Seventy-five per cent of Irish businesses are family-owned but families are not necessarily happy or harmonious entities. However, there are ways in which families can work together productively and in harmony, creating the best outcomes for both the business and the family.
The first thing to remember is that conflict in family businesses is normal and inevitable, according to Ken McCracken, director and head of Family Business Consulting at KPMG.
“With any family business, there is always a finite amount of money, time, job opportunities and love to go around,” he explains. “Think of these as resources that are limited in some respect and remember that a lot of people are competing for these resources. This means that there is always some competition for these resources. For example, only one person can be the next CEO, and that can lead to conflict. This is normal and inevitable and once families realise this, they can stop worrying about the fact that they are arguing and start thinking about the compromises they need to make.”
Families that are serious about growing their business will need to develop a family strategic plan, advises BDO partner Stewart Dunne.
“They should ideally appoint a trusted family business adviser who also has experience in their business sector. This process will highlight awareness of the dynamics of family members working together; planning for succession/retirement; and dealing with potential conflict. The adviser will give them material to read up on and get them to complete a detailed structured questionnaire and conduct private and confidential interviews.”
Conscious of boundaries
Families should always be conscious of boundaries, McCracken continues.
“A regular source of arguments within family businesses is when the boundaries between business and family aren’t clear, and people don’t know what is expected of them. Being clear about the boundaries can help. For example, don’t talk to the children like you are addressing a board meeting. There is a difference in the roles of director and parent.
“When it comes to discussing your pay increase, remember ‘I’m your boss not your mum’ reminds the negotiating parties that this is a business discussion, not a family discussion. But when we go for dinner at the weekend let’s enjoy our time together as a family.
“Families should make an effort to think about where these boundaries should be and then keep them in place. Allowing the boundaries to be moved, or ignoring them completely, can lead to conflict,” McCracken adds.
How can these issues be avoided?
“A typical issue that family businesses face is what family members get a job and who decides on this,” says BDO’s Stewart Dunne. “Are there specific requirements for new family members joining? What about succession and is there an agreed plan and structure to deal with the transfer of ownership to the next generation? These and many other issues need to be addressed so there is motivated and not frustrated management.
Managing conflict well can make or break a family business, he adds. “A strong family business can cope with conflict, crises and stress. However, to do this there must be trust, an appreciation for alternative views and good communication. To achieve this, there must be strong leadership from senior family members within the company.”
Agreeing on how to agree or disagree is also critically important.
“Families should talk about how big decisions will be made and who needs to be involved in the discussion,” McCracken advises. “Even if a decision is made that a family member doesn’t agree with, they are more likely to accept the outcome if they have confidence in the decision-making process.”
Wearing several hats can also lead to conflict, he adds. “People who wear more than one hat – owner, director, trustee, family member – may have a conflict of interest when faced with important decisions. In these situations, you should think about decisions with each hat on. What you want as a shareholder and what you need to do as a director or trustee may not be the same as what you’d like as a family member.”
Finally, selling or passing on the business is a hurdle faced by almost all family-owned enterprises. “One of the key questions when setting out your strategy is considering the question ‘what do you want from your business?’ Some of the answers might be: long-term capital appreciation; dividends now; a lifestyle for me; a legacy for my children or a way of life for my family. You must remember that these are not mutually compatible. You will need to consider whether all shareholders are agreed on the priorities,” Dunne says.
Help is at hand
Dublin City University has just announced a new agreement which will see AIB and PwC extend their support for the university's Centre for Family Business to 2021. The agreement will enable the centre to expand its work to support Irish family businesses through research, events, publications and a new Connectivity Project, a peer-to-peer mentoring programme that will enable family business leaders to engage and share personal experience and learnings on specific issues of interest to family businesses.
While family businesses account for about 50 per cent of Ireland’s GDP and employment, PwC’s Irish Family Business Survey has shown they face a particular set of challenges to their long-term sustainability, with just 14 per cent having a fully documented succession plan, only 53 per cent having a strategy fit for the digital age and 36 per cent having family and business strategies that are not aligned.
Since its establishment in 2013, DCU’s Centre for Family Business has established a reputation as a hub of expertise and advice, helping Irish family firms to address issues such as generational succession, integration of family and non-family talent, inheritance and estate planning, growth and exports, and the role of entrepreneurship and innovation in family business success. The centre has engaged with more than 1,500 family firms through national conferences and other events since 2013 and has participated in the worldwide Successful Transgenerational Entrepreneurial Practices (STEP) project, enabling Irish family firms to draw on international research and practice insights.
"In addition to our ongoing research and outreach activities, we are very excited to announce our new Connectivity Project," says centre director Dr Eric Clinton. "This peer-to-peer mentoring programme will initially engage 20 business leaders from the Irish, US and European business communities to provide at least 10 hours of advice and consultation to one or two matched family business peers each year and will be a new and very practical layer of support that we can offer to support Irish family firms."
"With a rapidly changing business environment, family businesses have unique opportunities and challenges," PwC Family Business leader Paul Hennessy adds. "And with an economy that is showing positive growth, we see Irish family businesses seizing growth opportunities. However, these unique businesses need support and that is what the DCU Centre of Family Business is all about. We are delighted to support the centre and its great work, and we look forward to helping Irish families grow successful businesses in the years ahead."
Playing to strengths
Glandore is a family business that was established in 2001. It is Ireland’s leading provider of flexible workspace, with more than 2,500 desks across eight locations in Dublin and Belfast. The family also owns Suesey Street restaurant in Dublin.
Dad Michael and daughter Clare Kelly reveal how they make their family business work.
“One of the key things is that the family member wants to be in the business,” Michael says. “It’s a real problem when someone is being cajoled or forced into it against their will. That’s a recipe for disaster. When the family member comes in, it’s important that they are treated like an adult and they are given a level of autonomy so that the parent isn’t doing parent-child stuff, which is another recipe for disaster. That’s not allowing the young person to progress.
“It’s also important that they are playing to their strengths. Clare is in charge of marketing and business development, Rebecca [daughter] is the sales director and Fiona [daughter] is in charge of all new projects, and likewise we have other managers. But they all have their strengths that they work to,” he adds.
“You also need to complement the family’s strengths with other people who can drive the business forward. Sometimes in the early days you’re a Jack of all trades but people have their strengths and we are fortunate to be in a position where we can focus on them and hire really smart people for other areas,” Clare says.
“The key thing is that everybody treats everyone else as adults and everyone is professional. We are working with other colleagues from outside the family and life wouldn’t be nice for them if the family didn’t behave professionally. We naturally are very respectful of each other as a family and we do enjoy each other’s company and it’s one of the reasons we have stayed in the business,” she adds.
“It’s fantastic to see your family growing and developing and just to see them all the time. I’m a very fortunate man that I am working and building with my three daughters every day,” Michael says.
One team, one goal
Tayto Park is a theme park in Co Meath run by Ray Coyle, former owner of Largo foods, his wife Ros, son Charles and daughter Natalya, who is also a professional athlete. Charles Coyle talks about about how they have made the family business a success, remaining good colleagues and a loving family in the process.
“There are a lot of good things about being in a family business but there are also a lot of challenges. We speak honestly and frankly to each other, father to son, but you get to learn a lot very quickly. We are living in one another’s pockets, but the only time tempers get frayed is when it’s about the business,” Charles says.
“We are on the same team and have the one goal, which is making the business succeed. I know my father very well, so I know how far I can push the boat out in front of other people. He can say whatever he wants because he’s the boss. You only push the boat out as far as you can in public but in private you can say, ‘I really didn’t agree with that’, or ‘I think we should do it differently’. He’ll either take the point on board or as the boss can say ‘we are doing it this way anyway’. My mother is very much the peacemaker and my sister Natalya looks after our social media. “
Charles says one of the main benefits of a family-run company is that you don’t have to go through 20 layers of bureaucracy to get the colour of a sign changed. “If you see something wrong on one day you can get it fixed by the next. When you’re dealing with the public, challenges come up from day to day, but you can act on it immediately. When I go to other theme parks, I can see the benefits of a family-run outfit.”
But there are downsides. “The big downside – if things aren’t going well – you can’t ring up your dad and say, ‘I’ve had the worst day ever’, because he already knows that. I think one of the main things to remember is to have patience and appreciate the fact that everyone is on the same team. Everyone has the best interest of the business and family at heart.”