Conflicting Hierarchies In Family Firms - Part 2

Friday 10 August, 2001

by George Tanewski

We will now turn our attention to how daughters and younger sons who become CEOs find it difficult to shake off their family ties to the bottom levels of the family hierarchy.

In Part 1 of this article series we discussed how parents have traditionally used hierarchy and primogeniture to set the rules for younger generation succession. The article highlighted that the prevailing assumption held by parents was that eldest or only sons were first in line to take on major family obligations and responsibilities.

Daughter and Younger Sons as CEOs

The cases surrounding eldest sons differ somewhat from the problems that daughters and younger sons face when they become CEOs of a family business. Daughters seem to face the most complex challenges. They may find doubt and skepticism coming both from parents and from siblings. Doubting fathers seem to give a daughter a much harder time when she accedes to power than they do to younger sons. Another male sibling may create difficult obstacles for either his sister or his younger brother. Both daughters and younger sons usually encounter a network of rival siblings, not to mention senior business associates, who think they know the business better.

In recent years, primogeniture has become less automatic than it once was. The presence of a favoured child may challenge old primogeniture assumptions. Sometimes, the issue is perceived competence. Today, the choice for CEO in smaller companies may go increasingly to daughters as more managerial women enter the workforce. Some women who hit so-called glass ceiling in large corporations where high level promotions go only to men, head for smaller firms to become first or second generation entrepreneurs. On still other occasions, daughter or younger sons start a business and hire an older brother or parents as subordinates.

The Case of Brown Brothers Wineries

The Brown Brothers winery in north-east Victoria has laid down a set of guiding principles for sons and daughters wanting to make a career in the family wine business. The rules state that each applicant must have worked somewhere else for at least four years, and must apply, like everybody else, to the board. A suitable opening must exist before they will even be considered for employment.

Cynthia Brown and her brother John junior are the first of a new generation at the wine conglomerate to meet the recruiting criteria. Both have a university education and had careers at BHP. Cynthia, 28, was in human resources and John, 31, in engineering and information technology. The ambition to return was shared by John, who is restructuring the company’s information technology.

The Browns have been making wine since 1889 but the current generation, brothers John senior, Ross, Peter, and the late Roger, built up the operation from a traditional mixed farm and vineyard to Victoria’s largest private winery in 30 years. Their vision for success is a mixture of passion and vision for what the family believes possible, along with a good dose of traditional Australian farming values. Strategic use of the talents of different family members has been vital in allowing the business to grow the way it has, and the best way to handle complexity was to allow each brother to slot into the area that fitted their skills and passions. John took on wine making, Peter went into viticulture, Ross was the marketing chief, and Roger developed wine varieties. However, the Browns are well aware that such family coalitions are fragile.

Conclusion

Under these conditions, family dynamics and hierarchies can be seriously challenged if strong ground rules are not established. The lower-status sibling may appear simultaneously at the top of the company hierarchy and at the bottom of the hierarchy. Such incongruent structures create tension among family hierarchy, and the typical response to such tensions is to want the hierarchies to align with each other. Fortunately this is not the case with Brown Brothers, which is a good example of establishing strong ground rules for both succession and entry into the family business.

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