Family (business) mediator

The father felt the eldest son didn’t have what it took to run the family business. The eldest son was rash, impatient with people, and thoroughly disliked the job of chief executive officer but liked the perks. The father favored his youngest son, who accompanied him everywhere.

When the father died, the mother, whose personal fortune was larger than that of her husband, openly backed the eldest son.

Upon inheriting the business, the eldest son chose to delegate the business to the youngest brother so he could concentrate on a financially-draining hobby. It was while he was away from the family business that he was kidnapped and the brother was forced to raised the ransom money from the almost bankrupt family business.

The story is a true one.

The family business was England in the 12th century. The father was Henry Plantagenet while the mother was Eleanor of Aquitaine. The oldest son was Richard Lion-Heart, who spent most of his years as King away from home, fighting Muslims in the Third Crusade. The youngest son was John, who became king in his own right.

In the Philippine setting, billion-peso fortunes and the companies which have generated such wealth have been fought over by the children, sometimes even while the founder-managers are still alive.

"The main issues of family businesses are the same worldwide. The issues of succession, conflict resolution, and retirement can be resolved if there is communication within the family," said Clayton Hebberd, Crant Thornton’s international family business consultant. Grant Thornton ranks fifth or sixth among auditing firms in most major markets and specializes in growing family businesses. "Our job is to mediate so that decisions can be made in everybody’s interest. To succeed, the main decision-maker in the client-company must buy into the program. We also understand that it is important in the Asian content not to lose face. Decisions have to be made with the concurrence of everybody. That’s the value we give our clients."

Business Model

In the Philippines, Grant Thornton International’s partner is Punongbayan & Araullo, which put up a seven -man Family Business Consulting Group in the fourth quarter of 2003.

"The family business is the primary business model in the Philippines. The owner-managed business goes through four stages, starting with the owner whose children are still too young to help out in the business and ending with the owner passing on the business to his children, either because of retirement or death," said principal for corporate finance Antonio Herbosa.

At the heart of P& A’s family business consultancy is a copyrighted methodology called PRIMA developed by Grant Thornton after a family business survey conducted in the mid-1990s in 16 countries. (The survey was expanded to 28 countries in 2002 but did not include the Philippines because of the absence of an academic partner).

"PRIMA, which stands for People and Relationship Issues in Management, assists family businesses to manage situations that can arise when family or personal values come in conflict with the needs of the business. What P& A has done is redesign the 12 factors in PRIMA to reflect Asian families and values," said Herbosa.

The consultancy starts with a family diagnostic, which determines, among other things, whether the family is enmeshed or disengaged and whether it favors businesses that are conservative or revenue-growing. Triangulation patterns of cross generations are also plotted.

Genograms and understanding the shared values and history of the family are then done.

"It’s much like a family tree. Instead of stopping at who married whom and the names of their children, we find out shared values such as an openness to change that is passed from one generation to another. It’s important to find out what are the values of the family, what are the principles that guide them. These are present even if they are not written down," said Herbosa.

Asian Face

In some cases, families insist on meeting abroad or on discussing sensitive issues with non-Filipinos.

"We try to provide the comfort zone needed by our clients although we sign a confidentiality agreement that ensures whatever dirty laundry is revealed will not leave the room," said Hebberd. "What we try to get is an informed view. We talk to not only key family members but also important non-family employees. This is how we find out, for example, that two brothers who seem to be supportive of each other do not get along after all."

With such professional help, more family businesses can have happy endings.