Eat your heart out J. R. Ewing. Move over Alexis Colby.
It's time for the "Dallases" and "Dynasties" of the airwaves, the prime-time purveyors of emotional power struggles in family businesses, to make room for Joe, Max, Bob and George -- four brothers aged 79, 77, 74 and 71 who inherited equal stakes in the family's manufacturing business when their father died, and one of whom recently contacted family business experts at the University of Pennsylvania's Wharton School for help. (Their names have been changed to protect the innocent.)
Their conflict typifies the difficult emotional and managerial issues that arise in family businesses, according to Wharton's Peter Davis. Davis discussed these battling brothers at a recent conference in New York, in an attempt to reassure 50 participants at a family business workshop that they are not alone in their struggles, and that constructive action can be taken to make their business and personal lives more productive.
Joe, Max, Bob and George are second-generation owners of a family business. Their father, who ran the business until his death, had said he wanted, more than anything else, to ensure its continued success and to treat his sons fairly. In his will he gave each of his sons 25 percent of the voting stock and stipulated that each must be paid the same.
George, the youngest brother, became the chief executive officer when his father died. At 71, blessed with good health and full of energy and enthusiasm, he continues to work 10 hours a day. George discovered that by padding his expense account, he could get around his father's equal-pay decree, awarding himself a premium for his active role in managing the company's affairs.
Joe, the oldest brother, goes into the office for three hours every morning to do one thing: verify George's expenses. When Joe discovered that brother George was submitting lavish expense accounts, he decided to monitor his brother's expenses on a daily basis.
Max has no interest in the business, but loves dividends. He shows up at the quarterly brothers' meetings at George's house and demands that dividends be increased. George argues that the long-term growth of the businesss depends on reinvesting capital, not paying higher dividends.
Bob valiantly tries to act as peacemaker, but that has gotten more difficult since two of his brothers tapped each others' phones.
Then there is the difficult issue of succession. The battling brothers have children, some of whom want to go into the business. The aging brothers do not know if the family fortune would grow faster, or last longer, if they sell the business and invest the cash, or if they try to groom third-generation successors.
Three of the brothers want to sell the business, but they cannot agree on how to proceed.
"There is no difference in the problems of relationships between family members that exist in $5 million and $5 billion companies," Davis said, "except big companies have more closets to hide some families' members in. Some people think of the family business as an aberration, but they fail to see that the structure meets the psychological needs of the founder to perpetuate his creation.
"After all, a business is the only thing a man can give birth to," Davis said.
Davis defined a family business as one in which two or more family members influence the direction of the business through exercise of kinship ties or ownership rights. Based on this definition, about 30 percent of all publicly traded companies and more than 75 percent of private corporations are family businesses, the Wharton experts said.
Sometimes highly publicized family feuds at big corporations lead to mergers, like the Keck family feud at Superior Oil that led to Superior's merger with Mobil Corp. In other cases, according to Davis, highly successful private companies like Mars Corp., the giant candy company, attract top talent by paying employes about 30 percent more than competitors, communicating to their employes that they are paid more (and should produce more as a result) because the company is a family business.
Davis said family businesses often are successful because of the high level of commitment made by family members. But the amount of time devoted to improving communication and mending relationships during the workshop indicated that complexities in family businesses can sometimes make home life difficult.
"You make it sound like we are all candidates for group therapy," one workshop participant said.
"Family businesses provide just one more stage on which family members play out their dramas, often handicapping a business's operations," Wharton's Nancy Drozdow said in a recent article.
The pained expressions on the faces of the workshop participants when the subject came up made it clear that succession is the most emotional issue. The scenario goes something like this: If the kids ask dad to retire, the parents think they are greedy. If dad brings up retirement at what might be considered a premature time, mom worries that he is not as strong as he used to be. Also, as long as they are healthy, many founders find giving up control of the family business too painful to bear.
"I talked to a guy who is 51 yesterday whose 80-year-old father is still walking around the factory every day," Davis said. "The son feels that he has no freedom, that he is in his old man's shadow.
"Succession should not be an event, but a process, where one generation succeeds the previous one. Declaring the succession phase is important for everyone, including non-family employes. It is important to see that the boss is committed to giving up control in a timely, unequivocal way."
The Wharton experts recommended that young people work outside the family business in their 20s, to gain confidence, experience and fresh ideas. Otherwise, they cautioned, some of them will wonder whether they could have made it on their own, adding to the credibility problems that already exist when young family members become managers.