‘Family’ in fambiz

Suppose you are the founder of a family business (fambiz). Your two sons are working with and for you. When they got married, they asked if their wives could join the fambiz. Your daughters-in-law seem qualified. But you have heard horror stories of in-laws who cause conflict in the fambiz. Would you invite them to join?

Or imagine you and your two brothers are running different areas of the fambiz. You are running marketing, your elder brother finance, and your younger brother operations. You never agree on big or small matters. The three of you fight a lot, so your father has to arbitrate. Business suffers. Are you and your brothers doomed to eternal rivalry? How can you learn to get along?

Take this case: You are 55 years old and your siblings are in their early 50s. Your father, who created the fambiz, is going strong at 75 and shows no signs of slowing down. You love your father, but he always treats all of you like kids, and does not let any of you make major decisions. You are chafing under what you call his dictatorial rule, and you want to break free. You also worry that if something happens to your father, there will be a fight over inheritance. But your father closes his ears to any talk of succession. How do you resolve this issue with him?

Or what if you are the middle child of five? Everyone in the fambiz (family and non-family alike) knows that you are the brains and the brawn, responsible for much of the company’s success. You generally get along with your siblings, but you know (and they know) that they don’t work as hard, or succeed as much. But your father’s last wishes before he died are that the shares of the company should be distributed equally among all five of you. That means you only get 20 percent, even if you feel you contribute 60 percent of the effort. How can you talk to your siblings about what is fair compensation, without alienating them?

Now put yourself in this situation: You are the eldest, and you are female. You believe that you are the best successor to your father in the fambiz. But in traditional Tsinoy tradition, the designated successor is your younger brother, simply because he is male. Can you convince your parents and the family board that you are the wiser choice, without alienating your brother?

Think of family

The above are real problems, not unique at all. They occur frequently in many fambiz in the Philippines and all over the world. Those that can afford hire business consultants, but such problems may often more effectively be tackled, not with pure management techniques, but with psychological ones.

Big or small, well-known or not, fambiz deals with several issues. Should the founder retire, and when? Should fambiz professionalize, and when? How can best successors be chosen? When is it best to retain the fambiz in the family, when to sell, when to fold? Should in-laws be chosen over professional non-family, or vice-versa? How can the next generation be enticed to enter and stay in the fambiz? How can non-performing family be asked to leave, without damaging family ties? How far can professionals rise in the fambiz, and how to retain them? Can family and business ever be kept separate? What are the pros and cons of working for traditional fambiz versus working for non-fambiz professional companies?

Fambiz constitutes anywhere from 80 to 90 percent of businesses in the Philippines, yet many are plagued with problems. As the Chinese say, “The first generation starts the business, the second maintains it, the third squanders it away.” Unfortunately, I find this frequently to be all too true.

But I assure you, fambiz can succeed despite the odds (or else I would have given up working with clients long ago). If everyone has the fambiz’s best interests at heart, problems can be confronted and solved reasonably.

In this column, I won’t focus on typical business issues like marketing, accounting, taxes, investments. Instead, I will discuss actual fambiz cases, from research and real life, and highlight best practices.

Unlike math, there are no right and wrong answers. But like math, there are techniques that work better than others. From time to time, I will also profile fambiz that I admire, to inspire you in your own businesses.

What topics do you want discussed in this column? Send me ideas. Tune in next week, as we discuss in-laws (or outlaws) in fambiz?

Queena N. Lee-Chua is on the board of advisers of Ateneo de Manila University’s Family Business Development Center. Her book “Successful Family Businesses” (Ateneo University Press, tel. 4265904) won the National Academy of Science and Technology’s Outstanding Monograph Award in 1995. E-mail the author at [email protected].