Dombey & Son. The Forsyte Saga. Steptoe. Family-owned businesses are the stuff of drama. And the stuff of headlines too: the Murdochs, Fords and Hiltons are as famous for their family rows as for their companies.
But in their suggestion that these family businesses are freaks, such headlines are highly misleading.
In fact, family businesses, large and small, are the backbone of the economy. Two thirds of all companies, public and private, describe themselves as family-owned. Think WalMart, Sainsbury’s, Ikea, Fiat, Samsung, Benetton and Barbour.
Far from being unusual, the family business has proved itself over the centuries. The world’s oldest family business, Kongo Gumi in Japan, was founded in 578 AD. England’s oldest, John Brooke and Sons, is over 550 years old. These companies have a lot of staying power and a lot of stamina.
It isn’t for lack of emotion: family businesses do conform to their soap opera image of being intensely emotional and no-one working with such companies would deny it.
“You get a lot of rivalry: sibling rivalry; father/son rivalry; mother/daughter jealousy,” says Peter Leach, a specialist and author on family business. “And you get a lot of out-of-office politics where two brothers may row, tell their wives about it, then make up but never get around to telling anyone. So, at Sunday dinner, the wives are still at daggers drawn.”
But you can’t fire your family. So you have to get your problems out in the open – and solve them. This is heresy, I know, but I often think a lot of organisations would function better if they couldn’t fire under-performers because they’d be forced to find ways of making them productive. Termination is often just the lazy leader’s way out.
Of course when companies are young, the rivalries and emotions are vivid but usually contained within a few key players. As family businesses get bigger, and grow further from their founders, they become highly complex.
No-one knows this better than Judith Derbyshire, company secretary for Clarks shoes. Her company has 350 family owners, only four of which work inside the business. “Emotionally and financially, they are very tied to the business. They identify with the name. They have a strong sense that, having inherited their stake in the business, they have a real responsibility,” she says.
Managing 350 passionate, committed owners is not a trivial challenge. So Clarks has had to find emotionally astute people like Derbyshire to find processes for containing all the emotion the business evokes.
“In 1993, we created a Family Council – a consultative body where owners can vocalise their views,” explains Derbyshire. “Before, individual family members might collar the chairman or the MD and drive him to distraction. Now, there’s a process for them to express any worries they have.”
Derbyshire and her 349 relatives can’t afford to bury the emotion implicit in that relationship, so they’ve found constructive ways of addressing it and capturing its energy.
Family businesses are among the most complex, dynamic, yet resilient organisations mankind has ever developed. Challenged by social and economic turbulence, they endure. Chaotic and emotional” Yes! But what else is business today”
Non-family businesses may be tempted to delegate all this messy, emotional stuff to HR, but the resilience of family companies demonstrates just how much strength it can impart if you learn how to handle it.
Most entrepreneurs talk about their company as their “baby”. That metaphor is no accident – companies are living organisms. And the place where babies grow up may be the best business school you’ll ever attend.