The Business of Family

When it works well, the family in business together can be a powerful force – think the Murdoch and Packer media dynasties or, closer to home, the Roddick family in Body Shop, the Sainsburys in retail and the Rothermere publishing empire. When times get tough, however, or when family conflicts affect the family business, the repercussions can affect future family relations for generations.

Conflict within families and in business is hardly a revelation, but two recent studies from Australia reveal the significant impact of changes in the nature of work and the composition of family structures, including technological advances, the 24-hour “global village”, the move away from manufacturing towards a service economy and changes in workforce demographics including working mothers and increased mobility for adult children. Professor Kosmas Smyrnios is foundation director of the Family Business Research Unit at Monash University, and co-author of the two research projects: The Australian Family Business Study and Work-Family Conflict and Emotional Well-Being.

Professor Smyrnios says the interface between work, family and psychological well-being is not well understood and that business owners, their spouses and their adult children have significantly different needs and values and place different emphasis on the key characteristics required to run the business successfully.

“In this environment the quality of family support is essential, in order to temper the effects of work-to-household issues,” says Smyrnios. His studies show families that communicate well, are able to problem-solve and have sound interpersonal relationships are less affected by the stresses of managing home life and business life, in particular the need to switch between multiple roles such as parent and boss. The individual’s sense of well-being is also key to their ability to mediate the demands of an inter-related business and family life.

“It’s hardly surprising that conflict arises,” says occupational psychologist Lesley Morris, “given that most people have someone in their family that they don’t like or don’t get along with, and family rows can survive many generations.” Businesses develop working teams based on skills rather than personality or temperament. Add to the mix any unresolved family problems and you have endless potential for ‘creative differences’ that can affect future family relationships and the business.

“Conflict comes from mismanaged or misunderstood expectations,” says Morris. “Traditionally, parents expected to pass the business on to their kids and the kids expected to join the business. But today with improved transportation, communications and technology, our youngsters have an unprecedented range of career choices – and the family business may not hold any appeal.”

Mark Friend, head of family services for an accounting consultancy, says that for previous generations, especially in smaller towns, the family business might have represented the only decent chance of a job but today, he says, “kids move into the cities or further afield and they often want to go their own way.”

Where Friend encounters adult children who don’t want to go into the family business but don’t know how to tell their parents, he encourages them to speak out: “I say it’s far better to open that can of worms now and get external facilitation to help resolve it,” he explains, “rather than try and deal with a truckload of worms in ten years’ time.”

Julia Cambage, the National Executive Director of Family Business Australia (FBA), says “In many cases, if the parents haven’t involved their children in the business as they were growing up, it can be hard to bring them into it once they’re older.”

FBA was established in July 1998 to represent Australian family businesses and to improve their effectiveness through sharing practical experiences and knowledge. Cambage says that FBA encourages family business owners to get their children to work outside the business for a time because it benefits everyone involved. To facilitate this process, FBA is setting up an exchange program “not quite for people to swap their kids,” Cambage laughs, “but we will ‘match’ people with suitable companies.” In the restaurant industry, this is known as “learning to break glass somewhere else”.

Geoff Porter, who owns a shoe repair firm, believes it is essential that children get a wider understanding of the business world before settling into a family company. “I told my kids they had to achieve something first in a business where their name means nothing,” says Porter. “It worked out well – by the time my sons joined me, I had a solid customer base, they had some decent qualifications and experience, and we’ve been able to expand into other areas together.”

Lesley Morris says the greatest danger for a family business comes from partners who “get more than they give,” adding that being born into the family shouldn’t be the only requirement for working in the family business. “Family businesses probably need more detailed employment policies than other companies,” she says, “simply to ensure fairness. If family members apply for a position, they should be assessed on education, experience and qualifications – in other words, being the best candidate. There should be no automatic entitlement to a job – it’s the best way to avoid conflicts later on.”

Geoff Porter believes that talking through the business issues in detail before any of his sons joined the company was invaluable. “My philosophy is ‘no surprises’,” he says. “I wanted them to know what they were coming in to. Let’s face it, business problems drive more family members away from the dinner table than anything else I know. I don’t want that for my family – no business is worth it.”

Case Study

“It wasn’t really a conscious plan to involve Nicole – I needed help, she wasn’t working at that time and it went from there,” explains Janel Horton, founder of the highly successful Gourmet Dinner Service, who runs the business in partnership with her sister.

Although originally trained in Cordon Bleu catering, Janel had spent much of her career in marketing for a funds management company before setting up on her own company seven years ago. She worked from home, sub-leasing a commercial kitchen and delivering her frozen and chilled gourmet meals in a small hired van. “I was fortunate that I had a good idea,” she says, “and it was the right time to go for it because the concept of home-delivery meal solutions was just taking off.” After two years the business moved to larger premises and Janel’s sister Nicole came on board.

“I always had some involvement with the company,” explains Nicole, “because Janel and I were living together. Janel had just lost a part-time kitchen-hand, I had been fired from my job, so I went to help her out while I looked for something else. Janel needed people and it made sense to take me on because it was someone she could trust and we got on well – probably better then than we do now…”

Nicole says many of their skills are complementary, which has been key to the success of their working partnership. “Janel’s a ‘big picture’ person,” she says, “whereas I love all the detail stuff. Janel had the catering and business background and I used to be in event management and fund-raising, so I’m good at the administration and organising.”

Nicole says their parents are proud that the sisters work together although they had some reservations. “I called and told them that not only was I gainfully employed again, but it was in Janel’s company and I was now a partner,” says Nicole. “They were pleased, but they did stipulate that since I was joining Janel’s business, if it didn’t work out I was to be the one to leave.”

Janel says candidly that it isn’t always easy working so closely with her sister: “Although we complement each other in many ways, we don’t think the same and that can be problematic because we get off on the wrong wavelength at times. And when you’re together all day with offices next to each other and you have your differences, you don’t always behave as professionally to each other as you might with another employee. You wouldn’t do it in corporate life but when it’s another family member, well you just do.”

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Author: Sharon Pink
Date: 15 April 2003