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Father-son rivalry
Three views on the reasons for joining the family business
How can a father and son work together if both of them are strong entrepreneurs who want to control their own business? The story of Hans and Friedrich Grohe reveal some of the challenges and long-lasting consequences of father-son rivalry.
Some of the information in this article is based on Peter Jaskiewicz's 'The GROHE Case', which won an FBN-sponsored award in the 2007 Case Writing Competition organised by the European Foundation for Management Development (EFMD).
Hans Grohe started his family business at the age of 30. In 1901 his small factory in Germany began to supply metal casings for alarm clocks and soon diversified into other metal products. The business prospered, especially when it moved into making bathroom fixtures such shower heads. Hans looked forward to his three sons joining his business and continuing what he had started.
Hans' second son, Friedrich, joined the business in the early 1930s. Friedrich was a gifted entrepreneur who wanted to be in control - just like his father. Some conflict was inevitable; the question was how to manage that conflict.
This was a critical moment in the evolution of the Grohe family business, just as it is a critical moment in every family business. But in the 1930s, just like today, it was hard to sit down and think about these long-term issues. Hans was extremely busy dealing with production issues and customers. He had more than enough to do already, without thinking long-term about succession and structure.
The conflict was not managed. And the result was a rift that divided the family for decades.
In 1934 a frustrated Friedrich resigned from the family business. He then set up his own company, which was a natural step to take. But, in an unwelcome surprise for Hans, this company was in exactly the same industry. Hans had not only lost a son from his business but also gained a potentially dangerous competitor.
For the next 20 years, each of the two 'Grohe' businesses - the original HansGrohe and Friedrich's GROHE - grew rapidly but separately. Father and son made efforts to avoid direct competition but inevitably there was some overlap and duplication as they were in the same industry and geography.
Was there going to be a single united family business? 
At various points there were hopes that the rift between Hans and Friedrich could be overcome. It is true that sometimes the passage of time can help heal divisions between father and son. There is less need for the son to rebel once he has asserted and proved his independence. At the same time, the father may recognise a need to rely more on the next generation as he becomes older.
By the 1950s Hans was in his 80s. He announced that he wished his business to become a family partnership with Friedrich as a key partner. The other main partner would be Hans' third wife. When Hans died in 1955, the business ownership was changed according to Hans' wish.
From 1960, Friedrich was both Chief Executive Officer From 1960, Friedrich was both Chief Executive Officer of his father's business and the owner-founder of his own business. At last it seemed possible that the rift within the family and between HansGrohe and GROHE would be healed. Was there going to be a single united family business?
It was not to be. 20 years is a long time in business. By now, Friedrich had his own family which had grown up thinking of GROHE as their family business, with much less attachment to HansGrohe. When Friedrich died in 1983, his heirs were ready to sell their 27% stake in HansGrohe to the Masco Corporation, an American company from Indianapolis.
The sale separated, this time forever, the two companies of HansGrohe and GROHE. It also, according to Peter Jaskiewicz's account, tore the Grohe family apart. The businesses were not united and nor was the family.
What happened next
After 1983 GROHE continued to grow rapidly but today it has ceased to be a family business. In 1999 Friedrich's son, Charles Grohe, announced the sale of the company to a private equity firm for over 1 billion Euros.
HansGrohe has also grown. In 2006 Klaus Grohe, Friedrich's half brother and the son of Hans' third wife, was managing the business which had a turnover of more than 500 million Euros. Klaus Grohe's family continue to own 35.65% of the shares.
Guidelines for managing father-son rivalry
Father-son rivalry is, some would argue, a totally predictable element in family businesses. Sometimes it can have positive effects: it can encourage both father and son to work harder and achieve more. Here are three steps for managing the rivalry and keeping it within reasonable bounds:
- The first step is usually for each side to recognise their different interests. The son often wants to gain control; the father often doesn't want to give it.
- Secondly, the father and son need to communicate about what they want, in an atmosphere of trust and respect. Discussions may well be painful, but better to have a little pain now than a lot of pain later.
- Thirdly, it's often useful to change the business structure to accommodate the different interests. Perhaps the son can take control of a new division or subsidiary, allowing him to have some control while not directly threatening the primacy of the father.
If these steps had been followed in the crucial months during the 1930s when Hans and Friedrich were working together, how different would the story of the Grohe businesses have been?
You can find out more about the Grohe businesses by reading Peter Jaskiewicz's full case, which is called 'The GROHE Case: From Family to Private Equity Ownership'. It can be downloaded by FBN members from the online library at www.fbn-i.org.
In this issue
Yin and Yang
How siblings with opposite personalities can work together
Catch them young?
Involving children in the family business
Success factors
What helps family businesses to succeed?
Fair dividends?
The balance between dividends are reinvestment