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A guide to family business succession planning

Friday, 11 February 2022

Succession planning is one of the most sensitive issues, and COVID-19 appears to have concentrated minds in this area.   Topics such as


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Tánaiste and Minister Donohoe launch new €90m fund for Irish start-ups

Thursday, 10 February 2022

The Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar TD and the Minister for Finance, Paschal Donohoe TD launched a new


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EFB-KPMG 2020 Global Tax Monitor

Thursday, 03 December 2020

In this challenging year, KPMG have explored the situation of taxation on family businesses in 54 countries and territories in order to offer an


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10 Tips for Bringing Your Children Into the Family Business
Monday, 23 May 2016 13:37

Thinking about bringing your children into your family or small business? Beware! This can be either a blessing or a curse depending on how you do it. Experience shows there are right ways to introduce your offspring into your business and, most decidedly, wrong ways. The following are 10 tips for pursuing the former and avoiding the latter.




1) Have them work elsewhere for at least five years.

There are plenty of rationalizations for why people hire their children as soon as formal schooling has ended. "We need help right away." "They would learn more here than they would anywhere else." "I'm getting older, and I need my potential successors around me." All are good reasons; however, the main reasons for having your children work elsewhere have to do with them, not you! They need time to mature, individuate and gain confidence learning and doing things as distinct human beings rather than just children of successful parents. They need to learn how to work, to be punctual, to earn their own money and to be held accountable. Everyone wins when potential successors have excellent training and gain skills and confidence outside the nuclear family.




2) Understand generational differences.

Today's young people are more to more likely to want to "work to live." Contrast that with their parent's "live to work" orientation. The generation gap is very much alive in family businesses; the senior generation is mystified that their children don't want to work 80-hour work weeks. They see the live-to-work mind-set as a lack of commitment to the business, and that's not entirely fair nor is it cognizant of their children's – and other younger employees — desires for a different workplace experience.




3) Give them psychometric assessments to make sure their personalities and capabilities fit the jobs contemplated.

Two older brothers were very frustrated with their younger sibling. He just didn't seem capable. Assessments revealed that he was temperamentally unsuited for his role in the family firm; he was in a position that demanded amazing attention to detail and strict deadlines, but he had much more of a big-picture, laissez-faire attitude. How had he come to be in this position? His older brothers, having entered the family business earlier, took the roles for which they were best suited. When he came along, the only management position available was this one; he was very much a square peg in a round hole. Some initial assessment for job fit would've gone a long way toward improving both business function and family harmony.




4) Hold them strictly accountable.

 but not to an unreasonable standard. Family members, more than any other employees, need to be held accountable for their actions. They need to have crystal-clear roles and responsibilities and regular reviews to make sure they're living up to the requirements of their job descriptions. The biggest morale killer in small businesses is underperforming or dysfunctional family members who are allowed to meander through various roles in the business with virtually no accountability and to inflict themselves on others in the organization. The opportunity costs for coddling underperforming family members are tremendous.




5) Communicate formally and regularly with a third-party facilitator.

It's hard to be in a family, and it's really hard to be a member of a family business. You can take to the bank the fact that virtually every family employee thinks she works harder and contributes more than anyone else and stews over this "fact." Family businesses have a greater need for formal communication in order to resolve perceived contribution issues as well as discuss and resolve a host of other pressing family and business ones. If they could discuss these often volatile topics constructively and productively by themselves, they would. Since they usually can't, they should seek the help of a talented facilitator to get the most out of themselves and their meetings.




6) Don't assume there's interest in working in the business.

In the 1995 movie "Sabrina," Harrison Ford laments to Julia Ormond, "I've been following in footsteps all my life." Don't assume that your children or grandchildren want to follow in your footsteps. And they shouldn't assume that you want them to! A family member entering your small business ought to do so intentionally of his free will. Make entry into the business formal and deliberate vs. casual and impulsive. A family hire should be treated at least as carefully and rigorously as any other hire.




7) You shouldn't hire a family member because he "needs a job."

Related – don't let anyone flunk into a job. You should demand that a potential family hire be able to walk into your place of business with his head held high. He should be able to point to accomplishments in previous jobs, promotions and valuable leadership experiences. Hiring a family member who is down on his luck or who can't seem to hold a job anywhere else is a recipe for poor morale.





8) Don't pay family members the same.

The default payment plan for many family businesses is to pay all next generation family members the same. After all, you love them the same, right? This is foolish. Every employee, family member or not, brings different talents, skills, attitudes, ambitions and capabilities. Family members, like everyone else, should get paid wages commensurate with what the market bears for the given position.





9) Avoid turning in-laws into outlaws.

Some family businesses view in-laws with a jaded eye. Shouldn't someone with the intelligence and good sense to marry your son or daughter also be judged to have the good sense to know how to work productively in a family business context? Why does it make sense to ignore the capabilities and talents of in-laws as potential employees and even business successors?





10) Get rid of morale killers.

It is sometimes necessary to prune the family tree. Several times a year we get calls from family business leaders who are wrestling with underperforming, sometimes incompetent, family members. The acid test question: "If this person were not your son, would you keep him on your payroll?" The answer almost always comes back a profound "NO!" Pruning the family tree almost always results in business productivity improvement. There are, however, usually family repercussions. See the point above about hiring a skilled facilitator to manage difficult family conversations.


Managing the intersection between family and business is quite difficult. These 10 tips will help you realize that delicate balance more effectively.








My Big Idea: The Dubliner who's marketing frozen veg in a fresh way
Thursday, 19 May 2016 10:47
A man branching out on his own from a Family Business.
Sam Dennigan (30) from Oldtown in North County Dublin is the founder of Strong Roots, a new frozen sweet potato chip brand.For ten years I worked for my family's business, Sam Dennigan & Company, one of Ireland's biggest fruit and vegetable distributors.
I worked across all parts of the business, from market stalls to IT and eventually to sales and marketing, where I managed several frozen vegetable brands.
It was there I saw the opportunity for Strong Roots.
Frozen vegetables have always been marketed in quite a boring way and perceived as low quality by consumers, whereas lots of fresh vegetables are going through a sort of renaissance, with products like kale and courgette growing rapidly in popularity as shoppers become more health-conscious.
I realised there was a gap in the market for a frozen vegetable that was marketed like a fresh one.
Frozen vegetables are also a good option for a startup because fresh veg is so perishable that it limits your export potential. Frozen food can be held for up to two years.
I did a lot of research and travel to find a product that would work. I settled on sweet potato fries because sweet potato has soared in popularity in recent years - there's huge demand for it now - but preparing it can be tricky.
In my previous role I had managed procurement at one stage and had sourced a large sweet potato contract for a UK company, from a supplier in North Carolina in the US where a lot of the sweet potato consumed in Europe is grown.
The supplier said that the best way to get the freshest product was to finish it in the US and then ship it. The manufacturer didn't follow that advice but it stuck with me and I settled on that option for Strong Roots.
I was accepted onto the Bord Bia/SuperValu Food Academy acceleration programme in April of last year and officially launched the brand at the National Ploughing Championships in September.
Our first stockist was SuperValu. Normally companies that go through the Food Academy programme start out in 10 stores but because of my background in food and the fact that we had a lot of capacity from the beginning, we were stocked in 100 stores from the start.
By Christmas we were in all 200-plus SuperValus nationwide. At the end of March we launched in Dunnes and also have agreements with Hendersons and Musgrave in Northern Ireland.
The plan is to expand into the UK and we are working with two major British companies on that.
I intend to introduce more products, another made from sweet potato and two more from other healthy vegetables.
Vegetables like kale, beet, celeriac and avocado are the focus, ones which are not currently represented in the frozen food isle and are growing in popularity.
Five people work on the business now and we are growing fast. It's been fantastic.
I initially funded everything myself but that was only sustainable for so long, so we secured a line of credit from Bank of Ireland. Giving away equity may be on the cards to assist the company's expansion in the UK because it is such a big market.
I'm keen that we hire great people, and they tend to be expensive, so an employee stock option scheme may be looked at.
The biggest challenge has been getting used to running all elements of the business, from finance to HR to marketing to strategy to all the niggling little issues that come with running a start-up.
I was used to just looking after my own department, be it marketing or whatever. That shift has taken a bit of getting used to."
Young farmers often live under parental microscope
Thursday, 19 May 2016 08:47

Below is a short read on a Bob Tosh, a farm management consultant's background and some useful advice for not just farmers but for any family business out there.  

We hope you find it of interest...




I probably stopped paying much attention to my father's opinion when I reached 18.


Of course, I take a lot more notice of it now as I've become older and realize the value of his life experience.


However, back then I had left home, either working on a farm or attending agriculture college, and our worlds didn't come that close together. I went on to serve in the army, attend university, get married and have a family. I made my own decisions, made my own mistakes and moved away from the close proximity of my parents.


As an adult, I can't ever imagine having to ask my parents for money, have them scrutinize what I spent it on or ask permission to go on vacation or get a loan for a new vehicle. I also can't ever imagine my wife having to live and rear our children under the constant gaze of her mother-in-law.


And yet this is the reality for so many young farm families who stay on the farm to take over the business.


Cash is often tight, and it makes sense to build on the same yard as Mom and Dad or have Mom and Dad move off the yard to accommodate the next generation. Frequently, there is only one bank account, which is operated jointly.


And then there may be other things to consider, such as attitudes toward child rearing, money, alcohol, work and education, which may differ between generations and between families. How many times do I hear things like "they can't manage money" or "my son doesn't work as hard as I did?"


And yet the reality for most of the world is that the kids leave the nest so that they don't have to endure the constant judgment of their parents. True, they might still be exposed to an opinion or two, but they aren't living and breathing it on a daily basis.


I blame the "honeymoon period," which are the early days when everyone is getting along and decisions are made in the glow of family harmony. However, this only sets up families for failure later on.


There are three circles of the family business — family, ownership and management — and it's important to know in which circle decisions are being made. As well, no matter which circle you are making a decision in, remember that formality will always be your friend.



So before you build that new house on the yard, here are a few things to consider:

1. Set boundaries around the overlap between family and business.

2. Understand that everyone needs their own space.

3. Keep in mind that the children are also adults who need financial autonomy.

4. Recognize that your children won't simply accept that they are a source of cheap labour. They will want to manage the business sooner than you might want to let go of the management.

5. Accept that your new daughter-in law-might not react well to your input on child rearing or whether she should work off the farm.




Elaine Froese wrote an excellent book on the topic, called Farming's In-Law Factor. I would urge you all to read it, but do so before you've built that house next door.


Begin by reading the sections that apply to others and only later focus on the section that applies to you. This will perhaps help you understand other perspectives before simply looking to reinforce your own.


There will need to be compromise from all sides and an ability to communicate so that a difference of opinion doesn't become a personal insult. Don't set yourself up for failure. Put some rules in place before the first foundations are dug.







Source: Bob Tosh, a farm management consultant in MNP's Farm Management Consulting group in Saskatoon


The 4 Step Succession Plan
Wednesday, 18 May 2016 15:06

A family business is either at its weakest during succession, if the new owners are not fully equipped or untested, or on the brink of a brilliant new era. One thing is certain, the business cannot stay the same, even in the hands of blood relatives, and that's why it's important to plan the succession process to its best advantage.


Most family firm owners trust their own flesh and blood more than an outsider to take the reins when they have to step down, but that trust can still be a little unstable.


They want to know that when their business is handed over, the new management will govern their evolving legacy to even greater heights – not leave the business stagnant or worse, diminished.


Plan for Succession Success

If you fail to plan, then you plan for your business to fail in succession.



1. Evaluate Realistic Goals

Before you can accurately discern what you are expecting of a successor, you need to first draw up a clear idea of what you and your fellow owners expect from the business going forward. Are there specific goals and objectives you'd like achieved? Write them down and agree on them.


These can include business performance goals, as well as what the retiring family members expect the business to afford them after stepping down.



2. Document the Succession Plan in its Entirety

Identify every successor, from owners to managers of the business, and write down their exact roles and responsibilities. The succession plan must also serve as a clear timeline for how long succession will take for each role and how succession will be achieved.


When it is documented properly then there will be less minor disputes escalating into major ones and every family member can be clear on their path going forward – including what they need to do to fit into their new roles, in the case of the younger generation.



3. Clearly State a Governance Process

With different generations of the family now having a vested interest in the running of the business – and the older generation having the experience, but now the younger generation having the status – it becomes more important than ever to set out clear governance procedures.


Document everything from how certain disputes will be handled, to the succession plan itself with details of every family member's role going forward and make sure that every family member and stakeholder is on the same page.


It's important for the successor to know when they will have the support of key family members in business affairs, and what kind of support they can expect.



4. Detail the financial Implications of the Succession

Draw up an agreement for the sale of the business that is fair for all parties. It should reflect the worth of the business while also minimising the tax incurred from the transaction.


There are also different ways that the business can be legally handed over to the next generation, including the successors purchasing the business, or it being treated as a gift from the present owner to the new one. All this should be worked out as early on in the succession planning as possible so that all parties know what is to be expected in the eventual handing over of the reins.


The succession plan should state a clear plan for the transfer of stocks between family members in the hand over. If spouses of those involved in the company are stakeholders then it should also be stated here what say they will earn in the running of the business.


Make sure that your legacy only grows with the next generation of the business by ensuring that nothing is left unaccounted for in succession – this way both the present generation and the future generation can work together towards the same goals.






Need further Advice? Contact us now at Tel: 021 4320466 / Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it  


Family-owned firms 'better equipped to survive downturns'
Wednesday, 18 May 2016 09:06
Long-lived family-owned businesses are more resilient, on average, than rivals and that is in part because they have a longer term orientation and are better able to retain the lessons of past crises.
Family-owned businesses are the "social and economic backbone of all communities across the world", including Ireland, according to Dr Justin Craig, inset, Professor of Family Enterprises and Co-Director of the Family Enterprises Centre in the Kellogg School of Management, at Northwestern University, in the US.
He is among the key note speakers at this morning's launch of a report by Fingal Co Council and Dublin City University's Centre for Family Business entitled 'Lessons in Resilience and Success: A Snapshot of Multigenerational Family Businesses'.
The report has examined 12 Fingal-based multi-generational, family-owned businesses - including well known food producers Keelings, Wrights of Howth and Country Crest. It sets out their unique position in the marketplace and makes practical recommendations for their sustained growth.
Click here to read more: 
7 Reasons Why You Should Make An Enduring Power of Attorney
Tuesday, 17 May 2016 14:54

Thanks again to Neil J. Butler & Co for passing on this useful piece on a having a power of Attourney. We feel that this need to be circulated constantly as it is so important in any turn of events.


An Enduring Power of Attorney is a document in which you appoint who should look after your personal and your financial affairs in the event that you are unlucky enough, through accident or illness, to lose your mental capacity.It is only ever intended to become effective IF you lose your mental capacity at some future point in time



1. You decide who is to look after your personal needs, if required



2. You can also have your assets or business affairs taken care of in a structured way



3. You give yourself peace of mind , knowing these arrangements are in place



4. You can ensure there is no undue financial strain imposed on family due to your illness or disability



5. While a Will covers things after death , this document governs the period from mental disability to death



6. It does not activate until something profound happens to you



7. You can change it or revoke it at any time up to it’s activation, if you wish







'The real value is in implementing your plan - although that's easier said than done'
Tuesday, 17 May 2016 14:29

THE PROCESS OF developing a strategy for your company doesn't end with a beautifully crafted business plan that sits on your office shelf and is dusted off from time to time.

The real value is in implementing it, although unfortunately that is easier said than done. To be truly effective, the plan must become a part of the daily, weekly and monthly routines that drive the sales and marketing initiatives, production efficiency, human resource practices and so on in your business.

Here are 4 steps that can help with this process:



1. Summarise the plan on a single page

Your plan needs to be converted into something that is easy to have on hand, simple to reference and can be communicated effortlessly. An 80-odd page document is not easily referenced, it needs to be a single page that highlights the main areas of focus in the plan.


If that's the best approach. then why do successful companies go to the effort of producing these large documents, you may well ask. The answer lies in a Mark Twain quote: "I didn't have time to write a short letter, so I wrote a long one instead."


It's often easier to ramble on and tell you everything rather than deciding what is truly important and what your audience needs to know. The business plan is a great way for you to clarify your thoughts, consider all the steps and ensure that a holistic view is considered for the proposed actions.


The reality is that not all staff need to know the thought processes behind a current strategy, but they do need to know what is most relevant to them.



2. Set achievable targets and track progress against them

What gets measured, gets managed and gets done. Knowing that someone will be scoring your performance helps focus your attention. So ask yourself, "How am I going to keep the plan on track?"


Think of key performance indicators, or KPIs, as a way for a company to keep score. They help management understand if the company is achieving the objectives set out in the plan. Unfortunately, far too many companies think that standard financial KPIs are sufficient. They are not. KPIs should be driven from the strategy and thus are personal to each business.


Measuring the right KPIs and determining what actions you need to take to ensure that you meet your targets can elevate a company above the competition. For example, failure to meet a quality metric should lead you to ask why, discover that there is an issue with the supplier and ultimately source from a new provider.




3. Find the person who will lose sleep if it isn't done


If you want something done, you need to make someone responsible and accountable. Relying on a group disperses the responsibility and can lead to delays in decision-making and meeting the targets. Holding one individual accountable means that they will be focused on delivering their metric which supports the plan.



4. Communicate and make sure everyone is aligned

Staff need to believe in the plan if it is to be successfully implemented. They need to all be pointed in the same direction heading for the common goal. There is a long history of companies failing, despite having the right strategy, simply because they couldn't get the staff on board.


To do this, you need to communicate the plan and take the time to answer questions from staff. Make sure to address their concerns and seek their feedback. In short, ensure that they understand the vision for the company and their role in it.


Tom Early is a senior investment adviser at Enterprise Ireland, which is running a series of workshops for exporting SMEs on 'finance for growth'.





Source :

Family Governance
Monday, 16 May 2016 15:36

The goal of family governance is to establish a sustainable family structure in relation to the family business. The main purpose of family governance is to define how a family-owned company is to be run once more generations get involved and/or more family members become active within the family business. It covers such questions as how business decisions are taken in such case and how the company's future strategy is to be set out. A good family office in Switzerland can assist you in putting a solid family governance code in place.



What does family governance mean?

The term 'family governance' is not immediately clear to most of us. The main aim of family governance is to cover how a family-owned business is run once more generations or relatives get involved in it. Family governance is therefore not an issue for public companies, but in a family-owned company it could be essential for the continuity of the business to put the right governance in place at the latest when, or just before, the next generation gets involved.



❝ How often do you sit together and discuss the family business? ❞

Family governance will not be an issue if you own 100% of a company yourself and your only child will take over the company (see succession planning). But if you own the company jointly with other relatives and each of you has children, you may very well imagine that the next generation of owners might not completely agree with each other on the way forward.



The complexity of operating a large family business

The more family members get involved in the business, the more their opinions can differ. This could result in a lack of consensus between the family members as long as no clear decision structure is laid down. How will the company strategy be decided on when the family members do not agree with each other on the way forward? How will family members who hold shares in the company, but who are not active in it, be financially compensated? How do family members communicate with each other? A Swiss multi-family office can play an important role in organising this potential trouble spot.


Additionally, good communication between the company and the (inactive) family members is of high importance. If this does not function well, the company, and its performance, could become paralysed. It could also have a negative impact on the relationship between the family members. And how will the company deal with potential threats to the business? All these issues are particularly problematic where part of the company shares are traded publicly.



The main components of family governance

Although there are no set rules, we usually see the following three components:  Family Governance overview


 -  A family constitution, in which the basic principles of the business and the family's policies and views are laid down.


 -  A family council - a council that represents all the family members vis-à-vis the company.

 -  Regular family assemblies, annually or twice a year, including information about the business, education of the younger generations, strategy of the company, potential changes of ownership, etc.


Family governance addresses all these topics and more. Most of the business-owning families find family governance a very difficult topic to address and a lot of family offices are not familiar with this topic at all. In case this topic is important to you, you should make sure to select a family office in Switzerland that has the necessary know-how and expertise to support you with putting the right family governance in place.


How we support you

If you have any questions about putting a family governance code in place and/or the selection of an appropriate multi-family office, please do not hesitate to contact us. We look forward discussing it with you.










Setting goals and objectives for an effective family business succession plan
Monday, 16 May 2016 09:56

Owners of family businesses often operate and manage their companies on instinct and personal experience, which may leave their management team and stakeholders guessing about the future direction of the business. When implementing a succession plan without the necessary goals and objectives it can hold dire consequences for the business, and may very well lead to disagreements, low staff morale and a decline in productivity and profitability



A succession plan with effective goals and objectives that are aligned to the business strategy and thus the business objectives and business goals, will focus all activities on achieving well-defined targets and will provide a foundation for measurement and evaluation of future business' activities.



Why is it important to define goals when setting a family business succession plan?

Before setting out on the preparation of a succession plan, the family business owner should have a clear understanding of his or her role in the future of the company. These decisions should be communicated to the stakeholders and the goals and objectives should be aligned as such.



Establishing goals and objectives for a family business succession plan

Although the establishment of succession planning goals holds intrinsic challenges, family businesses should implement this process to ensure that all parties are knowledgeable and aware of the future of the business, thus making every effort to avoid conflicts that might harm the business' future.


Grant Thornton (PDF 433 KB) indicates that as preparation starts for the succession plan, the business should engage with the wider group of stakeholders, including family members, employees, suppliers and customers. Engagement and involvement of stakeholders in the development of the future of the company will ultimately result in their approval of the succession plan's goals and objectives and therefore foster greater business stability.



Aligning the goals and objectives of the succession strategy to the family business' overall strategic business plan

A succession plan can only be successful if it is aligned to the strategic business plan of the business, linking the succession goals and objectives with the overall strategic business plan. The development of an overview of key competencies for each position in the business is the roadmap or template for the succession plan.


Of vital importance is the development of specific benchmarks for each position in the business. The benchmark should be developed by skilled and qualified personnel that understands the overall strategic goals and objectives of the business, and can align the expectations and demands of the position with the business strategy and potential candidates, with the assistance of a human resources specialist. These detailed requirements can help ensure seamless changeovers of people into new positions, when required.


Research done by Dobson & Associates (PDF 30 KB) indicates that more than 67% of American corporations do not have a succession plan based on competency. However, the small percentage of businesses that follows a succession plan that is aligned with the overall strategic business plan is able to show quantifiable results.


In conclusion, the most successful succession plans for family businesses, are the ones that have been aligned to the overall goals and objectives of the business that are clearly defined and that provides for development of future business leaders from within.









Keeping a business in the family can be tricky
Thursday, 12 May 2016 10:13

There are benefits to getting involved in a family firm, but there are pitfalls too:

You can choose your friends, but you can’t choose your family. The same might be said for your business partners, but many people nonetheless choose to tie their professional and family lives together, bringing with it inevitable ups and downs.
But the Irish family business remains a dynamic and resilient sector, with a 2014 PricewaterhouseCoopers survey saying it provided more than 50 per cent of the State’s GDP and employment.
It is undoubtedly a unique business model that brings with it specific challenges and obstacles. Dr Eric Clinton, director of DCU’s Family Business Centre, says conflict can arise when family values that are “emotionally driven” clash with the business values that are “rationally driven”.
Some of the major factors include succession planning. While the average tenure of a chief executive in a family business is 23-24 years, only one in 10 firms will have a succession plan in place.
Clinton says this is the “hot topic” for family businesses.
“Succession for many family businesses is inevitable. It’s one of the biggest topics people want to talk about. How to do it? When to do it? Who to engage? Is it a family person? What if the family person doesn’t have the attributes?” he says.
Dr Melrona Kirrane, a lecturer in organisational psychology at the DCU Business School, says the onus on family businesses to elevate family members can often have a detrimental effect.
“The family business can’t afford to take a talent management approach, and the reason why they can’t is because of family dynamics,” she says. “While most family companies choose someone from within the firm to carry the business on, they don’t consider the successor’s capabilities, and that’s one of the main reasons for failure.”
The upshot of that is that only 30 per cent of family businesses are expected to survive the first generation. Only 15 per cent are expected to survive to the third generation, and less than 3 per cent are expected to survive until the fourth generation.
One of the ways to combat problems with succession is to put strong corporate governance structures in place. If rules are established and adhered to, the business is less likely to fall foul of some of the usual pitfalls.
What are the rules for getting involved in the business? Is it automatic because you are family? Do you have to work outside the business for a number of years? Do you need to have a particular skill-set or educational requirements?
Of course, when it comes to family, there will always be issues that arise. Clinton suggests a “family council” where issues related to the family are expressed and discussed.
“One of the things families are very often not good at is communication. We see conflicts between siblings; in-law involvement can also create conflict. Some family businesses don’t allow in-law involvement as a rule. That’s about trying to make sure there is harmony and no friction,” he says.
“We see a lot of firms that have a thriving business and it makes no sense on paper for them to be sold, but often it’s just that the family members can neither agree nor agree to disagree. It’s just not functional. Often it gets very personal, and irrationality creeps in very quickly.”
Kirrane points out another pitfall called “consensus sensitivity” which she describes as when people “want to agree the whole time and keep things harmonious”. However, that doesn’t always happen.
There are also gender-related issues. Kirrane says the data indicates that sons – and even sons-in-law – tend to be favoured over first-born daughters when it comes to succession.
“When it comes to daughters, they have a much rougher time. Only 2 per cent of daughters are likely to become presidents in family companies. One reason is the father’s desire to protect the daughter from the cut and thrust of the business world,” she says.
“Daughters also get a double message. Interestingly, women-owned family businesses are 1.7 times more productive than those run by men. They are also six times more likely to have a female chief executive.
“One of the reasons they do well is the feminine qualities of being supportive and co-operative and attentive. They’re less hierarchical and more likely to take more time over decisions and seek information and other people’s opinions.
“That can result in better management, and better business decisions being made. It also means they are better placed to deal with rivalry issues or wellbeing in the family. That’s productive as well.”
Power and competition
That is in stark contrast to the relationships between fathers and sons, which are categorised by control, power and competition.
“The son can want to establish his own identity really fast, leading to competition with the father. The son can feel pressure to outperform the father, which can lead to a lot of poorly thought-through decisions and strategies that may not be helpful,” says Kirrane
There is also the issue of the “glass ceiling” for non-family members in the company, whereby an impression exists that senior management positions will always go to family members.
Paul Keogh is currently chief operating officer with the Ballymore Group and has worked as a non-family member of a number of family businesses over the past 30 years. He says there are “a lot of plusses” to the business model, but that it “doesn’t suit everybody”.
“One of the things families don’t realise is they might meet for Sunday lunch, for example, talk about something to do with work, make decisions, and then you come in on Monday morning and the whole strategy has changed since you left the office on Friday,” Keogh says.
“The other thing that is quite common is that families don’t tend to write anything down. So if you’re a non-family member, you have to pick things up intuitively and realise a conversation has been had that you weren’t involved in. In a plc company, you would just go and find the strategy paper. There tends to be a lot more verbal interaction.”
Keogh also points to the “different mindset” of a family company, which is more concerned with long-term viability than profit-driven goals. “It’s much different to working for a stock market-listed company where the chief executive is completely obsessed with share price,” he says.
“A family business doesn’t answer to the share price and doesn’t have this quarterly review feel to it. Not everything has to be geared towards the financial reporting. They are not necessarily profit- and money-driven.”
Weighing into discussions as a non-family member of the business also brings with it its hazards.
“You have to remember that blood is thicker than water. The advice is to pick your battles,” he says.
“Don’t get involved in that grey area between what is a family dispute and what is a business dispute. If it turns out to have a family element, stay away from it. You are after all an employee and they are family. You have to be comfortable with that.”
Keogh says his advice to family businesses is to steer clear of employing in-laws and to have family members spend two or three years in a different company to get some outside experience.
“You can talk to your siblings and eventually tell them they are not working out, but it’s very hard to fire the in-laws. If you take them on, you’re stuck with them,” he says. “It’s also a good idea to get educated and to go off and spend two or three years somewhere else before you join the family business so you have a little bit of outside experience.”
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