Happy Families - the manager's edition

Business and family values need not conflict, writes Roger Trapp

Just over a third of British owner-managers aim to pass on a growing business within their families, according to recent research by Grant Thornton and Business Strategies, the economic forecasting consultants.

Yet it is not always possible to achieve that, and it is even more difficult to pass a business into the third generation (only a tenth of family businesses survives beyond that mark).

The key to this is the word "family". A wonderful thing for everybody from politicians to priests, it can spell disaster for a business. According to a recent Grant Thornton initiative "People and Relationship Issues in Management", much of the problem stems from the fact that the values associated with family life are not the same as those required to make a business succeed. Where families tend to be "introspective, emotionally oriented and wary of change", businesses "need to be outward-looking, objective and willing to embrace change".

Noting that in business where there is close family involvement or where ownership and management are concentrated in the hands of a small group, difficulties usually arise because personal and commercial objectives come into conflict, the firm has devised the "12-factor framework". The purpose is to enable problems to be seen from different perspectives - and to ensure that they are not tackled in isolation.

The 12 factors are:

succession planning

remuneration planning

equity ownership by family members

family members not involved in the business

introducing and rewarding non-family executives

retirement and estate planning

bringing family members into the business

strategic planning

financial structure

preserving wealth

resolving conflicts

the family creed

Though careful attention to each factor will help to resolve problems, the last perhaps underpins all the others. Grant Thornton believes that developing a creed as a distillation of the family's core values and principles can help to prevent or resolve disagreements.

Moreover, it should focus attention on certain issues by attempting to answer the question: "Why is this business better because our family owns it?" Of course, when there is no clear answer to that question, that is the time to selln