community across the UK. Join almost 75,000 people worldwide in becoming officially Carbon Literate to help optimise your Net Zero and ESG ambitions and ensure your family business’ future and long-term success. Carbon Literacy means having the awareness and understanding to create a positive shift in how we live, work and behave in response to climate change*. It provides the foundation for reducing emissions, becoming more environmentally sustainability and more effectively supporting all stakeholders on their journey. Carbon Literacy is desirable for any family business, resonating strongly with their mindset and ethics and this bespoke course is for owners, board members and senior decision makers within family firms. Becoming Carbon Literate supports the alignment of policy and action across all business areas, ensuring: More effective recruitment and retention of both staff and clients Stronger brand reputation More robust business continuity A more profitable business The Carbon Literacy course covers: The science behind climate change Social equity & climate change What you can do to act on climate change, both as a companies and individuals How the family business sector can deliver effective climate action Strategies and skills for communicating action on climate change Following the successful completion of this training you will gain an internationally-recognised accreditation through your unique Carbon Literacy Certificate. It will also help your company work towards becoming a Carbon Literate organisation. These online courses will be run by Nottingham-based, multi-award-winning Spenbeck which has over 40 years’ experience in helping companies and organisations prosper through its client support and expertise in decarbonising heritage commercial buildings. Working across both private and public sectors, Becky is an accredited Carbon Literacy Facilitator. She is also asought-after sustainability keynote speaker, expert panellist, podcast contributor and feature article writer. Places are limited and kindly note that course cost includes the £20 Carbon Literacy Project certification processing fee. Training runs throughout the year, but if you would prefer a bespoke course for your organisation please do contact us and we will be happy to discuss this option with you. May 23, 2024

The date is set so book now to join us in Glasgow as the family business community comes together for a day packed with insights, panel discussions and real life journeys from family business members. Add to the mix a number of workshops and plenty of time for questions and networking. Join us for what is always an inspirational family business day. Find out more including the full programme and book your tickets to join us here

When it comes to family business, one of the biggest challenges they face in the near full employment economy in which they operate is the recruitment and retention of staff. The culture of any organisation determines many things and can have a real bearing on the staffing conundrum. Our recent attendance at the Institute for Family Business national conference clarified the cultural impact on family firms even further. The next generation of employees, current graduates and school leavers have very different career objectives to many of their predecessors, whether it is in regard to working hours, ways of working, working practices or simply looking for a role with a purpose. Professor Veronica Hope Hailey from the University of Bath was clear that the right approach that is already adopted by many of the 5 million family firms across the UK today with regards purpose and values should stand them in good stead, and make the 21st century, THE century for family firms. Purpose and values serve much more than simply words. They help to define the culture of a business, a way of working and a real set of values that should permeate the entire workforce, creating a unique environment to work and service the needs of customers. The culture is also shaped by the leadership of the business, often over generations with different generations helping to shape the business for subsequent generations too. Over time, different family firms will inevitably create a culture of inter-generational collaboration, something that can take various forms, not least at an extreme level the destruction of the history wall, only for two generations to then work together to rebuild it with a better impact as the end result! Culture needs to be worked for, values lived and breathed, with leadership demonstrating the values to which they subscribe each and every day. Creation of successful family business culture and good governance through the existence of a successful board culture is also important, and in this regard the roles of both family and non-family members are key. Obviously, with the wrong people on the board and the wrong chair in place, family or non family, can lead to the creation of an unsuccessful culture that can create all sorts of challenges going forward. Culture is not only defined by a set of values but also the history and heritage of the organisation, something that is clearly apparent in long standing, multi-generation family businesses. Younger family firms also have their own culture too. However, over time, it is inevitable that the roles and impact of previous generations on the culture of the family firm becomes more apparent, the stories and anecdotes from previous generations playing their part, as does the fact that in many of these businesses multiple generations of families have worked for the businesses too, creating a unique mix of pride, determination and passion to continue. Never under-estimate the power of culture within the context of the family business. It can be a truly powerful force and a clear point of difference in a competitive market place, adding real value to the business and the relationships with stakeholders and helping in the battle to attract, recruit and retain the workforce for the next generation too. About the Author - Ben Fowler is the Managing Director of Western Pension Solutions, a specialist pension consultancy that provides strategic advice to family businesses for managing their legacy defined benefit pension schemes. Following their success in managing the Vestey pension scheme, they were founded by Ben Fowler and the Vestey family with the clear purpose of helping other families solve their pension issues in ways that are fully aligned with their objectives as business owners. All their client relationships are led by people experienced in understanding how the complex dynamics of family, business and ownership translate into an effective pension strategy.

When crisis strikes a family business, advisers need a clear plan, with an emphasis on honesty, to minimise reputational damage Many businesses have been through a tough time over the past few years. Public mistrust of politicians and bankers has spilled over into wider cynicism about businesses generally. The ‘information age’ also means journalists are no longer the only people who tell us about the world; the web allows anyone to assume the role of public commentator. With so much information out there, the noise can be deafening. The writer Linda Stone describes our response to this as ‘continuous partial attention’: we never really focus in detail on anything, but we are always tuned in. For businesses with complex issues to explain, it is often difficult to get a message across to the public. Media Attention Family businesses are confronted with their own particular pressures. Private and inherited wealth have become an increasingly prominent political issue, and, in these times of economic hardship, the tax debate has become heated. Adopting a low profile is seen by some as ‘hiding something’. As for the UK media, its notion of what makes a good story has not changed much in recent years. The mishaps and lifestyles of people always make better copy than the issues of corporates. Significant moments in a family business’ history, such as the death of a founder or the transition from one generation to the next, are analysed as never before. The media has few scruples about the cost of such personal attention. When a crisis does occur, whether the media focus on the family or the business that the family owns, these can be highly stressful times. Close media attention can call into question the management’s values and competence, and cast a critical light on the business. A crisis can erode trust not only between the business and its employees or customers, but also between family members and within the business itself. But how the family or business handles such a crisis is part of the story itself, and can often give that story longevity, long after the original issue is forgotten. Protecting Reputations In one sense, there is no such thing as ‘crisis management’, if that implies media attention can be stamped out through clever public relations. Managing a company and a family through the media storm requires leadership, and a measured and unemotional sense of how the business’ reputation can be best protected. This requires the family business adviser to know the facts and have a clear idea of how to respond to them. Saying nothing to the media is sometimes an option, but, when silence is untenable, the adviser will need a clear idea of what to say. Hiding behind lawyers rarely works. The media, the adviser’s staff and others need to have a clear sense that the affairs of the family business are being managed with confidence, and that the adviser is in control. Reputational damage does not always finish once the media move onto other subjects. Having a long-term plan to address the issues raised by the crisis, and to rebuild trust, is vital. Throughout, advisers need to be mindful of the views of all stakeholders. Understanding the family members’ perspectives and being seen to be sensitive to them will help the adviser to respond effectively and mitigate criticism. Managing a family or business’ reputation in advance of a crisis is the best way for advisers to protect themselves from the consequences of a crisis. Knowing your advocates, knowing your detractors, and making sure the media have a sympathetic view of the family business are all important. None need preclude a family maintaining a low profile, but having some prior information on the issues that might make a family vulnerable, and where the threats might come from, is useful preparation. The most important point in a crisis is that everything said and done must be authentic. Corporate speak is out. Family members and the business managers need to be clear in their own words about what has happened, why it matters and what they are doing to address it. Their values and character should come through in all of their communications to employees, customers, suppliers, media and even regulators. If this is done, advisers will be able to influence and shape a crisis and have a better chance of surviving it. About the Authors - Alex Finnegan is an Associate and Richard Meredith is a Partner at the Brunswick Group. Reproduced with permission from the Society of Trust & Estate Practitioners. For more information please visit www.step.org

In-laws hold a unique position in family businesses. This may be said for both in-laws who work within the business and those who, for a variety of reasons, do not. This unique position has an impact on the family and business systems as well as the interaction between such systems. When in-laws work within the business, some questions that may arise are whether or not they form part of the family, whether they should be subject to the same treatment as family members or whether they should be treated differently. Despite this ambiguity, the study of family business thus far has failed to account directly for their role and position in the family business. Situating the in-law in the family business is an issue many families eventually face. Experiences vary as there are in-laws who are a tremendous asset to the family and the business whilst others may find it difficult to understand the central role the business plays in the family’s culture and value system. There exists a reality that should not be underrated of in-laws who choose to work in the family business and who experience the difficulties of not being treated equally to family members. They tend to work doubly hard to prove themselves yet often do not perceive that they reap the same benefits that family members do. A reason to this may be that there are many fears, not always totally unfounded, of the problems that in-laws can bring into the business and subsequently, the family. Since a main objective is to maintain harmonious relationships many look at the in-law as an additional complexity that could be avoided. It appears that many rules can be bent for family members but there are second thoughts for in-laws. Most in-laws, irrespective of whether or not they work in the business, who were not brought up in business owning families experience a culture shock. Most business-owning families have used the business as the centre of conversation for decades. If in-laws are not closely involved in the business they may feel left out. In-laws that come from a non business-owning family may lack the experience to prepare them for the dominance of the family business. Difference in values and expectations may cause marital conflicts. A business owning family’s expectations regarding holidays, free weekends or regular dinner times may lead to real strain. Sometimes in-laws may resent the influence of the business family over their lifestyles. Conflict is part of family life. Different people and different families experience conflict in differing ways. In-laws, both those who work in the family business and those who do not, may view matters differently from family members working in the business. The probability and frequency of conflict increases as the family expands. Fear of disagreements or conflicts can make families resist change as they may seek to avoid conflict at all costs. Recognising and grappling with conflict is a sign of strength and progress. The family’s skill in dealing with conflict and confidence that conflicts should be openly and directly addressed impact whether a family business experiences success or pain in the face of conflict. The possibility of divorce is one of the main demotivational factors for in-law participation. Not dealing with the possibility of divorce is unrealistic. Prenuptial agreements can create hard feelings with in-laws. Family rules and regulations are best established beforehand, as part of the family constitution, so when potential in-laws learn about such policies they are not taken personally. In-laws play a very important role in successful generational transitions. In-laws who do not directly work within the family business still play the important role of educating and socialising the next generation leaders into the family business. The way these in-laws perceive the family business and the messages they send to the next generation, both implicitly and explicitly, help to shape and mould the next generation of family business leaders. Fostering open communication is the overarching recommendation. Other recommendations are to educate in-laws about the family business, involve then in regular family meetings and establish times when discussing the family business is off limits. Some families develop a family code that spells out what behaviour is encouraged by all family members. Another recommendation is for family business owners to model strong, loving behaviour in one’s marriage. Flexible family boundaries, excellent parent-child relations, affectionate and caring siblings and the ‘match’ between in-laws’ personality and the background of the family have all been found to lead to positive in-law participation. In conclusion, the professionally managed business is inclusive and looks towards in-laws as having full participatory roles. Most often this expectation is expressed and information is shared openly. In-laws, in turn, reciprocate with loyalty, dedication and commitment. About the Author - Roberta Fenech is an occupational psychologist. She is an Associate Consultant for EMCS group and a lecturer at St Martin’s Institute of Technology.

Fratelli Cosulich is a family-owned shipping group founded in 1857. Now run by the family’s fifth and sixth generations, Fratelli Cosulich retains its customer focus while obtaining rapid development and geographical expansion. The company operates in several sectors, including ship management, liner agency, tramp agency, yacht and cruise agency, ship owning and insurance broking amongst others. Today Fratelli Cosulich is a diversified group operating in 15 different countries, including Italy, Hong Kong, Singapore, China, Turkey, United Kingdom, Brazil and USA. We spoke to family CEO Timothy Cosulich to hear his journey in the family business. What Does Your Family Business Do? We are a diversified Shipping Group dating back to 1857. How Did You Get Involved? After spending 6 years in consulting working for PwC and 3 years working for Maersk – another large shipping group – I was asked to join the family business and after a bit of ‘negotiation’ I decided to embark in this new adventure. What Did You Want To Be When You Grew Up? A tennis player! What Are Your First Memories Of The Family Business? I clearly remember, as a 5 years old boy, going to the office with my father and spending hours playing with telex machines, stamps, and bothering the employees asking them if they wanted to play with me! What Values Are Important In Your Family/Family Business? Integrity, first of all. We identify ourselves a lot with our name and we make sure that our brand remains a synonymous of outstanding service. The other aspect we particularly look after is our people: I am aware that it is a fairly common thing to say… “our main asset is our people”… nothing new. What I realise more and more is that, over the years, a special relationship has developed between the Company and its people. We take care of each other and we don’t let each other down. What Is The Best Thing About Being A Family Business? The legacy and the attachment to the Company are something truly special, but what I like the most is the entrepreneurial spirit. And The Worst? The lack of pure meritocracy that sometimes affects many family businesses, including ours. What Is The Best Thing About Your Working Day? There are two moments I particularly enjoy: the morning when I come into the office and I get started with meetings – this usually comes after a hard training session and I am still energised by it. The other moment I like is the evening, when most people have left the office and I can focus on my to-do list. What Is Your Proudest Family Business Achievement? The turn-around of the Singapore office that had been under-performing for 8 years before I took over the management and that in 3 years has increased its volumes by 430% and turned back to profitability. More importantly, I was able – with my colleagues – to build a very solid team that I am confident will continue to perform strongly. Is There A Next Generation Waiting In The Wings To Take Over? The sixth generation – my two cousins and myself – are the ‘young generation’ and we already manage a relatively large chunk of the business. Fortunately the senior generation is still there though as we still have a lot to learn from them. What Do You See As The Biggest Challenge Facing Family Businesses? Implementing full meritocracy in their management structure while – at the same time – maintain the special attachment that people have in a family business. Striking the right balance between being a fully professionalised company and preserving the legacy will be the key to success for most family businesses going forward. To face a difficult challenge such a this one, the support of an organisation like YPO can be vital: I personally find it extremely useful and enriching to be able to discuss very sensitive and complex issues with like-minded peers who – most of the times – understand my situation very well. What Words Do You Associate With Family Businesses? Legacy, tradition, entrepreneurship, integrity. Words Of Wisdom – What Piece Of Advice Would You Pass On To Someone Thinking About Joining The Family Business? If it’s a young family member thinking about joining his/her own family business my advice is twofold: 1) Get significant and relevant outside work experience first – this will give you great confidence and credibility within the company; 2) Once in, don’t get tempted by trying to change things for the sake of changing them. Spend time understanding why things work in a certain way and only then suggested the changes that – in your opinion – are necessary. In addition to this, I cannot but recommend joining YPO for the value it adds both on the professional as well as on the personal side.

Making a success of succession is not, by any means, impossible as Marc Farror explains. Like all businesses, family ones have to deal with a diverse range of challenges that typically include reacting to market turmoil, cash flow pressures, retaining the best management talent and driving international growth. Without doubt, though, the most critical challenge involves generational change. In the trust world, there are countless stories of families who create wealth through an entrepreneurial individual and lose it again within three generations. Often the wealth creator can directly influence the second generation – their children – to be frugal. However, while the children may be careful, they may not always be as expert at creating wealth as their parent. Often, the children will manage to maintain the status quo, and keep the family wealth static. But, given inflation and the increasing cost of living every year, maintaining the status quo can often mean that the family are gently eroding their wealth in real terms. Good governance is an integral part of wealth structuring. When grandchildren arrive, they may be born into wealth and may not have the same discipline that was instilled into their parents. If few family controls are in place, this can sow the seeds of disaster, as some might feel it is acceptable to spend the family fortune with largesse. Under these circumstances, it really is only a matter of time before the majority of the wealth is eroded. Making a success of succession is not, by any means, impossible and there are large numbers of high-profile families who not only protect their family wealth, but manage to actively grow it from one generation to the next. So the questions are: what distinguishes the family who diminish their wealth from the family who actively grow their asset base, and how can the trust industry contribute to the key area of succession planning? Effective Family Decision-Making Family governance is a well-understood concept in larger families. Many trustees work closely with families and their advisers to ensure the creation and implementation of a detailed and recorded family governance process. Where good governance is created for families covering the way they operate their businesses, it can impose similar disciplines to those under the statutory corporate governance required for a PLC. Governance helps determine how, when and by whom decisions are to be made. It helps resolve disputes within the family and between the family and the trustee, all of which can affect the preservation and growth of the wealth. So good governance is an integral part of wealth structuring. Education Is An Investment Family members’ education should not be restricted to school and university. Rather, business-oriented families need to establish their own values and be clear about what those values are, if they are to be handed down. For the entrepreneur thinking about future generations, it can be useful to see basic principles written down in the context of the running of the family business. Typically, this may include: Establishing codes of behaviour about how family members talk and inter-relate to each other. An environment needs to be created where family members feel free to express their opinions frankly, thereby avoiding divisive and, ultimately, destructive conduct. Developing a similar open forum about how family members can both earn and spend money. In the more successful family dynasties, there is a direct correlation between effort (in the family business) and reward. Establishing a process for looking after all family members, especially those incapable of looking after themselves, such as children or aged relatives. Developing a process for resolving disputes and aiding decision-making in the best interests of the family. Establishing rules about what education and experience is useful for family members to bring to bear on the family business. For instance, many families who run their own office prefer relatives to have worked for a significant period in, for example, the investment industry prior to entering the family business. Developing an approach to philanthropy. While it is not essential that families give to charitable causes, philanthropy is a proven way of engaging family members who are not core in the business, and provides a worthwhile outlet for their energies. Philanthropy also has the added advantage of improving the profile of the family. Secrets Can Cause Problems While establishing open channels of communication in the family can help eliminate divisive behaviour, the same can be said of communication between trustees and individual beneficiaries. One of the perennial problems that trustees face is how much information they should pass to beneficiaries. Two cases highlight some of the issues trustees face regarding the flow of information. In Re Rabaiotti 1989 Settlement [2000] JLR 173, it was established that the beneficiaries of a trust could inspect the trust accounts if it was in the best interests of all the beneficiaries. In addition, a letter of wishes could be disclosed to the beneficiaries if the court felt that there was good reason to do so. In Schmidt v Rosewood Trust Limited [2003] UKPC 26, the Court saw little difference between being a beneficiary of a trust and being an object of a dispositive power when it came to being given trust information by the trustee. As long as the object of the power has a genuine and legitimate expectation of benefiting under the trust, no distinction should be made between beneficiaries under discretionary trusts and objects of discretionary fiduciary powers when it comes to the disclosure of information. On a practical basis, it perhaps makes sense for trustees to engage with beneficiaries as early as possible. This allows the younger beneficiary to understand over a period of time why and how decisions are made. In addition, they can develop a better understanding of how investments work and what the family’s investment strategy is. Generally, this dialogue builds a greater appreciation of the role that the trustee actually plays on their behalf. Where beneficiaries are suddenly exposed to trustees, having had a lifetime of isolation, the trustee often faces a much harder task in explaining their role and accounting for their decision-making. Often the settlor’s best intentions of protecting the beneficiaries are seen as manipulative and the trustee is the one held to blame. In such circumstances, the choice of trustee and an agreed communication protocol are critical, as it can be a fine line between a settlor’s intentions and the best interests of a beneficiary. Using Appropriate Structures With changing tax laws, an evolving beneficial class, and greater fluidity around where beneficiaries live and what taxes they pay, it is often easy for a structure to become obsolete. The ongoing assessment and resulting adaptation of the structure can often help maintain tax viability, provide control over the current trust assets and actually build a better relationship between beneficiaries and the trustee. By way of example, the following structures could be implemented to ensure that change is planned and effective: Trusts. While it is common for a close family friend or a non-beneficiary family member to be appointed to steer the trustees in the best interests of the beneficiaries, the notion of a professional corporate protector is gaining increasing recognition for the improved unity it brings to relationships between trustees and multi-generation jurisdictional beneficiaries. Foundations. These can offer greater flexibility whereby family members can make up the majority of the council members. The foundation’s council is the body that administers the foundation’s assets. In Jersey, foundations are required to have an enforcer role, which is akin to that of a protector, and that too can be occupied by either a family friend, family member or professional corporate enforcer. The guardian’s role is to ensure that the council carries out its functions in relation to the charter and the beneficiaries. Private trust companies. These have been established in offshore jurisdictions to provide families with the ultimate level of control, and the family can provide the majority of the board of directors required to run the trusts underlying the private trust company, alongside advisers and fiduciaries. Shari’a structures. For Islamic families, having a Shari’a-compliant structure is essential. Many Middle Eastern families use a combination of waqfs (endowments) and Shari’a-compliant trusts that their family’s scholar approves. Waqfs and trusts are very similar and many academics consider the waqf to be the precursor to the trust. Filling The Gaps Gaps in succession, when family members have no aptitude or inclination for the business, are often easily filled by external professionals. If family members can’t agree on the best candidates, it is often the guardian or protector who decides. They will need to take a fiduciary position in this process and decide for the best interests of all beneficiaries. Where there is no inclination for family members to become involved in the family business, conflict can arise. In some structures, it can be normal to reward family members who work in the business more favourably. Alternatively, it is also common to recognise the value that family members make by undertaking highly productive but low-paid work and compensate them with extra funds to recognise the wider contribution that they are making to society. Family members who have no aptitude for the business represent a slightly larger problem, but if they have their own business ideas, these can be supported by the trustee as long as the ideas are well thought through and the trust deed allows it. If the family member chooses to have no employment at all, philanthropy can provide a positive outlet. This is particularly true where philanthropic decisions must be made about which charitable sectors the family wishes to support and those charities that represent a reasonable investment. Ensuring family members conduct their own due diligence about the daily operation of a charity, how they help at grass-roots level, and how effectively the money is spent are essential exercises that can be overlooked, unless a process is established. Assets And Investments Ultimately, to increase a family’s assets, some investment risk must be taken to ensure the return from the assets beats inflation. The current volatile state of the markets illustrates how hard this can be. An investment strategy reflecting the family’s appetite for risk that is acceptable to all beneficiaries and allows for financial performance that grows the asset base in real terms is needed. The process can also be structured to allow trustees to consider other asset classes, such as property and alternatives, alongside traditional funds and equities. While some of these assets and investments may have a higher risk profile, that risk can be managed by the trustee in the context of the rules of the structure chosen. Planning, education (in its broadest sense), and the use of appropriate structures and investment strategies can combine to create an environment in which a family can keep and create wealth. But care and attention to detail are essential if the family is to flourish. Good governance, both within the family and between the family and trustees, lies at the core of an effective succession strategy. About the author - Marc Farror TEP is the Private Client and Family Office Director of Vistra Jersey Limited, St Helier, Jersey. This article has been reproduced with permission of the Society of Trust and Estate Planners.

Mitzi Perdue’s story is summed up in the title of her website: ‘Insider secrets from wildly successful families’. She’s the daughter of Ernest Henderson, the founder of Sheraton Hotels, and was married to the poultry magnate, Frank Perdue. Between them, the Henderson and Perdue families have 222 years of experience in managing successful businesses, and Mitzi is an impressive entrepreneur in her own right. Though back in the 1940s, when she was a girl, that looked like the last thing she was likely to become. “My father made it pretty clear that I was never going to be in the family firm – I don’t think it even crossed his mind that one of his daughters would have an interest in the business. And it wasn’t just that no-one expected me to do it, it was actively discouraged.” As it turned out, it was the moment of transition between the generations that opened up an opportunity for Mitzi – when her father died in 1968 she still didn’t get the chance to work in the hotels business, but she did inherit enough money to start up a venture of her own. “The Henderson family decided to sell Sheraton company, but it was only the men who got to have a vote – the women had just as strong views, and we were stockholders, but we didn’t get a say. Soon after that I started a business growing rice in California, and I think I must have learned a lot from my father about the importance of picking the right site, because I deliberately chose an area where I thought the land might have future development potential.” The site was indeed eventually sold for an enormous profit, but in the meantime Mitzi spent 15 years growing a really profitable rice business, and had a great deal of fun as one of only eight women out of the five thousand rice growers in the US: “the other seven inherited their firms; I made mine.” Mitzi learned the value of visibility as a woman in a male-dominated sector, and became a leading light in the industry, helping to prevent legislation that would have decimated rice growing in the area, and becoming President of American Agri-Women. Though she admits, “It was easier being a pioneer then than it is for many women today.” She puts her success down to a willingness to do her homework and work hard. Not being afraid of failure is important too, in fact she says she “failed her way to success”. This ability to take a long view is a characteristic family businesses like her late husband’s also share. Perdue Farms is one of the largest producers of organic chicken in the world, with a promise that no antibiotics are ever used. But getting to that position – and making it profitable – was a long eleven-year haul. “My husband worked out that the only way to get a better price for selling chicken was by offering a premium quality. So we had to learn how to deliver that quality and still make money. We learned about the importance of scrupulous hygiene to keep disease levels down, and how to use probiotics and herbs to keep the chickens healthier. It was a huge innovation at the time, and it’s really successful now, but if we hadn’t been a family firm I doubt we could have done it. We wouldn’t have been able to take such a long view.” But family firms have big challenges too: “I have a theory of life that one of the biggest causes of either happiness or misery in life is the family, so if you want to be happy you have to work really hard at your family. That’s even more true if you all work together.” The Henderson family have pioneered a number of really interesting ideas, as a way to keep the family united, and bridge the gap between the generations. One is the ‘service to the family award’, which is judged each year by all the previous winners. “On the Perdue side, we have regular newsletters, one of which is specifically designed for our youngest family members, with stories about the family, and what it did in the past, so they know where they come from, and feel part of something big and special. Because it is: if you’re part of a business that’s been going for four generations, that’s a big deal. And it’s very special.” This feature forms part of the PwC Global Family Business Survey 2016. It has been reproduced with permission of PwC.

Tohtonku Sdn Bhd is a major player in the personal care products sector in Malaysia, and stands out from many other family firms in the region by having made it successfully to its third generation. It was set up in the ‘60s by Lim Joi Him, and in the half century since then has grown its portfolio to over 200 products, some of them market leaders. It’s also a significant regional player, selling all over Southeast Asia including Japan, Hong Kong, Singapore, Thailand, Indonesia, Myanmar, Brunei, Pakistan, and Sri Lanka. Personal care is a particularly fast-moving segment, driven by changes in consumer taste, new fashion, celebrity endorsement, and new product development. Tohtonku’s work in this area is managed by a member of its third generation – Jasper Lim, its Executive Director. “We use some of the region’s best-known celebrities to promote our brands, and we’re always looking for the next big thing and the next important fashion trend. We think our own staff are one of the best resources we have to capture how our consumers are thinking, and we encourage a working environment where new ideas can come from anywhere, not just an office marked ‘Innovation’. And once we have a new brand it’s all about achieving market share, which means clever marketing, and an efficient production operation.” This inclusive culture reflects the values which are important to the family, and which they apply within the business as well. “For us, values are as important as profits – not more important, but equally important. My father cares as much for the welfare of the staff as he does for the family itself. Some of our staff have been here for decades, and many work long beyond their official retirement age, because they feel part of something. We want to contribute positively to the economy and the social welfare of the nation, and we believe our values of humility, trust, growth, and service are the best way to do that.” The same values have helped the family manage its own affairs, especially in an increasingly fast-moving world which is utterly unlike the business environment Lim Joi Him first knew. “I think the secret to our success is that we understand the importance of harmony. There will always be some disagreements among family members, and differences of opinion about the direction we should take, but we give each other the benefit of the doubt instead of immediately passing judgements. We make an effort to clarify and understand the issue before we come to conclusions. We eat and breathe this company – it completely dominates our lives, and that makes us stronger as a family, stronger as a business, because our customers really respond to the strong values and heritage of family-owned firms.” About the piece - This feature forms part of the PwC Global Family Business Survey 2016. It has been reproduced with the permission of PwC.

It’s often said that family firms have the ability to reinvent themselves with each new generation, but it’s harder to find real-life examples where this has actually happened. Greg Rowe Ltd is one of them. After growing a hugely profitable tap making business in the ‘80s and ‘90s, the family started up a new venture focusing on drinking water filtration products, and is now expanding back into the kitchen taps that gave them their initial success. And it’s all down to the power of innovation… Greg Rowe Senior built his first business from his garage, with his partner, Bob Perrin. It eventually grew into the Perrin & Rowe range of luxury kitchen and bathroom taps, showers and accessories. The company’s success was also driven by their invention of Triflow. The world’s first three-way tap, the product dispensed hot, cold and filtered water from a single spout and was patented in 1991. As Greg’s wife Alex says, “At one point, there were Perrin & Rowe taps in every single 5-star hotel in London, as well as other luxury venues all across the world.” Greg adds, “We grew at 30-40% a year for about five or six years.” That international expansion was built on an exclusive distribution arrangement with Franke, the biggest sink manufacturer in the world, and over time, Perrin & Rowe expanding its sales in the USA. At the end of 20 years the business was turning over around £19 million, and had three manufacturing sites. Greg Rowe Junior, Greg’s eldest son and his brothers, Scott and Todd were all working in the firm, alongside other family members. But with retirement looming for both of the founders, the decision was made to sell their shares. However, as Greg Rowe Junior says, “Once an entrepreneur, always an entrepreneur. When the chance came up to acquire a small filtration business called FreshWater, Dad couldn’t resist. And it wasn’t just that – he also wanted to give me and Todd a chance to build a family business of our own, just as he had.” Both sons were prepared to “roll our sleeves up and do what had to be done”, but that task turned out to be even bigger than they expected, as the timing coincided with the 2008 credit crunch. “We knew FreshWater had problems,” says Greg Junior, “it was already losing money and lost even more when the downturn hit. But we’d bought it because it had a good digital sales platform, and we focused on growing that. It was tough, and we had to pare back to the bare bones, but we hung on in there. We focused on improving quality and streamlining the product range. And then we had a stroke of luck.” That luck was a call from the MD of Franke UK. They were still working with Perrin & Rowe, but had encountered some challenges, so they asked the Rowes’ new business if it was interested in making filter cartridges for a range of taps which Franke were planning to make themselves. “It was our breakthrough,” says Greg. “We started hiring engineers again – some of whom had worked with us at Perrin & Rowe – and set up a whole new call centre and after-sales function to deal with the Franke products.” “That turned out to be key, because it meant we were hearing directly from consumers about what worked with the Franke taps, and what didn’t. That was the spur to start working on a new tap of our own. Because when it comes to innovation, it isn’t just about engineering, it’s about practical issues like how the product is installed and used. Having that insight helps you identify what exactly consumers are buying from you. In our case, it’s not taps, per se, it’s water – water at the quality and temperature they want, in an instant. That helped us see that we’re not just competing with other tap manufacturers, we’re competing with kettles too.” The result was Omni, a new multi-patented four-way tap, dispensing filtered boiling and cold filtered water, as well as normal hot and cold flows. “It’s easy to install, and easy to maintain,” says Greg. “We’re making around 600 a month, and they retail at £1,400. We’ve plans in place to begin exporting to Europe, China and Australia, and we’re adding to the range all the time. And everything we’ve done so far, we’ve funded ourselves.” The key to the family’s success is their dedication to innovation, just as it was the first time around: “Around 15% of our turnover went into R&D last year,” says Greg. “We empower our employees and apprentices to come up with new ideas, and we’re backing up our investment in our physical infrastructure with investment in digital – new websites, new systems, and better e-commerce platforms.” “We’ve never been followers and we never will be. We always want to be first.”

The Harrison Spinks bed business is now into its fifth generation with three generations still involved in the business and innovation and reinvention have been the key. Harrison Beds spent the majority of the 20th century as a mid-range mattress manufacturer, with a solid reputation and solid returns, though very little real growth. Then the ‘90s recession hit and the business suddenly found itself in trouble. The current MD, Simon Spinks, takes up the story: “We’d expanded into a new building and took out a lot of debt to finance it, but when the downturn came the bank wasn’t exactly supportive. I started by making some operational changes to cut our costs, but there’s only so much of that you can do. We needed to grow our top line as well; the question was how? In the end we got our inspiration from two things: one was looking back at the past, and the other was looking ahead, at innovation.” “I did some research about where the business came from and went through a lot of the old archives. That’s when I found references to the name ‘Spink & Co’. That was the first time I knew my grandfather had ever used that as a trading name. The second thing was to look around at our own industry and see which of our competitors were actually making money. Surprise, surprise, it was the ones that had some sort of unique selling point, a technology that allowed them to sell at a premium.” That insight prompted Simon and his father to look at new ways to make beds, and Simon came up with an idea inspired by a Ford car engine. It was, in essence, a spring within a spring, which led to the creation of a completely new type of mattress, and some extremely valuable Intellectual Property. That mattress was launched onto the market as a premium-priced product under a new Spink & Edgar brand name. “That was a big change for us: we’d never thought of ourselves as a consumer brand or acted as one, probably because we had too much of a ‘small business mentality’.” Since then, the company has continued to innovate, with a pioneering 100% natural mattress which deliberately runs counter to the current fad for memory foam mattresses. They also own a 300 acre farm where they grow their own natural fillings – hemp and flax and also rear sheep. They locally source as much as possible, including fibre crops and wool from other local farmers. As Simon says, “We’ve never been afraid to swim upstream.” These innovations have helped propel Harrison Spinks to annual growth rates of around 20%, but that degree of success eventually becomes a challenge in itself: “The risk is complacency, because success is not a burning platform. So you have to create that. And you have to be prepared to fail: you’re not a truly innovative company if you can’t handle the possibility of failure, because if you don’t fail, you don’t learn, and if you don’t learn, you won’t succeed.” The next challenge is to ensure the recent upgrade of the company’s IT infrastructure is fully integrated and standards of production and customer service are maintained and enhanced as the company gets bigger. And there will be more innovations to come, too. As Simon says, “Our mission is simple: we want to change the way the world sleeps.”

FLO S.p.A. founded near Parma in 1973 by Antonio Simonazzi is now Europe’s largest manufacturer of plastic vending cups and a leading player in the production of disposable tableware. The company’s turnover exceeds €100 million. Antonio’s son, Daniele, joined the family business after completing a degree in mechanical engineering and undertaking Italy’s compulsory military service. It wasn’t assumed that he would join FLO but his father’s passion for his company seeped in to the family’s DNA and, as a result, Daniele, his sister Erika and her husband all joined FLO in executive positions. Following a period developing FLO’s business opportunities, Daniele became CEO of the company on the death of his father three years ago. Daniele’s mother became chairman of the board, holding the majority of shares but without an operational role in the company. On taking over the running of the business, Daniele became aware of the huge weight of stakeholders’ expectation on his shoulders. “People who had worked alongside my father, who had been with the company from the very start – my father’s trusted advisers – were now looking to me to fill his shoes. My father left us suddenly and they were not ready for the changeover. I could sense their concerns about my moving in to this senior role. It was a really steep learning curve at the start.” For example, he had little if no idea about the full implications of being a director when he first took over. “Being a director isn’t just about running the business – there are wider legal and risk issues as well. What are you liable for? I didn’t know.” He needed advice to help him understand and manage effectively the legal consequences of the decisions he was making. Daniele also realised he needed to dramatically change how he dealt with family members. “A key learning for me was to understand the difference between the types of conversations you need to have. If I’m talking about a business issue with a family member who’s a director, I’m speaking to them as a peer; if they’re managers I’m speaking to them as their boss; if I’m speaking to them as a shareholder then that’s another conversation entirely, which possibly shouldn’t take place. Situations can look confused, even misleading. Compromising can often be detrimental to sound business governance and wider family relationships.” Daniele also learned that it can be ‘lonely at the top’. That’s why it’s so important to have someone who isn’t a family member as a mentor – someone who’s utterly discreet and trustworthy and can provide an objective external perspective on both business and family business issues. Under his leadership, FLO has negotiated a period of considerable change and met some significant business challenges, including acquisitions in the UK and, more recently, in Spain. European regulation around the use of plastics in the sector continues to be an issue and could even force changes in both products and technology for the company. Looking to the future, and the role of next generation members, Daniele wants to avoid what he refers to as “the family business obsession”. He says he doesn’t talk about FLO with his three young sons, nor does his sister Erika with her three sons, as they don’t want them to feel under any pressure to join the firm unless they want to. “We’d be delighted if they did, but we’d want them to develop a career outside the company first. And if they do join, they’ll have to have the right skills. Family businesses go wrong when family members are given jobs they’re not suited to. If they join the company they need to have something to offer in whatever position they may take, not necessarily an executive one. It’s tough enough being a family member”. This feature forms part of the PwC Global Family Business Survey 2016. It has been reproduced with permission of PwC.