Conflicting Hierarchies In Family Firms - Part 4

Friday 10 August, 2001

by George Tanewski

Although help in restructuring hierarchies sometimes comes from within the family, as when a mother mediates on behalf of a younger son or a father voluntarily withdraws, help more often comes from the outside.

In a number of cases, a high-status friend from outside the family has helped to smooth the transition. Sometimes, it was a business partner. Sometimes, it was a company director or advisor. Occasionally, it was a friend who could see both sides of the picture and, most important, had the confidence of both parents and siblings.

Role of High-Status Friends

Here is one case where a business partner helped a father to gain perspective on both his sons in a sales and service company. The father recognized that his younger son was much like himself and had more energy and flair for the business than did an older son who preferred back office administration. The older son was very shy. The father took over the grooming of the younger son, while his partner took on a mentoring role for both boys but paid particular attention to the older son.

Or, take another case where the daughter would have given up without the help of a high-status friend who was trusted by all family members. The youngest daughter went from treasurer to chairperson after eleven years in a high-tech business. She was promoted after her father fired a nonfamily heir apparent – something he had done before. Neither an older brother engineer nor two older sisters had ever expressed interest in working for the company. After the youngest daughter became CEO, she felt that her father and his chief technical officer would not let her take any major responsibility. They also became increasingly critical of her actions after her older brother said that he would like to join the business. The father was delighted, but the daughter was not. The father suggested that she might like to change jobs. Soon after that, he called a family meeting to discuss the family business but did not invite her. She asked why but received no information. Soon after that, she resigned from the company, blaming her siblings and mother for lack of support. A month later, her father died. Much to her surprise, the daughter found that she had inherited most of the company stock. Even then, she would not rejoin the company until a new board of directors took office about six months later. The new chairman, an old family friend, asked her to come back to help her brother as co-managing director, stressing the need for the two of them to work together. Her brother also asked her to return. She did.

In this case, the daughter felt unable to gain further autonomy and competence at her own initiative, particularly after being excluded from the family meeting. She felt that both family and company hierarchies weighed too heavily against her. Only after her ownership and absent competence immobilized both the board and her brother did the family decide to set up a board that would try to work with her. In this, the high-status friend built a mediating bridge between her family, her brother, and herself but only after the brother became more dependent on her than she was on him.

Conclusion

In both cases, the helpful high-status friend was acceptable to parents, to the younger CEO, and to the siblings. They had no personal axes to grind. More important, they had built up trust over a period of time. Daughters and younger sons who become CEOs cannot easily shake off their family ties to the bottom levels of the family hierarchy. As CEOs, they then become key figures in incongruent hierarchies. Their positions in the two hierarchies can lead to discomfort, tension, and agony for all members of the family. Outsiders who see this pain are often at a loss to know how to deal with family members as the problems become public and sometimes tragic. But, whereas the origins of the problems are structural to begin with, only day-to-day actions and behaviour serve to bring the two hierarchies into line with each other and to change expectations and perceptions.

This article has been extracted and modified from Barnes, L.B. (1994). Incongruent hierarchies: Daughter and younger sons as company CEOs. In Beckhard, R. (ed.) "The Best of Family Business Review: A Celebration". Boston: Family Firm Institute.
 
Source:ceoonline.com