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Dealing with differences
‘It’s not fair!’. How can business families make sure that complaints about unfairness don’t poison feelings in the boardroom and around the family dinner table?
It’s an unfortunate fact that sometimes it’s just impossible to be ‘fair’. If you have at least two children there is almost certain to be some differences in what they get from the family business. Often one of them becomes the overall leader while the other must be content with a lesser role and fewer rewards. The choice of the leader might be very logical and sensible but in the eyes of the other it’s still not fair.
But if you can’t have fair outcomes then at least you can have fair process. When there has been a clear process for choosing the next leader of the business, which everyone has agreed to, and which has been carefully followed at every point, then the outcome becomes easier for everyone to accept.
Let’s take a fictional illustration based on a real case. Andries heads up an African mining company. At the age of 57 he wants to pass the business on to the Next Generation which is made up of his sons Pieter and Jan.
Pieter, the older son, is a trained accountant who is excellent with numbers and would make a competent Chief Executive. Jan, the younger son, dislikes dealing with details but is excellent at strategy and has a real sense of where the mining industry is going. Secretly, Andries is sure that Jan is the better man to be the next Chief Executive.
Whenever Andries thinks about succession he feels guilty. Pieter, as the oldest son, is expecting to take over from his father. Andries puts off the issue to avoid hurting Pieter but, after a mild heart attack, he knows that he has to face it. He finally talks to his wife and asks her how she thinks Pieter will deal with the disappointment of losing out to his younger brother.
You can’t always have fair outcomes but you can have fair process. 
His wife’s answer surprises him. She suggests that Andries does not choose the next Chief Executive at all. Instead, Andries will work with his sons to come up with a ‘fair process’ by which the sons themselves will choose which of them should succeed their father. If they can’t come to a joint decision (which is unlikely), neither Pieter nor Jan will take over and an outsider will be appointed.
‘This way,’ says his wife, ‘they can’t be unhappy with you for choosing your favourite son because it’s not up to you. Nor can they be unhappy with the process because they agree that it’s fair. They can only be unhappy with themselves that they aren’t the best for the job and they’re mature enough to deal with that.’
Andries agrees to give it a go. It’s surprisingly difficult to come up with a ‘fair process’. There are many hours of meetings before they decide how to decide. Over six months, they agree criteria based on performance reviews, progress towards personal business targets, and suitability for expected developments in the industry.
More than once Andries feels some frustration. It would be so much quicker to just stand up and say, ‘Jan is the man!’. But he knows that the price of family harmony has to be paid for by hours of listening to each other and negotiating. The currency of family relationships is time.
It’s actually Andries’ 60th birthday before the process fully runs its course. The new Chief Executive is announced by a family that remains united. Andries, Pieter and Jan all continue to have a good relationship despite having had to deal with many differences of opinion.
The new Chief Executive is Jan just as Andries had originally thought but the process of selecting him highlighted just how much he would need Pieter’s methodical competence. The process has given Jan a sense of legitimacy (because his selection was based on objective criteria) but also a sense of humility (because he understands more clearly where he has weaknesses).
Pieter feels, of course, some disappointment. He says, ‘I used to say that I’d been born with the equivalent of a winning Lottery ticket. Now I have agreed to give the ticket away; it’s tough but I’ve done it willingly because I can see the reasons for it. I know that I have a lot to contribute to the family firm and I’m looking forward to working in the areas that I enjoy most and which I know I’m good at.’
Looking over the whole process Andries says, ‘Fair process takes time and money but it is a good investment. We have managed to come through a handover that might have torn our business and family apart. I am more confident than ever that my sons can deal with differences and enjoy working together. I feel that my dream of building a successful family business and even more importantly a successful business family is a big step closer.’
In this issue
Strategic Parenting
Prevent destroying the family wealth
Emotional ownership
The next generation and the family business
Focus on the Samuel family
One of the largest energy groups
Five strategies to unite a family
Keep the bond strong