Generational shifts in family business
The initial glimmer of hope that the withdrawal of the resolution that removed Federico “Piki” Lopez as president and CEO of First Gen. Corp. would help resolve the intracorporate dispute among the members of the third generation of the Lopez clan may have vanished.
Last week, Piki Lopez asked a court to cite for indirect contempt some of his cousins who are major stockholders of the company for alleged violation of the court’s earlier order for them not to block or delay a major manpower hydropower transaction of the company.
The stockholders named are expected to oppose that move and argue that the actions on which the citation for contempt is based are within their authority to exercise.
Barring any miraculous change of heart among the protagonists, prospective investors in the family’s businesses may opt to hold back on their plans or, worse, stop doing of business with them to avoid getting caught in the crossfire.
After all, there are other companies in the country that are engaged in power production that are worth investing in that do not have the same corporate baggage as First Gen.
As things stand at present, the once politically and financially influential Lopez clan that had major interests in sugar production, power distribution and media has become a shadow of its old self.
This turn of events brings to mind a saying in family business that states, “the first generation builds it, the second generation sustains it and the third generation loses it.”
Business analysts say the second generation is able to improve on what its predecessor had built because their close proximity to it gave them a front-side view of or close connection to the stresses the business went through and learned their lessons.
No longer burdened by the birth pangs of the business and with its coffers full, this generation is more prepared to take on the risks of expansion or diversification of the business. And they often succeed because they have the benefit of past experiences behind them.
But most importantly, since they are siblings who grew up and learned the business together, they have strong emotional connections that make it easy for them to talk things over or be open to compromise in case of disagreements in the management of the business.
Seeing the close ties and the family dynamics, the in-laws often make an effort to stay clear of the business unless the siblings agree to their involvement or participation.
However, on account of disparity in age and changes in economic circumstances, that emotional bond and shared experiences often do not extend to the third or succeeding generations.
Having grown up in an environment of wealth and comfort, the latter generations are believed to be prone to a sense of entitlement or bravado that encourages them to be less cautious in making significant business decisions.
They also want to establish an image or reputation separate from their grandparents and would like to be less known as the grandson or granddaughter of a business tycoon.
Unless well-taught or disciplined by their parents, the close level of communication and give-and-take attitude that usually characterizes sibling relationships may not exist among first- or second-degree cousins.
In case of disputes in the management of a business co-owned by this generation and there is no older relative who enjoys the respect of the contending parties who can conciliate and patch things up, going to court to resolve their differences becomes inevitable.
Once it gets to the court, unless an amicable settlement is reached, one party is bound to lose. Sadly, the hurt from that loss would, as a matter of family loyalty, be passed on and suffered by the succeeding generation of the losing party.
The patriarchs or matriarchs of established businesses that are wracked by disputes among their surviving heirs must be turning in their graves. They’re probably asking themselves where they went wrong. INQ
