Jessica Penny from family firm Penny Hydraulics adds her voice to the challenge for manufacturing that needs to do more to fill substantial skills gaps. According to a new study by CV-Library, Engineers are now top of the list of sought after graduates with more than 1,000 jobs available for engineering graduates in the UK, the employment website found. More than ever before, business owners are relying on foreign graduates to fill these gaps. This is often a win-win situation as many graduates see the UK as a place with many excellent career opportunities and UK employers can take advantage of the talents they cannot find in the UK. Many European graduates see the UK as an ideal location to kick start their careers with benefits such as flexible career paths, a vibrant technological and entrepreneurial sector as well as fiscal incentives. As a country we excel in hi-tech industries but we need engineers to make sure the UK stays ahead of our competitors: the rest of the world isn’t standing still, so we must do everything we can to uphold our position as a leading engineering nation. Engineering UK’s annual report finds that engineering businesses have the potential to contribute an extra £27 billion to the UK economy every year from 2022 if we can meet the demand for a quarter of a million new vacancies in the same time-frame. A strong British engineering sector is vital to the long term sustainability of our economic recovery, and increasing the supply of engineers is at the heart of this. With immigration being such a fraught political issue in the UK, it would be unwise to rely solely on immigrants to fill these important roles. To address this issue, Nick Boles, former Minister of State for Skills suggests that anyone with an interest in engineering must all play a part as he comments, “These shortages are compounded by insufficient numbers of young people, especially girls choosing a career in engineering. I am convinced we will only overcome these challenges if all those with an interest in UK engineering commit to greater collaboration and partnership.” In higher education, it has been encouraging to see entrant numbers to all AS level Science, Technology, Engineering and Mathematics (STEM) subjects rising by a third over the past ten years, and by 5 per cent between 2013 and 2014 alone. A-level mathematics and physics entrants have also increased significantly in the past decade. These subjects are the first step to a career in engineering, so their increasing popularity is a positive sign. Applications for engineering higher education courses have also increased by 5.5 per cent in the past year, with accepted applicants to engineering rising by 6.8 per cent. STEM subjects are valuable not only because they can lead to exciting, rewarding career options, but also because they enable individuals to be active citizens in an increasingly technological society. STEM subjects open doors, provide options and are vital to the modern age. Most students recognise that science & maths subjects could be useful for getting a good job. However, far fewer feel such jobs are attainable or relevant to them. To add to the problem, the profile of those who do go on to study particular STEM subjects and pursue certain STEM careers is too narrow. Women, working class and some minority ethnic groups remain under-represented in some disciplines and occupations, particularly in engineering. This not only means a pool of potential talent is being lost, but that those industries are missing out on the many benefits of a more diverse workforce. Studies show that these groups tend to have limited exposure to the world of STEM, which those with high levels of exposure generally gaining this through family members’ qualifications, occupations and interests. The greater the level of exposure to STEM, the more likely a student is to study STEM subjects post-16 years of age. If businesses can help engage these young people, it will increase the likelihood of young people from all backgrounds engaging with STEM. With a year-on-year increase from 12 to 19 per cent of firms reporting difficulties in finding suitable graduate recruits, it is clear a skills gap still exists, so those in industry must play their part to make sure the engineers of tomorrow are inspired to pursue a career in engineering. Most companies offer work experience places and apprenticeship schemes but this may not be enough according to Jess Penny, General Manager at lifting equipment manufacturer, Penny Hydraulics Ltd as she comments: “Apprenticeships and work experience placements typically start from the age of 14 years, we need to engage children at a younger age at primary school level.” Manufacturers can assist by liaising with schools to organise class trips to their premises or sending engineers to talk to children to provide real industry role models to give young people insights into STEM-related jobs. There are also a number of national programmes and events that companies can participate in such as Tomorrow’s Engineers, STEMNET and STEM Learning. The real answer may lie in STEM-promoting initiatives between schools and businesses according to Jess. STEM-promoting initiatives attempt to address some key issues such as the current perception of STEM subjects and careers, with both students and educators. Jess comments, “STEM teachers need to feel confident in giving careers advice in manufacturing and engineering. This is a key area where us as manufacturers must work more closely with educators. Where STEM teachers may not feel confident giving careers advice in this area, engineers and manufacturers have the opportunity to fill the gap, giving pupils a deeper understanding of what is involved in STEM careers, and what steps they need to take if they want to pursue them.” Businesses co-delivering activities such as careers workshops alongside teaching staff, can help develop the knowledge of staff and students. Teacher placement schemes in business, business-led workshops or open days for teachers can also help teaching staff better understand the STEM careers landscape and advise students appropriately. By supporting teachers, some of whom – particularly at primary level, may not be science specialists, business can help them have the confidence to teach STEM-related topics in creative and inspiring ways, and to promote STEM as a career path to their students. Involvement in female specific campaigns such as National Women in Engineering Day organised by the Women’s Engineering Society (WES) and Women in Science, Technology and Engineering (WISE), inspires girls and women to study and build careers in STEM and offer organisations advice on how to create environments where those women can do their best work and thrive. WISE state one of their core aims as “driving economic growth by working with employers to boost the talent pool from classroom to boardroom.” This is desperately needed as according to Engineering UK, the UK has Lowest Number of Female Engineers in Whole of Europe. Peter Jackson, Chief Executive of Engineering UK supports this stating, “We need a step rather than incremental change in the number of women entering the engineering profession in the UK if we are to meet the future global technological challenges that lie ahead.” Connecting business and education by the use of local economic partnerships between schools and employers using recently retired executives as enterprise advisers to bridge the gap between employers and schools is an idea from the Secretary of State for Education. Enterprise advisers would have knowledge of local business but also the time to help out, since they would be retired rather than engaging in day-to-day business activities themselves. Schools would be free to find their own advisers meaning they could find an appropriate fit for their school. The existing STEM Ambassadors programme enables anyone of any age working in a STEM-related job to engage with schools to encourage and promote STEM industries. Ambassadors not only work with young people to increase engagement with STEM subjects, but also help teachers by explaining current applications of STEM in industry. We believe that teachers are crucial in developing and inspiring young people to become the scientists and engineers of the future. But there is a much wider role that we can all play in helping teachers to make STEM-related subjects more engaging by opening young people’s eyes to their relevance to themselves and their own lives.

Tackling conflict head-on and taking a no-holes barred approach to its resolution can lead to life enhancing benefits within the family business. To fight or flee? That is the question. Harvard psychologist, Walter Cannon, explained that we have a genetic wisdom hardwired into our brains to protect ourselves from harm at all costs. So, we flee when we can: a predisposition readily seen in the family firm. In my interviews with several family businesses, the most often heard statements related to conflict are: “We tend not to get into it…” “Some things are better left unsaid…” or “I couldn’t possibly tell them how I feel; the family will fall apart”. But the irony is, the longer things go unsaid, the more likely the family is to suffer irreparable breakdown and that’s when the impact on the business can be catastrophic. Studies reveal that family firms tend to deal with internal conflict by adopting one of five approaches: Avoidance Accommodation Competition Compromise Collaboration. I find the tendency is for the majority of families to either avoid conflict altogether, for fear of reprisal, to postpone a crisis for as long as possible or to accommodate each other in order to maintain friendly relations. This may be because families in business have to simultaneously deal with a variety of relationships encompassing both personal family matters and business matters. It may also be because families in business hold multiple roles; within the family group a sibling, cousin, parent or offspring, might also be a CEO, chairman or executive director. No wonder then, that in such a unique and often fraught structure, the complex, sometimes tense family landscape is likely to be dotted with potentially lethal minefields. And, while most families see internal conflict as being unpleasant, even ‘destructive’ and usually as ‘bad’ what they seldom see is that healthy debate, admitting to conflict head-on, is the obvious way to relieve it. So families, our research tells us, tend to ‘avoid’ and ‘accommodate’ rather than enter the dangerous seas of debate and argument. The tendency to pacify is overwhelming, albeit that such tendencies may lead to bottled-up emotions and pent-up feelings. Unresolved conflict, worse unspoken conflict, is a pressure cooker and the avoidance of ‘debate’ or, if you will, ‘argument’, jams the safety valve closed; inevitably an explosion will occur and often the damage done is greater than if the pressure had been relieved in a controlled and sensible way. If avoidance is ‘usual’, then I would argue that the best way to support families in business is to teach them how to fight, in a healthy way, of course! This begins with presenting the possibility to them, that conflict can be viewed as “good” and “constructive”, not as ‘bad’ and ‘destructive.’ For many, locked in the throes of family variance, where business and emotional responses are inexorably confused, such an idea can be a revelation. A healthy, open attitude to conflict, allows us to recognise ‘difference’ and to make the important distinction between being ‘different’ and being ‘antagonistic’. If handled correctly, this approach will allow families in business to emerge from their conflict with renewed understanding and acceptance of each other and their individual personalities, problems and needs. But How Does A Family Set About This? How do they make the quantum leap from sullen resentment and suppressed anger, to open and articulate argument? First of all, they do not attempt to address the conflict themselves. They find a facilitator who is skilled in conflict management nothing that a good facilitator should provide a safe environment, gather everyone’s expectations prior to commencement of debate and help to co-draft “rules of engagement.” And a good facilitator will start by defining the problem with all key players involved and/or affected by conflict. Without a common definition or agreement about what the issue actually is, there is little hope of finding a solution. Only when the family understand what they are in conflict about, can we move on to resolve it. Finding this definition will require certain rules to be laid down by the facilitator, of which giving each side a chance to express themselves and each a chance to listen, is central. A facilitator will ask opposing factions to be prepared to agree to disagree and will request that round table talks should be, above all, open, honest and rational. To that end, he or she will request that extreme language (“You always…” and “I never…”) is avoided, and she/he will achieve consensus that interruptions and quick retorts are not acceptable, nor is personal criticism. The facilitator’s aim is to attempt to change the attitude of the family by discussion, suggestion and nuance – the goal being to change the fixed mindset, centred round the ‘I win – You lose’ syndrome. They will introduce more rational concepts where debate and the acceptance of another’s right to hold their own opinion prevail, eventually leading to the point where the facilitator can find a compromise acceptable to all parties. Along the route to this end, the facilitator will doubtless encounter the need to ask the family to listen and reflect. These two, simple words are key concepts. They may appear trite but their neglect lies at the heart of most conflict in family business. Central to the facilitator’s skill is the awareness of the ‘behaviours’ that indicate change and the ability to steer the family to the realisation that they can compromise. Compromise is the goal and what the family must realise is that compromise is not a failure or a battle lost; rather it is a mark of success and maturity. The achievement of reaching such a compromise is for the good of the family and also for the common good, i.e. it is to the benefit of all members of the family, and to the firm’s workforce, suppliers, customers and even the local community. To reach this end the facilitator will have to introduce the family group to the importance of certain ‘negotiating’ skills, including the need for each family member to become aware of matters as basic as body language and eye contact and the slightly more difficult art of listening, retaining and mentally ‘playing back’ what is heard. This, to be certain that family members develop the skill to listen to what has been said and not merely to assume that if “‘such and such’ said this, then he must have meant that!” The successful facilitator will also warn of the dangers, and actively discourage the desire, to form coalitions. Coalitions within the family are notoriously divisive, invariably lead to greater upset and typically create ‘victims’ and ‘bullies.’ Most family firms have within them, one or two members who hold onto entrenched views and any threat to these views are perceived as a threat to individual identity. Understanding this can breed willingness to compromise, on all sides. Above all, the facilitator will lead the family to face the specific issue at the heart of the conflict; to define the problem and separate it from other disagreements about which there may also be ill-feeling. (Other issues can be acknowledged but we should move on and set them aside for another time. They mustn’t impact upon the issues in hand). If this is the role, some might say the art, of the skilled negotiator, what of the family? Can they develop similar skills for themselves? Of course, but our experience shows that even when such skills are learnt, they are seldom as effective as when instigated by a third party – the impartial and professional outsider. However, if the family is to fully benefit from the introduction of an independent mediator then they need to work with that facilitator wholeheartedly and be fully committed to making the process work. To achieve successful resolution, the family need to cooperate with the facilitator and they need to adopt a simple set of rules. In most cases of conflict in family firms, people simply want to be heard…and genuinely heard. They want to be understood. They want their feelings to be validated. They want to feel they count. Often in family firms, there are perceived imbalances of power, whether related to shareholdings, positions in the business or generational positions in the family. So, it is critically important that all family business members are perceived as “equal” in a conflict management setting. A most effective way of enforcing this equality is to have family business members complete psychometric questionnaires which reflect their psychological orientations. This allows members to understand others’ views of the world rather than assuming others are deliberately trying to make their life a misery. In summary, family firms should be encouraged to see conflict as a “tool” for enriching ideas, plans and relationships, indeed for seeing their business ambitions fulfilled in their entirety. The degree of ‘bad’ conflict we see in such firms, is often directly proportional to the amount of time the embryonic conflict has been avoided. The essential lesson therefore, is don’t let things fester. When conflict arises, tackle it immediately and head-on before it grows into something uncontrollable. Above all, benefit from the experience and use the opportunity to get to know each other better and to cement closer relationships, to clear away negative and destructive undercurrents and to build for the future by resolving the problem together. When conflict is tackled head on, families not only learn to manage complex systems of relationships, but more importantly, they will develop more attractive growth environments for the generations to come. In other words, families who bite the conflict bullet and take action, such as bringing in the professional outsider to arbitrate, are more likely to survive and prosper, than those who don’t.

The drive for innovation features across each of the three Keeling generations; from fruit growing and glasshouse production, to the wholesale business, to a large international portfolio company. In 1926, the grandparents of the current Keeling siblings began growing rhubarb on their land in St. Margaret’s, Fingal, North County Dublin. Soon the family were producing apples, strawberries and tomatoes and exporting flower bulbs to the UK. Throughout the 1940’s, the business operated as a small farm producer, selling their products at the Dublin Fruit market. The second generation became involved and son, Joe Keeling, established Keelings wholesale in 1973. From growing own produce, Keelings transitioned to buying from growers, both nationally and globally, and selling to independent retailers and the services and catering industries. In the 1980’s, the farm expanded and Keelings became a fresh food supplier for national supermarkets including Dunnes Stores and Quinnsworth. Supermarket retail gradually overtook the wholesale side and their product range expanded. Keelings is an exemplar of rapid expansion; from its humble beginnings the company now boasts five divisions, imports from 42 countries, and operates in European, Asian and African markets. Family Involvement Despite the company’s expansion, the family remains largely involved in management and ownership. Joe Keeling remains in the business as Chairman. His daughter, Caroline is CEO and part of her overall management is developing Keelings Solutions, the ERP (Enterprise Resource Planning) facet of the business. Joe’s son, William, is property director and oversees the businesses in the UK. His other son, David leads the retail side from FoodCentral. David had this to say on the sibling-manager dynamic: “I think it has worked very well that we’ve tended to have our own areas that we’ve worked in and developed.” Family governance is an important feature of Keelings which has a family charter in place and holds shareholder meetings four times a year. The separation of family and business issues is clearly defined: “We’ve got a business that has over 2,000 staff so it’s very important that it’s run as a business and not as a family.” Process Innovation In Family Business The drive for innovation features across each of the three Keeling generations; from fruit growing and glasshouse production, to the wholesale business, to a large international portfolio company. “It’s a combination of many people’s ideas and hard work and then we probably make particularly quick decisions. We’re relatively entrepreneurial,” says David. Keelings lead the way in pioneering processes for fruit production in Ireland. “The drive for innovation comes from the pressure from consumers and retailers to continually get better every time.” In the 1980’s, Joe Keeling requested daily data on company profi ts which led to the development of the Keelings ERP (Enterprise Resource Planning) system software. This incremental innovation was developed over 30 years and in 2011, Keelings Solutions was established and the software came on the market. This division sells industry-focused solutions in stock management, sales and procurement management, warehouse and production planning, quality assurance and food safety management. Their experience of food production formed a sound basis for their progression into system management: “We’re not just selling our system; we’re selling our expertise and how to run a produce business”. Keelings has made strides in infrastructural innovation, opening Ireland’s National Food Park, FoodCentral, in 2010. “We just looked at our site and could see there were a number of benefits in being located where we are”. This 113 hectare food industry park is ideally located, in proximity to Dublin Airport, Port Tunnel and M50 motorway. One of the company’s major developments was their state-of-the-art glasshouses that extend the growing season from March to December. Keelings provide a significant percentage of all Irish-grown peppers. “It’s very often run on the basis of what’s good for the business. That’s the key to success for the business as well as having a lot of very good people,” concludes David Keelings.

Darren Stanley of Land of Rugs takes us through how incorporating core family values into business can help improve both the professional and personal relationship you have with your loved ones, as well as allow your enterprise to thrive. In some ways, a business is very similar to a family. Both have key members that are essential to the running and ongoing success of the operation, but each individual member also plays their own valuable part in proceedings. While you all have your own roles, you recognise that there is a clear set of values you operate with, and this is what keeps the train on the tracks. It is important to have a mutual understanding of what you are working towards as a family, and as a business. Implementing a clear set of values into your business can help to engineer a more productive, more enjoyable work environment. Ensuring there is a core set of ethical principles at the centre of your organisation will translate to the work that is produced, and the quality of customer service that your business offers. Work Hard, Play Hard I’ve always felt that it is important to clearly separate family and business time, just as you would when working a normal job. This allows everyone to stay refreshed and not feel burdened by the stresses of work when they are supposed to be relaxing or blowing off steam. At the same time, sometimes discussing work in evening hours is inevitable, and creative ideas can actually flow a lot more naturally if you’re in a laid-back setting. Make sure that your family regularly socialises outside of work. Your entire relationship should not be centred around the business, so take steps to ensure that the board room is not the only time you sit across the table from each other. Your business will only work if you all continue to have healthy personal relationships with each other, as confusion or frustration will only serve to hinder the quality of work your business produces. Learn From Each Other At some point, you may look to bring other members of your family into the business as well. If you have children, you may have considered whether they wish to enter the family business or go their own way. My partner and I have always encouraged our children to follow what they think will give them the most satisfaction, but they are of course welcome to join the business. It is important to encourage family members only to join the business if they have a passion for it, and if they have a work ethic and attitude that reflects the standards of the business. Of course, you should also recognise that you can learn a lot from family members who are new to the business. If you have children, you will have already discovered how much you can learn from a fresh mind, and your business is no exception. Always listen to the ideas of your family members, even if they are inexperienced, as they could potentially offer a new take on a subject that you had been overlooking. Even if their idea isn’t great, they will at least feel valued as an individual; this will encourage them to work more efficiently. The most important value that you should work towards, as a family and a business, is respect. Respecting each other both as individuals and as workers can only have a positive impact on how you operate as a unit.

Trust is a fundamental basis for both cooperation and competitive advantage in family businesses. The words ‘trust’ and ‘business’ written within such proximity may raise some eyebrows. However trust is a fundamental basis for both cooperation and competitive advantage in family businesses. Trust entails the acceptance of one’s vulnerability based on one’s expectations of the way others will behave. This vulnerability is central in many definitions of trust and is the condition of being open to harm, criticism or attack. Gene politics hold the business together through ties of trust, flexibility in decision-making and power in execution. Trust is a multidimensional, complex and dynamic construct that includes an emotional attachment of care and sincere concern. Risk propensity is also an element of trust. It is associated with qualities like consistency, competence, fairness, responsibility, helpfulness and benevolence. Shared trust in family businesses that are governed by fairness and justice emerges from a set of relational ethics that value cohesion and consensus. In family businesses, harmony within the family is characterised by trust and mutual understanding. Family business owners who have difficulties in trusting are characterised by passivity, pessimism and isolation. These types of leaders seldom speak positively of non-family coworkers and are described as paternalistic. On the other hand, family businesses owners who engage in trusting relationships have been associated with optimism and pro-activity. This type of leader embraces involvement of others in the family business. Among other things, these owners are transparent about the rules governing family members’ entry and involvement in the business. Communication, which is indispensable in any form of business, entails revealing oneself, being open to others, trusting, as well as raising issues that might generate conflict. Open communication about difficult issues is vital and this requires trust and willingness to be vulnerable. Family forums, such as meetings and councils, are valuable mechanisms to enhance trusting relationships, to improve communication and prevent and manage conflict effectively in the family business. Consultants and advisers may act as trust catalysts in family businesses by inspiring members and business partners to trust each other. Trust catalysts serve as a reminder of the family glue: they are good listeners, remain calm and put a damper on destructive conflict. Gene politics is a term that is used to describe the ties of blood that run through the family business and the biases such ties bring. Gene politics exists only in family businesses and generates a culture that is capable of motivating, nurturing, integrating and innovating. Gene politics hold the business together through ties of trust, flexibility in decision-making and power in execution. Trust in family businesses provides a means of co-ordination, reduces risk, and may lead to greater investments, and economic efficiencies. Trust enhances performance and long-term orientation. Leaders act on trust and this is especially so in family businesses where shared leadership is the prevalent form of leadership as the business grows through generations. Owner-managed businesses develop into sibling partnership and cousin collaborations demanding an ever-increasing form of shared leadership. In shared leadership there is tacit understanding, intuition and trust between parties. Trust needs to be sustained and nurtured throughout, particularly as the business grows and expands. The incumbents’ trust towards successors, and vice versa, is an important criterion for successful succession. Mechanisms that may lead to trust in the successors’ abilities in one family business may not work in another. To ascertain whether the abilities of the next generation will fit in with the needs of the business, open discussion between owner-manager, potential successors and other family members is recommended. Lack of trust is one of the causes of problematic relational factors that cause conflicts and that obstruct successful succession. Trust is also positively related to the transfer of knowledge in succession that needs to be created, shared and transferred over time to create value to the family business. Interpersonal trust that is indigenous to family businesses stems from common heritage and can be sustained by fostering additional and complementary forms of trust. This additional trust is fostered through openness to outside influence, clear and transparent policies and strong communication. The evolution of trust in family businesses is different from that in non-family businesses. In non-family businesses, relationships, formal contracts and controls are initially used to start business relationships. These are gradually complemented with relationship-based trust. Initially in family businesses, relationships based on trust are central, however, as the business evolves, additional processes that engender competence and system trust become increasingly significant. A recommendation for family business leaders is to juxtapose processes typically linked with control, such as policy formation, with those associated with trust building, such as communication. Sustained levels of trust are key ingredients for emotional capital that is central in the success of every family business. About the Author - Roberta Fenech is an associate consultant for EMCS and also a lecturer at St Martin’s Institute of Information Technology.

Sustainability is an age-old problem for businesses of all shapes and sizes across the entrepreneurial landscape. Measuring the success of non-family businesses is typically generational, whereas the judgement on family businesses is over a longer timeframe with sustainability analysed over decades. Considering that one job in three within the UK is family business-based (IFB 2008), an understanding of the phenomenon which leads to the vast majority of family businesses failing to progress to the second generation and even fewer to the third is essential. In short, why do so few family businesses succeed at sustainability with only 1 in 10 surviving to the third generation (BERR). The ability of the family business to disseminate the tacit and explicit knowledge required to deliver competitive advantage is at the heart of the successful succession. The central drive for sustainability, coupled with familial ownership and management, delivers a unique identity. The stakeholders of the succession process are the family, the founder, the successors and the advisers. Each can be a significant reason for success and equally the cause of failure. The article will continue by discussing these areas along with conflict which acts as a further primary cause of the family business breakdown. The Successors’ Role Lost tacit knowledge and the inappropriate replication of old decisions can lead to poor quality successors and an inability to deliver the same added value as the previous generation. Encouraging the potential successor to gain external commercial experience and either quality educational or practical expertise will provide the tools to aid independent decision making. It is important that this encouragement does not lead to a stifling sense of pre-destiny but provides the opportunity to develop ideas and independence. The Role Of The Founder The majority of founders refuse to discuss succession plans and continually change retirement plans and dates, aiming for an individual sustainability. The perception of indispensability becomes endemic and represses the next generation; so firm plans are needed to avoid the ‘just five more years’ sentiment. The overall strategy for the founder will include addressing their financial, business, family and psychological concerns amidst a backdrop of a strong board and an established peer network to enhance the succession potential. The founder can further play a part by helping to develop a robust family business culture that will endure without their central leadership. Areas Of Conflict And Resolution Conflict can greatly affect the chances of developing a sustainable family business through the generations. Typical conflict issues include the capacity and capability of the successor, family issues that directly affect the business, poor communication, and non-executive shareholder issues. Non-executive family shareholders are those individuals or groups that hold an ownership stake but are not part of the day-to-day running of the business. Arguments typically develop around the direction of the business, the dividend policies, the executive remuneration policy, the succession policies and other family employment rules. The implementation of a family charter and family council can go some way to addressing these associated issues and can give a formal feedback channel to address emergent and long-term issues that the family members face with the help of advisers. The Role Of Advisers Trusted, knowledgeable and experienced advisers can deliver detailed input to the succession strategy via skills audits, family charters, forecasts and business plans or they may simply act as a sounding board throughout the process. Family Matters Integral to succession success are the actions of the family. The introduction of the family charter can aid the long-term reduction of conflict. Included in the charter would be a set of rules on the entry and exit of family members to the business, capital rights of each participant, the salary and bonus structure enjoyed by the members, and a route for mediation resolution. Evidently, the facets of the family business problem are inter-related, no more so than the connections between founder and successor which exist in adult-child and founder-successor forms. This creates tensions and blurred bonds that will often drive the ultimate outcomes and sustainability. It is important that the relationship becomes an adult-to-adult rather than adult-to-child during the antecedent phase of the succession process. This will create the change dynamic and aid the removal of ambivalence via a combined professional-emotional bond. Bringing together the pertinent complex issues and strategising as a whole leads to enhanced opportunities for the sustainability of a key part of the global economy; family business. Of Course It Matters… This article began by asking whether sustainability in family business matters before moving onto a strategy for improving the success rate. Maybe there is space for an alternative view of family business sustainability that takes a step back from the prescribed wisdom. It may be worth considering that a large number of family businesses only ever intend to ‘survive’ for one generation; the available figures for survival rates do not examine the thousands of businesses that provide funds and resources to the next generation and their successors to continue entrepreneurial endeavours outside of the banner of the initial family business. The ‘failure’ rates may be hiding a sustainable business family ethic developed from within the initial family business too. About the Author - Richard Alun Jones, Commercial Finance Director who can be contacted on rjones@accural.co.uk

Billionaire businessman William Heinecke discusses his unique, entrepreneurial approach to philanthropy. Every year on his birthday on June 4th, billionaire William Heinecke closes his company of 45,000 staff for the entire day. “I ask everyone to give up their day to work for a charity, whether they are painting a school or working with their community. It is their gift to me.” This approach to active giving has become a hallmark of Heinecke’s philanthropic mantra: corporate social responsibility interwoven into his day-to-day businesses. When it comes to philanthropy, the Bangkok-based founder of publicly-listed restaurant, hotel and retail operator, Minor International (MINT), does not just write cheques. Much of his philanthropic contributions came from the proceeds from the book he authored, The Entrepreneur: Twenty-Five Golden Rules for the Global Business Manager, which has been published in four different languages and had various reprints. He is also heavily involved in elephant conservation. “Since commercial logging was banned in 1989, elephants and their mahouts have been unemployed. Many were just roaming the streets and begging,” he explains. He founded the Golden Triangle Asian Elephant Foundation in 2001 as part of one of his hotels, the Anantara Hua Hin Resort & Spa, which he raises money for through the glamorous Annual King’s Cup Elephant Polo match. To date the competition has raised US$750,000 for the foundation. He admits that his entrepreneurial approach to philanthropy may revert to cheque-writing over time. When he feels his company is sustainable, he will join Bill Gates’ Giving Pledge and donate at least half of his wealth to charity. “It is my personal goal to give more away over the years to come as we owe this to future generations. Currently, I am very focused on ensuring the continued sustainability of the company – long term business success so that we can ensure a bright future for all our stakeholders,” he told Wealth-X in an exclusive interview. What keeps the 65-year-old US-born billionaire up at night is the thought of the direct and indirect impact he has has on his 45,000 employees. “We employ 45,000 people. We say for every one employee we have we affect 10 lives, so that is a lot of responsibility.” His approach looks like it is paying off. Last year MINT realised record net profits of 4.1 billion baht (US$126 million), up 26 per cent on the previous year. The leap in profits meant that Heinecke, who owns a third in the company, was propelled into billionaire territory for the first time. MINT now operates over 1,400 restaurants, 250 retail trading outlets and over 100 hotels in 27 countries from Australia to Africa. His most well-known business is the luxury Anantara Hotel Group, whose postcard-perfect resorts are beloved by VIPs and celebrities from R&B star John Legend to footballer Cristiano Ronaldo and tennis champion Roger Federer. Heinecke is the true essence of a self-made man. One of the wealthiest expatriates in Southeast Asia today, Heinecke started out life as the son of a military foreign serviceman and a journalist. They moved to Bangkok when he was 14 and two years later, he had successfully introduced go-karting to Thailand. He persuaded the editor of Bangkok World to let him write a column on the subject, who agreed on condition that he secured advertisements to run alongside it. Heinecke’s first venture proved so successful that at 17 years old he took over from the paper’s advertising manager while still attending school. When he graduated a year later in 1967, he borrowed US$1,200 to register his first two companies under Minor Holdings (so-called because his entrepreneurial career began at age 16); Inter-Asian Enterprise which supplied office cleaning services, and the radio advertising company Inter-Asian Publicity. Five decades on and Minor International is the largest listed hotel operator in Thailand, with big names including the Anantara, AVANI, Oaks, Per AQUUM, Elewana, Four Seasons and Marriott. It also operates 1,200 restaurants in Asia including Swensens, Sizzler, Dairy Queen, The Coffee Club, Burger King, Thai Express and the Pizza Company, the largest pizza chain in Thailand, which Heinecke’s eldest son is in charge of. “Our restaurants served over 6,000 tons of ice cream and over 13 million pizzas last year,” claims Heinecke proudly. Heinecke, who dropped his American passport to become a Thai citizen in 1991, said despite his recent success he is still heavily involved in the businesses, and works “what most people would call very long hours, maybe 12 hours a day.” His record profits have been steadily rebuilt after a difficult period when the tsunami struck Thailand in 2008 and many of his businesses were damaged or worse. His Anantara Royal Coco Palm Hotel in Phuket was completely destroyed and 12 members of staff lost their lives. “It was devastating for everyone. We couldn’t bear to build another hotel on that site so we just deserted it and rebuilt elsewhere,” he said. He said that the natural disaster heightened his awareness of the need for philanthropy and now he considers it a key part of his business model, although he keeps it low key. “I’m not a big self-promoter when it comes to philanthropy. The best types of philanthropy are not exposed to the public because if you are doing it to raise your profile it is for the wrong reasons.” He added that he is asked to speak at public and private events every day, and he frequently does, as long as the firm will donate to his foundation to pay for his time. “I am happy to speak at public events but I sort the wheat from the chaff by asking them if they are willing to donate to a charity for me to speak. If they do they clearly think what I have to say is worth it.” And what is his mantra in life? “I don’t do anything I don’t feel passionate about and enjoy immensely. My advice is don’t work for money or prestige, work for your passion. Then you will always be successful.” Reproduced with permission from an article that was first published on Wealth-X and written by Tara Loader Wilkinson. To find out more please visit www.wealthx.com

When cultural traditions and interpersonal relationships coincide, businesses start acting in irrational ways. The world knows that Samsung, LG, and Hyundai are based in South Korea. Relatively few outside Korea, though, grasp how massive they actually are – did you know, for example, that Samsung encompasses more than 70 “affiliated companies” involved in everything from fashion to healthcare? These three firms are among Korea’s biggest chaebol – family-owned conglomerates whose internal diversity and mass of incestuous affiliations have no precise analogue in the business culture of any other nation. The chaebol were largely responsible for pulling Korea out of poverty in the latter half of the 20th century, and they continue to exert a titanic influence over the country. This raises an interesting question: How far does the “Korean-ness” of the chaebol extend? Since we know that each one is ruled pretty much unilaterally by its founding family, how relevant are Confucian ideas about family life to understanding how chaebol behave in the business environment? Quite relevant, as we found when doing research for a paper recently published in Academy of Management Journal (JungYun Han of National Taiwan University and Andrew Shipilov, INSEAD Associate Professor of Strategy, and I wrote the paper). Applied beyond the Korean context, our findings suggest that the line separating business strategy from cultural and interpersonal influences is largely illusory. Chaebol Family Values Confucian values place men in a privileged position within families. Upon marriage, a woman separates from her own family, surrendering her inheritance along with the responsibility to care for her parents as they age. By accepting her as a bride, the husband’s family is thought to have done a “favour” for the wife’s family, which they are obligated somehow to repay. This places the wife’s family in a submissive position as the wife establishes a place for herself in the new household. Korea has arguably veered away from undiluted Confucian culture in recent years, but the conglomerate owner-families have been classed among the country’s conservative holdouts. Add to the above, the fact that chaebol owner-families often intermarry – just as business families the world over have always done, with full awareness of how such ties can boost cooperation and information exchange between companies. We wanted to determine whether marriage ties between chaebol introduced a Confucian-style dynamic whereby the “husband’s chaebol” (meaning the conglomerate owned by the husband’s family, in which the husband himself is generally a junior member) lorded it over the “wife’s chaebol”. Market Entry And Exit The mind-boggling diversity of the chaebol entails a fair amount of market-hopping. To examine how inter-chaebol marriage ties affected market entry and exit, we traced the composition of the owner-families behind Korea’s 60 biggest chaebol over the period 1987-2011, juxtaposing it with data on the chaebol’s presence in various industry markets during the same years, as reported by a leading credit agency. We also interviewed Korean executives and journalists to verify our theories. The lopsided picture that emerged would make no sense to those unfamiliar with the Confucian dynamic. We saw that the husbands’ chaebol were, after marriage, more likely to enter markets where the wives’ chaebols were already present. Far from trying to repel the invasion, the wives’ chaebols seemed to step aside and make room, despite the business threat posed by the husbands’ entrance. In addition, wives appeared to help their husbands exit markets with resources intact, whether by buying up their assets (factories, distribution networks, etc.) at non-competitive prices or by not teaming up with other firms to take advantage of the fragile state of retreating husbands’ firms. Nothing here would be particularly out of the ordinary, if there were reciprocity in these relationships. But this was emphatically not the case: The wives’ chaebol seemed timidly to refrain from entering markets where their husbands had established a foothold. In markets where both spouses were present, the wives stayed close to their husbands, letting them be the ones to exit if they chose. Our interviewees confirmed the observed gender dynamic was rooted in Confucian values. “If in-law families have some conflicts, the odds are always against the wife because she becomes a part of the husband’s family,” one said. “That’s why even when a wife’s chaebol sees some potential economic benefits from marriage [i.e. through the opportunity to enter new markets], they hesitate to exploit it.” Interpersonal 'Trojan Horses' The behaviour of the chaebol has implications for all organisations. The business world is thick with cross-organisational ties mixing the professional and the personal, as when ex-schoolmates broker a collaborative relationship between their respective firms. While such ties are unquestionably valuable, they can also be “Trojan horses” through which status hierarchies – which often have a cultural dimension – can sneak into business behaviour. For example, strategic alliances built around board interlocks can be unbalanced by a high-status board member throwing his weight around and eliciting deference from other directors. As the chaebol prove, interpersonal ties can even influence interactions between firms that directly compete with one another. Therefore, it’s always naïve to talk about business competition as something removed from its social and cultural context. About the Authors - Henrich R. Greve is a Professor of Entrepreneurship at INSEAD and the John H. Loudon Chaired Professor of International Management. He is also co-author of Network Advantage: How to Unlock Value from Your Alliances and Partnerships. This article can be read on the INSEAD website here and has been reproduced with their permission.

A lot of multi-generational family businesses struggle to get buy-in from everyone. A family constitution can help secure, and maintain, commitment towards a unified goal. I often speak about family businesses needing to bring everybody together to proactively plan for the future. At FINH, we openly endorse the development of a Family Council or even a “Family Constitution,” the latter of which serves as an emotionally-binding contract, creating a vision for how the family and the business can grow together. Rather than the default arrangement — jamming business talk into discussions around the dinner table –family businesses can leverage their own unique, formal family constitution. The idea is to build around a sustainable model that promotes generations of pro-growth decisions. Creating a Family Constitution A family constitution can be as simple or nuanced as the family wants, but keep in mind it’s easier to get buy-in by starting with the lowest common denominators. In other words: everyone wants to succeed individually, as a family, and as a business. Start with the basic premise and go from there. Just like putting up a house, crafting a family constitution starts with the foundation and framework. The foundation is the people. This means members of the family get together, often with an experienced professional, to speak openly and create commitment. Every family business has its own dynamics and personalities, so the path to consensus is always different. The framework is made from procedural rules that are drafted directly into the formal constitution. This is when family meetings are scheduled, when the relationship between family issues and business issues is defined, and roles/responsibilities are established. What to Include Family constitutions are sort of like shareholders agreements. There’s a lot of flexibility in the standard shareholders agreement, but each one has to cover the basics like ownership, finances, assets, transfers, and restrictions. Family constitutions will vary from family to family, but each one should cover ownership, business interests, conflict resolution processes, wealth and title transfers, communication channels, and the role of the family council. Emotion is a real dynamic in family business, and it won’t go away just because a family constitution established a formal process. In no way should the family constitution be designed to squash emotions, either; make sure there’s sufficient room in the structure to accommodate intensity and passion when it pops up. Remember that the family constitution doesn’t force agreement. It codifies agreements once reached. Constitutions included family values, family goals, and the process through which those values and goals are synthesized. When used properly, a family constitution both creates a path and sets up guard rails to keep everyone on track. It’s a document everyone can refer to, read, and understand. Relationship Between Family Constitution and the Family Business Family constitutions are not the same thing as business constitutions. The business needs its own rules and processes, particularly if it includes non-family workers or management. Instead, the family constitution is the physical, documented result of strong family governance – it acknowledges that the business needs and the family needs aren’t always the same, but they aren’t completely separate, either. A family constitution helps bring the family together in cooperation. This inevitably helps the family business out, especially in families prone to infighting. It also serves as an example for times of future conflict. Each family constitution gives direction in a way that benefits the business, even if indirectly. Sometimes this takes the form of a “mission statement” or a “purpose statement.” The values and principles laid out here will underpin the conduct of the family business moving forward. Why Family Constitutions are Important? Creating a family constitution is not a guarantee of business success. It won’t make conflict go away in the family. Instead, a family constitution is a living, documented mechanism to reduce the ill effects of conflict and uncertainty. It should force the members of the family to consider what is most important to them and, more importantly, how to live out those values in their personal and professional lives. Most family businesses fail to make it to a third generation. There are major hurdles around succession, taxation, regulation, accountability, and infighting. As a family business advisor, I know first-hand how important it is to have a strategy and a vision. A family constitution won’t give you these things, but it can be a powerful ally in support of them over the long haul.

Understanding family businesses entails understanding the ‘family factor’, more specifically family ownership, involvement, commitment, values, vision, self-perception and succession. Family businesses play a prominent role in the global economy. It is a unique form of business as it is subject to influence from the family. The family is the original economic unit from which all other forms of economic organisations evolved. Families in family businesses are a unique fusion of ownership, strategic influence, concern for family relationships and a dream of continuity. Understanding family businesses entails understanding the ‘family factor’, more specifically family ownership, involvement, commitment, values, vision, self-perception and succession. When addressing the family in the family business one needs to be sensitive to the way families define themselves as there is a great deal of boundary ambiguity, which can be navigated only via the family’s personal definition of family. Family influence in family businesses may vary from one-sided control of the strategic direction of the business to one where strategic control is left entirely in the hands of professional management. A family first philosophy or a business first philosophy may work well or fail, as a function of the changing demography of the family, and the environment in which the business operates. As both the family and business grow what is needed is not an enmeshment but a philosophy that mediates between a family first or business first approach offering a more balanced framework for decision-making and planning. Families share common goals and resources. As generations are added, the family business will have multiple family systems to consider. Each will have its own background, values, goals and development, but they are interconnected as a larger family system, as well as a family business. The family and business are not necessarily compatible and the family factor may impose costs and liabilities. Family, ownership and business clearly involve different and sometimes conflicting values, goals and actions and in a family business individuals may have multiple roles and priorities. Problems may arise from the unwillingness of family members to monitor, evaluate and discipline other family members such as in the case of nepotism. In other situations the family business may be more insular and self-interested than non-family businesses as outsiders are not trusted and seen as potential competitors and enemies. Family members may not always be able to supply the business with enough talent, for example, in businesses that require highly specialised knowledge of technology and markets. The family factor when invested in and harnessed well is a source of competitive advantage. This occurs when the family business puts high priority on the human capital, emotional capital, social capital and financial capital. On human capital one may say that family members are motivated, committed, flexible and have been socialised and trained early to understand the nature of the family business. Family businesses have an advantage in building social capital as they have a distinct ability to cultivate and nurture long-standing relations across generations.Social capital enhances value creation in all businesses but in family businesses these advantages are absorbed in family members’ social links and in the family network’s configuration, and therefore are more sustained across generations. Family businesses have the ability to attract and provide good quality due to the goodwill and trustworthiness generated by the family name and commitment over time to customers. Families leverage their social and professional networks to ease access of valuable resources. Family cohesiveness is central in accessing and generating valuable resources particularly in difficult times. The total value of the family business to family business owners is the sum of both the financial and emotional value. Family businesses also make non-financial valuations of investments and assets together with financial appraisals. Non-financial values of the family may push the family business to: take an investment diversifying business activity in order to lower total risk, but that at the same time is value driven; make investments in brands or sectors that bring high reputation to the family; hold steadfast in their reluctance to diversify the business portfolio because the founding member started the company in this line of business, expressing legacy value; family business owners may continue to employ workers even through outsourcing would be more financially beneficial. Family businesses enjoy the competitive advantage of strong trustworthiness if they leverage the interpersonal trust that emerges during the early stages of a family business. As the family business grows this trust needs to be supported with the trust that the family members leading the business are not only willing but capable of performing effectively. Transparency and clear policies also help build trust as the family business enters the stages of sibling partnerships and cousin collaborations. Communication is a vital ingredient in re-vitalising collective identity and interpersonal trust. About the Author - Roberta Fenech is a freelance Occupational Psychologist currently reading for a PhD at the University of London

It is often said that the first generation creates the wealth, but that it is the second generation that creates the legacy. In an overseas Chinese Family Business (“CFB”) the traditional approach is for the founder to leave the ownership of the business in equal shares among all of the legitimate heirs. In the past, this meant all of the sons. However, it is more common these days to see all of the children of the founder becoming equal shareholders when the founder passes, if not before then. In the stereotypical CFB, the founder is also the father and the head of the family. While the founder is alive the family is kept together and working together in the business. Sometimes, the surviving spouse of the founder can also keep the family united in the same way. But what happens when the founder is no longer around? Can the siblings work together as equal owners to continue the family firm? Family governance expert, James E. Hughes, the author of ‘Family Wealth: Keeping it in the Family’ (Bloomberg Press) notes that in his experience, the members of the second generation will either see themselves as an ‘Inheritor’ on the one hand or as a ‘Steward.’ Two Different Paradigms What do we mean by a ‘Steward’? This term refers to a member of the second generation who wants to work together with his or her fellow siblings to see the family firm continue under family ownership. They see themselves as being under an obligation to pass on the family firm as a legacy asset to the next generation. To such a person, legacy is important. A Steward is likely to be emotionally committed to the family firm On the other hand, an ‘Inheritor’ sees their ownership in simple financial terms. Such a person is more like an arms length investor. Importantly, they want to be their own person, and they do not want to feel like they have to work together with their other siblings. Under our definition, they may lack emotional commitment to the family firm. In terms of family culture, a person who is a Steward has an inward looking orientation. This means they tend to look in towards the family unit. A person who is an inheritor looks outward. This means they tend to look away from the family unit and they like their independence. By definition, the paradigm of a Steward is very different from the paradigm of an Inheritor. James E. Hughes further notes that in his experience: Neither of these two paradigms is inherently right or wrong. There should be no question of judgement or blame involved here; You cannot convince an Inheritor to become a Steward; It is vitally important that all the siblings who are owners in the family firm can have ‘adult-adult’ conversations about whether, as an individual, they see themselves as a Steward, or as an Inheritor; and To understand the different belief systems and practices within single Asian families and the confusion they create. It is often the relationship between the founder and the siblings that will determine where each of the siblings comes out on this question. Where They Are All Inheritors If all the siblings see themselves as individual Inheritors, you know there is little point in attempting to get them to work together as a family team. Family teamwork and the skills this requires is not an aspect of the Inheritor paradigm. If all of the second-generation owners see themselves as Inheritors, they may still decide to keep their shares intact together out of economic necessity, to pool their financial capital. However, in this event they will be more like a group of unrelated investors. In this scenario, the family firm can be continued if one of the siblings manages to buy out the shares of the others so that this individual can become a controlling shareholder, and in a sense, the new ‘founder.’ This is known as ‘recycling’ the family firm. In the absence of the emergence of a new controlling shareholder in the second generation, it is reasonable to predict that a CFB controlled by a group of Inheritors will disintegrate, either as a result of internal family conflicts, or at the stage when the shares start to pass to the cousin generation. Where They Are All Stewards The second scenario is one where all of the second-generation owners see themselves as Stewards. By our definition, this implies an intention, a motivation, to want to work together. However, will good intentions be enough to make a difference? You could have a group of Stewards who feel very committed to the family legacy, but who still struggle to work together because they lack the necessary skills for effective communicating, decision making and conflict resolution, and because they don’t know how to overcome the tendencies of their family system (i.e. family dynamics) that are inappropriate for the business system. Having good intentions is one thing. Having the rights skills is another thing. It is often said that power corrupts. You could have a group who define themselves as Stewards, but who cannot really work together because of politics or power struggles. Stewardship and working together imply a need for participation and ‘fair process.’ If there is a sibling who seeks to be too authoritarian, to be too directive in their leadership style, expect that there will be some problems with the group. You could have a family that are all Stewards and are fully committed to working together but where there is a lot of confusion over family, ownership and management roles. Most conflicts in a family business are ‘role conflicts.’ Fortunately typical role conflicts can be predicted and therefore planned for. The important tasks in this scenario will include creating good boundaries between family and business; and between ownership and management. The good news is that a group of Stewards is likely going to have the motivation to do the work necessary to improve their skills at working together and to adopt good family business governance structures and processes. This includes cultivating emotional commitment to the family firm. A Mix Of Stewards And Inheritors The third alternative is that some members of the second generation will see themselves as Stewards, and some will see themselves as Inheritors. The third scenario is the case where there is a mix of views. In practice this is likely to be the most common scenario. The danger with this third scenario is that it has the potential to paralyse things if the siblings are unable to discuss and reconcile their differing views. If some are Inheritors, in an Asian family, the Stewards may not be comfortable to move ahead on their own while leaving the inheritors out of it because they fear this will imply the family is not united. Accordingly the group gets stuck. A way to reframe this third scenario into a more positive light is to realise that a healthy family is one that can balance the desire to be together (something the Stewards feel comfortable with) with the desire to be your own person (which is what the Inheritors want). Logically a family system in this third scenario has both ends of the spectrum and just needs to find a way to integrate balance or integrate them. What Is Your Ownership Philosophy? This leads onto James E. Hughes next proposition which is that members of the second generation need to be able to have ‘adult – adult’ conversations about whether each individual regards themselves as a Steward or as an Inheritor. Before examining this concept of an ‘adult-adult’ conversation, why should it be important for the sibling shareholders to be able to have such conversations? These two groups will have different goals and expectations for their share ownership. They are two different types of owners. The two groups could be expected to have different time horizons, risk appetites, liquidity needs, and maybe different expectations for how the company should be managed. If the shareholders are not even able to acknowledge their fundamental differences of view point, if they are not able to ‘agree to disagree,’ or if they are unable to discuss mechanisms for bridging their differences, there will be no leadership for the family firm. If the shareholders are frozen or in confusion, how do the directors know how to govern the business? How can you plan for the future if you are not able to talk about what each owner, as an adult, really wants to do? Another reason is that ‘form should follow function.’ For example, any trust structures or family agreements should be drafted to take into account whether you are looking at the first (all Inheritors), second (all Stewards) or third (a mix) scenario. The way a group of Stewards would want a family trust structure set up, or for a family shareholders agreement to be drafted, could be very different from the way a group of Inheritors would do it. Adult – Adult Conversations What is an adult – adult conversation? James E. Hughes says that an adult – adult conversation is one where siblings can look at each other and listen to each other as adults, not based on their family roles as developed since childhood, and not based on the roles as defined for them by the business founder. In a family, roles and characters are defined from an early stage. It is common that one sibling will look at another sibling through a lens frozen in time. Nevertheless, life is about growth and cycles of change. An adult – adult conversation then is one in which each sibling can look at the other through the lens of the current reality. It is a conversation where you can seek to understand the other while knowing that you are not able to control their view, and they are not able to control your view. In an adult-adult conversation you are not able to impose your perception of what someone else ‘should’ or ‘ought’ or ‘must’ do; or what ‘father would have wanted.’ You cannot invoke ‘family obligation or duty’ against your sibling. Such conversations require a respect for differences. It includes being able to agree to disagree, and being able to work with people who have different views from yours. Conclusions There are two paths for increasing the chances of successfully perpetuating the life of a CFB and continuing the family legacy. The first way is through consolidation of the share ownership and bringing the family firm back under the centralised authority of a single owner. The second path can open up if the siblings, or a sufficient number of them, see themselves as a group of Stewards. However ‘Stewardship’ should be seen as an intention or motive to want to work together. These positive intentions will need to be backed up by the necessary actions work and skills to convert intention into reality. Stewards will also need to adopt sound family business governance practices. Finally, a group of siblings who are unable to have adult-adult conversations about whether they are each Stewards or Inheritors are likely to find themselves stuck and unable to make plans for the future.

Conflict is a natural part of running a business but when colleagues and employees are also family members, ordinary conflict can take on new dimensions. Corporations and non-family business have formal barriers to conflict between colleagues; Human Resources departments and the natural separation between work and family make it unlikely that a workplace conflict will have serious repercussions on a firm’s future. On the other hand, the interconnected nature of family businesses means that family drama, workplace issues and conflicts about the business can more easily become serious problems without special handling. Many, if not most, family firms lack formal processes and strategies to mediate disputes, making it difficult to prevent inevitable quarrels from developing into ongoing issues. Here are five rules to help manage conflict in a family business: Rule 1: Leverage formal governance structures to mitigate conflict One issue that we have seen arise in many family businesses is that family members may lack a forum for discussing issues in the business. Formal structures like family councils, boards and family forums can offer family members a safe, organised way to bring up issues and negotiate conflict. Formal governance can also help mitigate family and financial issues by separating ownership of the business from its management functions. Rule 2: Give family members space (and permission) to air grievances One problem that we frequently see in businesses with a first-generation matriarch or patriarch is that family members may lack a safe way to express their needs and concerns. When people don’t feel listened to or appreciated, seemingly small problems can mushroom into major business and family drama. To help prevent conflicts, family leaders should actively encourage family members to air concerns constructively and give them the space they need to disagree. Senior leaders should come prepared to listen without judgment and be willing to fairly consider what is being brought up. Rule 3: Don’t let business bleed into family time (too much) It’s very challenging to keep from bringing business home, but one way that conflicts turn into family drama is by failing to keep them separate. Family business leaders must set the example by separating business and family time as much as possible. One way to make this separation possible is by having formal spaces and structured times to discuss business issues. Explicitly making other times no-business zones can help family members relax into their personal roles and get away from work. Rule 4: Communicate early and often about issues Many large complications start as small problems that could have been resolved with early intervention. Sometimes, spotting issues early and addressing them through clear communication can be enough to prevent a conflict from developing. Even when family members see each other regularly in the business, formal family meetings can be a better place to hash out complex issues. Whether it’s at a family retreat or simply at a separate meeting, making a break from daily routine to tackle the big issues can help open lines of communication. A formal setting can also help ensure that issues are not ignored and that members of the family have the opportunity to make their opinions heard. Rule 5: Bring in experts to mediate major conflicts Some issues simply cannot be resolved internally. When family members become entrenched and constructive dialogue isn’t possible, an objective expert who is trained to help resolve conflict can help cut through the emotions and focus on issues. A mediator can also help guide a family through initial conversations all the way to a final resolution. We have found that many family groups can achieve more in a few hours with an outside expert than they have in years by themselves. Final thoughts Many conflicts boil down to age-old family disputes. It’s common to see businesses that mirror family hierarchies. For example, parents might run the company together or a favoured eldest child might serve in an executive role while other children and spouses fill in other management positions. However, these parent-child and family dynamics can make the separation of family and business even more difficult. Leaders must be able to treat children like employees and managers during business time to help reduce the risk that family dynamics will damage the business culture. Ultimately, managing family conflicts often comes down to creating better communication skills as a family. While conflict can never be completely avoided, treating it as a normal part of business and developing the skills to handle it can go a long way toward building healthier business and family ties.