Clash of the offspring

In family businesses, psychologists say that sibling rivalry – something that goes back to the time of Cain and Abel and was elaborated on by Sigmund Freud – derives from the struggle to gain attention and affection from parents in childhood. It remains a classic area of conflict for families and can destroy a business.

Sibling rivalry creates issues for family business owners. Which child does the parent give the voting shares to? Who is named CEO? If the children do not have the same commitment to the business, should they be given equal shares or equal salaries?

Unless it’s carefully handled, sibling rivalry can wreck a succession plan. And the big problem often is that the hostilities often only break out after the parent has died. Therefore, it’s imperative that things get sorted out early on before any transition.

While outside counselling might go some way to resolve the problem, strategic conflict between siblings often has a very different context to rivalry for parents’ affections. Therefore, it might need good business solutions rather than explorations of growth and it might affect how other family assets are considered.

The first and most obvious thing to do is to identify whether the conflict is emotional and relationship-based, or if it’s just strategic: Do the siblings have a different take on where the business should be heading? That would determine how much counselling is needed and whether a business solution might be more appropriate.

A good way to tackle this would be through family councils and family forums – often conducted as retreats to help families maintain a reasonable level of communication over important issues (Clearing out the messy communication blockages, June 19). 

Accredited family business consultant Elizabeth Guerra-Stolfa, who is with law firm Rigby Cooke, says the family forum is a good start.

“What happens is whenever you have a board meeting you talk about company business,” Guerra-Stolfa says. “And anyone can do that, that’s not hard. But what never gets spoken about, other than at Easter and Christmas is family issues.

“A family council is effectively a board meeting for the health of the family, not the business. If one is coming up every three months, you can store up your little issues and grievances and you turn up and let it rip. That meeting is precisely for that function so it’s not inappropriate. Without the airing of these things, you can cause yourself huge problems in the family unit.”

She says counselling from an independent outsider can also help.

“I have sat down with mothers, fathers, brothers, sisters and cousins. The thing is a lot of stuff that tears families and business apart is stuff that’s very difficult to put on the table. Sometimes it is childish stuff from when they were 10 years old, like perceived preferences by parents.

“They feel embarrassed by these things but you put someone independent in there and I tell you, it all comes spilling out.

“The sessions I’ve done for families involve me getting the permission of everybody after I have collected the sensitive information to quarantine the key issues, de-emotionalise them and put them on the table as things the family has to address.

“A parent might not even know they are demonstrating favouritism to one kid rather than another. They mightn’t know that someone is feeling their remuneration isn’t reflective of the effort they are putting in.”

But she says if the problem is intractable, there’s usually only one answer. And that would have to be managed properly to keep the family together.

“At the end of the day if the siblings can’t work together, the answer has to be a business solution. One has to get out.  It’s as simple as it gets,” she says. “You can’t force them to get on to keep the parents happy because it’s not going to happen.

“I would sit down with the parents and ask: where is the business is going? Who do you want to take over? Of the two siblings is one clearly a stand out? If the answer is yes, then that’s what we try to engineer.

“But if there isn’t a standout then it comes down to the dollars. If both are pretty much at the same level but the parents want to hand over to one. How much is on offer will depend on which sibling leaves.”

It’s a tough solution, she says, but often it’s the only one. “I’ve seen people make one a CEO and one a CFO and one an HR manager, but it doesn’t make for good business and it doesn’t make for good family relations and at the end of the day, it will end up tearing the family apart. While they may be there short term and they are nice stop gap measures, you’re better off achieving a solution that has a sound financial basis. Otherwise these things fester and fester and suddenly it gets bigger than the original problem and you can’t heal the family anymore.

“Alternatively, if the parents have more than one business they give one to one and one to the other. Keeping the two together if they haven’t been working is not a solution.” Which is something Alan Kohler found out Kennards Hire and Kennards Storage handled well (Why there are two Kennards, April 4). 

“Short term solutions might sound good but you only create bigger problems. You’ve got to facilitate and enable. If that means enabling someone to get on with a life outside the family business but still part of the family, so be it.”