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Mr. Cruz is the founder of a family business. His two sons work with him. When they got married, they requested their wives join the business. The women seem qualified, but Mr. Cruz has heard horror stories of in-laws who generate conflict in family businesses. What should he do?
Another case: Mario and his siblings are working different areas of the family business. Mario is in charge of marketing, his elder sister, finance, and his younger brother, operations. They have been fighting with each other since childhood, and now the business is suffering. How can they learn to get along?
Another case: Tina and her siblings are in their late 40s. Their father, who created the family business, is 75 and shows no signs of slowing down. He does not let any of the younger generation make major decisions. Tina and her siblings are worried that if something happens to their father, there will be problems with succession. How do they resolve this issue?
Last case: Nena is the eldest in the succeeding generation, and is a woman. She believes that she is the best successor to her father in the family business. But following Filipino-Chinese tradition, the designated successor is Nena’s younger brother, simply because he is male. Can Nena convince her parents that she is the wiser choice, without alienating her brother?
Psychology, Not Just Management
The above are real-life, not hypothetical problems, which, I as a clinical psychologist, I have dealt with in more than two decades of helping family businesses in the Philippines. These issues also arise with clients of the Ateneo Family Business Development Center (AFBDC) housed within the Jesuit-run Ateneo de Manila University, where I am on the Board of Directors.
Family businesses account for anywhere from 80 to 90 percent of all businesses in the Philippines, yet many are plagued with situations like the ones above. As the Chinese say, “The first generation starts the business, the second maintains it, and the third squanders it away.” Unfortunately, I find this all to be true.
Businesses tend to hire management consultants, but such problems may often be more effectively tackled not with pure management techniques, but with psychological ones. In AFBDC, we ensure that family problems are ironed out or at least made less toxic before we help clients with the ordinary business problems such as increasing sales, improving marketing, streamlining operations, etc.
General principles exist, such as “communication is key to family relationships,” but the answers to the above situations are not black-and-white. Sometimes, when the family business cannot afford to hire qualified outsiders, in-laws who sincerely care for the family can be a help. While other times,, although sometimes, they hinder smooth functioning among siblings. Sibling rivalry is a nasty problem that when not nipped in the bud, can result in more issues later in life. Oftentimes, the only realistic solution to deep-rooted conflict, is therapy and counseling to address each problem.
As for the founder’s reluctance to plan for succession, it may stem from a denial of mortality, or the fact that the business is dear to one’s heart. Providing alternatives, (such as devoting his efforts to philanthropy), is often more fruitful than forcing him to relinquish control altogether. Cultural traditions are also often ironclad, and understanding them, (rather than denouncing them as sexist, racist, and so on,) is the first step to evaluating their usefulness in modern times and specific family businesses.
Values and Pope Francis
Though generally I try not to discuss values when helping a client, when the need arises, I do not hesitate to extol models that can inspire, such as Pope Francis, whom I call the “CEO of the Catholic Church.”
Pope Francis never took management courses, but has performed better than many business leaders, because he walks the talk. He exchangesd the red cape, red shoes and golden cross of his predecessors, for a white cape, sensible black shoes and a metal cross. He washes the feet not of bishops, but of juvenile delinquents. He does not stay in the luxurious papal apartments, but in the simpler Vatican guesthouse.
Contrast the Pope with a family business leader founder I’ll call Mr. Pedro. Mr. Pedro complains that his employees are lazy and unmotivated. “I invested in workshops, Six Sigma, Seven Habits. I even paid for my children’s MBA’s! I tell them to work hard, but they don’t listen.”
The problem is Mr. Pedro does not lead by example. He collects luxury cars; his children sport branded clothes and gadgets. Team building workshops are held in luxury beach resorts, and while this may be fine with say, Google, the workshops are considered junkets and not taken seriously by others.
Once, Mr. Pedro told employees to finish production, which meant that they must stay overnighting at the plant. The task was not done. Did he supervise them? “No, I have to rest. You can’t expect me to stay up with them!”
According to Jesuit seminarian Chris Lowney, in his book on the Pope, when a priest was hospitalized, Bishop Jorge Bergoglio (now Pope Francis) cared for him the night after his operation. A witness says, “That really struck the rest of the clergy, because they’d never seen an archbishop who spent the whole night in the hospital with one of them.”
I told Mr. Pedro that no amount of threats or anger would make his employees improve, unless he models the values he wants them to have. Part of the consultation involved telling Mr. Pedro about the Pope so that he could reflect on living out those values in his business.
Let us end with a prayer to Jesus for family businesses, which appeared in my business column in Christmas 2014:. Excerpts follow:
Guide us, as a family, to work and to love the way that Your own family did in Nazareth. Watch over us as we work together to grow our business, which we do in Your name. Counsel us to be honest, responsible, skillful, devoted, and wise stewards of the business. Whatever we have built, whatever we have worked for, whatever we have striven for, are always blessings because of your grace.
Bless the founders of our business. Like Papa Joseph, may the founders guide the next generations and instill in them the values of hard work, perseverance, integrity, cooperation that have made the family business survive all these years. Help them to understand that success is not achieved overnight, and that only through mistakes can young people grow and learn.
Grant the elders wisdom, so that when the time comes, they will not be like the rich young man in Your parable, holding on to wealth and power at the expense of their soul. May You keep watch as they prepare for a smooth succession, for they know that the ultimate expression of love is not empty verbal promises, but guidance and training for the younger generation, followed by trust and faith when the transition arrives.
Bless our young ones, to whom the family business will eventually be entrusted. Help them to recognize and to take pride in their legacy, so someday, they will handle it like the treasure that it is. Instill in them the lessons in Your parable of the talents, so that instead of wasting their time and efforts in mindless entertainment and pleasure, guide them to make the most of the resources that they have been fortunate enough to receive.
Bestow upon our young ones the gift of resilience. When our young ones fail, let them not crumble under depression or anger, but instead rise again with dignity, courage, and the determination to do better. Instead of blaming others for their failures, let them have the discernment to look inside themselves and realize what they need to change or improve.
Help us realize that the most valuable gifts are not material ones, but rather, our presence. Let our gifts be a willing ear, temperate lips, and an open heart. Help us realize that “whatever you do, work at it with all your heart, as working for the Lord, not for men” (Colossians 3:23). Amen.
Queena N. Lee-Chua is on the Board of Advisers of Ateneo de Manila University’s Family Business Development Center. Her book “Successful Family Businesses” (Ateneo University Press) won the National Academy of Science and Technology’s Outstanding Monograph Award in 1995 and her business column “All in the Family” (Philippine Daily Inquirer) won the Catholic Mass Media Awards in 2015.