Article

Making a Career in the Family Business: a Duty or a Choice?

November 2022

It’s complicated. Five members of family businesses from across the globe and of all ages and generation levels share their internal and family debates about whether they should get in, stay, leave or keep away from the business.

 

By Morten Bennedsen, Claire Harbour and Antoine Tirard

 

As experts in career management, we have long been intrigued by family businesses and often wondered how members of a family enterprise made career choices. We chose to partner with a leading family business expert, Morten Bennedsen, for this article  and thanks to his most recent statistics, from a piece earlier this year, we were staggered by the massive contributions that family-owned businesses make to their respective economies. In the USA, 35% of the Fortune 500 is family-owned, and family businesses account for 64% of the GDP. In France, 65% of businesses are family controlled, while across Europe on average this figure is over half. In India, they constitute 70% of the GDP and a hefty 85% of “India Inc”.

Recognizing the economic dominance of family businesses, we wanted to better understand the career implications for members of these families. How do they decide whether to work, or not work in their family enterprise? What options are available to them?  Are there any winning career strategies, or paths, that lead to leadership roles in a family business?  We also wanted to understand the unique psychological aspects of career management and how especially family expectations played out in this particular context. We talked to five subjects, from Asia, Europe and the Americas, in the hope of crystallizing some wisdom from them, that would inspire those who are in or thinking about joining or creating a family enterprise.

 

Gabbie – Still outside of the family business, but for how long?

To date, despite a 14-year long career, Gabbie has not elected to join her family business. Born in Manila into, on her mother’s side, a nationally prominent family in politics and business, owning TV channels, banks, telecoms companies and more, and on her father’s side to a provincially dominant family with stakes in more or less every business in one of the islands that make up the country’s archipelago, Gabbie was raised in a life of plenty and an expectation that she would, at some time, become part of the web of family businesses. With her unusual intellect and gift of the gab, there was an assumption that she might do this through following paternal family tradition and becoming a lawyer, to safeguard company interests.

Gabbie studied Political Science at the nation’s top university, and put her skills to valuable use in the debate team. Despite frequent allusions to the special “lawyer’s desk” that awaited her in family offices, she chose to get into marketing. She chose fun, plus an honest evaluation of her skills, over familial duties at this stage. She joined Jollibee, the country’s famous top fast food corporation, where she thrived as a graduate trainee, and was able to do so thanks to her talents alone, as opposed to any sense that she might have received special treatment.

The next stages in her career followed naturally, and, having already moved from corporate marketing to advertising, she was invited to join a futures and foresight consulting firm in Singapore, where she embraced the “not knowing” and enjoyed the challenge. Soon, she was married, and her wife had been offered a job in Hawaii, so they spent time on the island, enjoying the freedoms afforded a gay couple, in the knowledge that it would not have been as simple in Singapore, nor indeed at home in the Philippines. As it was not easy for Gabbie to find stable job in Hawaii, the couple decided to move to LA, where they both found work, as well as community amidst the huge Filipino population of California.

There is a running family “joke” which is that Gabbie’s corporate career is “just a kind of entertainment” of which she will inevitably tire one day. This seems to stem from the fact that parents and grandparents have not worked outside their own businesses, and struggle to understand why, in the end, she would not find it more comfortable socially and financially to return to the nest. Gabbie recognizes that she could, theoretically, come back and run or even create a business that would pull on her skills and outside experience. Her parents and the businesses are anxious for her to bring back whatever it is that she has learned and developed in her decade away.

Name: Katherine (Gabbie) Diaz

Nationality: Filipino

Education: BA Political Science, Political Science and Government

Family business: Lopez Holdings Corporation

Current situation: Director of Trends at Ebco

But it is more complicated than that. Gabbie holds a Filipino passport only, and while she is proud to be a “Pinay”, she recognizes the various constraints on freedom attached to it, including her right to be married to a woman, and the rights of their as yet unborn children. This makes it troublesome to consider a life “back home”. Now she must await her US nationality, only a few years away, before returning to the “very comforting quicksand” of life in the Philippines. She explains how “it kind of sucks you in, and it’s very slow; it’s smothering, but also very comfortable.”

The reminders continue as her parents are getting older. The opportunities to build on existing businesses or create new ones are intriguing to Gabbie, and she is also quite sanguine about what this future in the family business might look like. It is obvious that life for her generation will be simpler and less lavish than that of her parents and grandparents. She will “need less” to have a pleasant lifestyle, and may well be content with that.

There is a sense of pleasant inevitability to Gabbie’s situation. Her taste for work and exploring new ideas will probably follow her, even when she does return to her homeland, and this is likely to manifest as some sort of contribution to family business, but without the desire to keep up exponential growth. An acceptance of comfort being enough prevails, and this is underlined by her recognizing that, of her own generation of cousins, only a few work inside the family business, while others enjoy careers as actors, producers, entrepreneurs and so on. The duty prevails, but without as much weight as could be common elsewhere.

 

Marco – Now in the family business following first experience in multinational corporations

By contrast, Gabbie’s cousin, Marco, has had a journey that led him into the big, prominent business owned by their mothers. But it took a while, and not that much initial desire on his part.

When Marco was born, his mother (Gabbie’s aunt) was enjoying the freedoms and excitements of a corporate career, flying high at first Unilever and then Nike. His father, while also from a prominent business family, was a dyed-in-the-wool entrepreneur, and owned and ran a chain of bars in the city center. Marco observed that his father enjoyed his work life, while his mother seemed to be stressed a great deal of the time in her corporate role. At the same time, he was blissfully unaware as a young child, of the business empire that was carrying on around him. Initially from sugarcane fortune in the preceding centuries, but now an enormous diversified corporation.

His mom pressured him to be striving for the best school, the top grades and to be achieving on every front. When he took up Business as a degree, he did it with the assumption of joining a multinational corporation when he was done, with no pretensions regarding the family business. The assumption was : do your time, succeed in big corporations, climb the ladder, and prove yourself first.

So, on graduation, Marco joined a telecommunication company where he would learn skills, with a view that these would bring value and growth at some later stage to the family business. Among the cousins, including Gabbie and her brother, there was a lively debate about the right sort of path to take, and a perception, from above, that those who chose more artistic or non-traditional careers were not going to be “as successful”. Being more adept at numerate work helped Marco in this respect, as he was clearly growing skills that could be useful, “in fifteen years or more, when I might enter the family firm”.

After a few years in that first role, Marco took on another multinational role at McDonalds, but this time, the function much more closely mirrored the activities of his mother’s branch of the family business. He became a real estate officer, whose job was to scout for new locations, and then open new branches. So, he was combining real estate knowledge with an entrepreneurial aspect, and loving it. He even remarked how he was “basically doing a job that was a hybrid between his father’s and mother’s roles!”

The entrepreneurial streak reared its head further a few years later, when Marco decided to set up a business and “maybe prove himself”. The vehicle was a high-end college bar, offering local students an elevated experience around cocktails. Along with his co-founder, he worked 18-hour days, and created a business in a relatively short time. He thrived on the autonomy and responsibility of entrepreneurship. Tragically the business had only been open for a few months when Covid struck and it became untenable to maintain. Disaster continued to loom large in Marco’s life, as first his grandmother and then his grandfather died of Covid. Sensing the weight on his mother’s shoulders, he ultimately decided to help out and start doing his part for the family, despite the fact that he felt far from ready or willing to make this transition.

Name: Marco Limcaoco

Nationality: Filipino

Education: Bachelor’s degree, Business Administration and Management

Family business: Lopez Holdings Corporation

Current situation: Vice President, Real Estate Management

With a deep reliance on real estate and tourism, their branch of the business was hard hit. Marco had a candid conversation with his mother, who was used to working and managing alone, and does not generally relish sharing responsibility, and she passed the torch on to him. This led to relief on the one hand, but an inevitable clash in working styles on the other. The old school approach of using power and influence without much empathy was no longer valid, in Marco’s eyes, so he set about changing things where he could and saw fit. Another strain was the struggle between the siblings of his mother’s generation, as they took on the role and the responsibility associated with inheriting the whole business empire their mother had previously dominated.

The future is bright, however, and Marco has clear goals. He is aiming to bring people together across the family group, via best business practices, and, having achieved profitable equilibrium, to push into new areas. He has a long-term vision of many new ventures, more aligned with his tastes, while maintaining the fundamentals of the business. He dreams of starting new businesses with his mother, and has been bringing ideas to the family for years already, injecting an energy that was perhaps waning a generation above him. Who knows, maybe his next venture will be with his cousin Gabbie?

So far, we have looked at individuals who made their own choices about whether to be in or out of a family venture. The next case is less a question of volition.

 

Emilie – Making a first name in and out of a 400-year old luxury jewelry house  

Emilie Mellerio grew up in Paris, part of the fourteenth generation of the eponymous jewelry “maison”. Her father was deeply attached to the family business, but worked in finance, while progressively buying up shares in the company. He was exceedingly proud of the name and heritage, and often took his daughter with him when visiting the boutique in rue de la Paix. His frequent allusions to being “just a link in a chain” were somewhat belied by his hope that one of his offspring would eventually take over the business. Since her older brother was autistic and not likely to manage such a task, it fell to her to take on that pressure from an early age.

Emilie dreamed of studying art and design, but her father pushed her to “design jewelry”, after studying business at HEC, as he had done. She failed to gain entry to a top art school, so gave up on her creative dream. At this point, she allowed her sincere interest in the “maison” to rise up, in all its romantic links to royalty and beautiful history. She also developed an obsession with “getting a first name” instead of “just being another Mellerio”.

A chance encounter with a headhunter saw her, nevertheless, enter LVMH in the watch division, where she exploited her taste for design in product and marketing roles for almost five years. She then followed her husband, a diplomat, to Israel, and thus left behind the corporate role. While far away, she observed most small jewelry and watch businesses being eaten up by the large groups, and reflected on the fate of Mellerio. Her uncle, who was in charge of the maison and her father invited her to do “some consulting and strategic thinking” about the brand from a distance. On return to Paris, she was invited to head the marketing division she had recently created. She felt a strong sense of meaning, recognizing that the heady combination of skills she possessed and the embodiment of the family brand were vital to the heritage.

Name: Emilie Mellerio 

Nationality: French 

Education: Master in Management, HEC

Family business : Mellerio dits Meller

Current situation: President and founder of TheOne AI

Next came the opportunity to become Finance Director, which she embraced. She enjoyed the organization and structuring skills involved and was soon elected president of the subsidiary’s board, entering a whole new dimension of family politics. Diverging views between her father and her uncle, along with envy and other skullduggery led to a family crisis in 2015. Despite her side of the family having introduced a more modern, sustainable business model, they were in a minority. Emilie’s attempts to set up a talent management strategy, clearly aimed at using competency rather than blood allegiance as a filter, went ignored, and all her efforts to convince her uncle and cousins of better management initiatives were pushed back systematically. The situation became untenable, and Emilie resigned from each and every one of her positions, one by one. “Nobody ever actually said that I could not stay, but I could not accept holding a role without being aligned with their values. I always wanted to put the general good first, and avoid an environment of conflict”.

Emilie was deeply disappointed, and frustrated not to be able to see the fruits of what she had been building. Not only was she now on the outside, but the whole business was damaged pretty fast by the new regime. Today, Emilie plays very little role, despite holding a number of shares. She does not attend general meetings, nor try to follow what is going on, unlike her father, who seems unwilling to cut the umbilical cord.

While father has been unable to accept that is no longer “us” that are carrying the history, Emilie has been looking for new ways to use her creativity, and perhaps to carve out her own “first name”. But it has not been easy. Having invested herself so deeply into the strategy and future of a house, never to have seen that put to the ultimate test, leaves her with doubts as to her own talents and skills. She created a startup which was not helped by Covid, and is now considering buying an existing company, in the hope of bringing modern business practices to operate alongside her heritage and creativity.

Her learning has been significant: nothing matters, strategically, if conflicts are not ironed out along the way. There is no value in pure logic if there is no listening going on: this is where she and her father definitely missed out on opportunity. “Family business is a particular kind of environment, and it is impossible to remove the emotional aspect.” She believes that perhaps the most common feature to grapple with is lack of self-confidence, and advises that this must be played with positively, with a constant intention to “put the wind beneath the wings of each and every member”.

Will Emilie create a family business for her children? “I will do all I can to ensure they each have ‘first names’, and dearly wish for them to create their own destinies”. She will no doubt continue to go at full tilt into her coming business ventures, with a mix of painful and beneficial learning inside her, and the ever-present family name in the shadows.

 

Shiraz – Sticking to his knitting but doing better knitting within the family tea business

Shiraz grew up in Colombo, the capital of Sri Lanka, during civil war. His mother owned an antiques and art business, while father was working in the family tea export business, established by his grandfather, over fifty years ago. The business enjoyed a strong reputation, and had attracted five of Shiraz’s seven uncles, giving off a clear signal that it was “open to any family member who wanted to join”. And certainly each member of his generation was expected to contribute and understand how the business worked, from early on.

Shiraz and his older brother were the most senior members of their generation of potential entrants into the business, and experienced unspoken pressure to join the firm. However, he felt free to make his own choices about what to study, as he set off to Australia to pursue his education. He was considering a career outside the family business and even worked for a short while at Unilever in Sri Lanka, but in the end opted to join the family company.

Why? “The war had ended, things were really looking up, and then the clincher was that my grandfather offered me the chance to come and learn directly from him. He was in his mid-seventies, having set up when he was fifteen, and it is not often that you get the opportunity to learn from someone with sixty years of experience”. Shiraz asked to spend a year in an operational role, learning what the business was really about. He managed to streamline and “clean up” many processes out in the factories, and was sensitive to the feather ruffling that his presence was inevitably causing. One day a week in the office meant he could “loop back and exchange ideas” such that by the end of the first year, he was comfortable taking on a full-time head office role, close to the heart of the business.

The learning was intense: Shiraz would accompany his grandfather to all meetings, becoming quickly familiar with all aspects of business and leadership. He remarks that “it’s the fine detail which gives you the flavor of a company, and I got to distill that”.

Three or four years in, Shiraz began to play with his entrepreneurial instincts, creating a tea extract company. He loved learning by doing, and the freedom to make the odd mistake. “My family is very open like that. They are happy to support you, but they do believe that you have to do your own learning and take your own risks.”

Shiraz shouldered additional responsibility as the company grew faster and faster, and then a strategic sale of part of the company led to a lull in responsibilities. This was the moment to seek out new skills, recognizing that organic growth alone would not be sufficient to keep things interesting. He was focused on finding learning from the rest of the world. “Sri Lanka is such a small fish, and I wanted to go and see the ocean, not just be stuck in the pond. As third generation family members, we wanted to put an emphasis on professionalism and quality, so doing a top-notch MBA was crucial.”

Name: Shiraz Akbarally

Nationality: Sri Lankan

Education: Bachelor of Engineering, MBA INSEAD 

Family business: Akbar Brothers

Current situation: Director 

Shiraz left for France to take up his MBA studies at INSEAD, open to the possibility of leaving the family firm. He certainly aimed to “completely distance myself from the business for the duration of the course, so I will have time to reflect properly”. He was swept up, like most, with the prospect of joining a strategy consulting firm, but rapidly realized that there were far more opportunities in the other direction. The tipping factor was the clarity that “the impact from doing a program and returning to the business is exponentially higher than what my impact would be in going to another industry”. He decided to “stick to his knitting, but to do better knitting” and took part in classes on innovation, entrepreneurship, mergers and acquisitions: everything that could be relevant to making the family company much better.

Then along came Covid. Shiraz was just able to make a one-week trip home before lockdowns, and to spend a beautiful day with his grandfather, just before he went into hospital and passed away a few days later. “Someone was taking care of things up there!”

Since his return to the business, Shiraz has instigated numerous changes, with increased confidence and abilities. This has included work-from-home systems, risk management and a merger with one of the largest pharmaceutical companies in the country, affording him a seat on the board of a publicly listed company.  His main project has been setting up of business subsidiaries in Africa, as he hopes to expand the core business into new markets across the world .

While there is considerable growth and ambition for the family business, with new members from the younger part of his generation joining, Shiraz is careful to state that they have been working on a clear talent strategy regarding how family members may and may not engage. “These are the right decisions for us in our generation, but may need to be reviewed ten or twenty years down the line.” This vision of how to manage the participation of current and future family members is part of his ambition that the “company be around in several generations to come, bigger and better, still having impact in some way”. The family values “honesty, integrity and fair dealing” play large, and Shiraz is clear these must be maintained at all costs. He is cognizant that his role is most valuable with the family firm, and is not going anywhere.

 

Andreas – Breaking the family circle by leaving … but do you ever leave? 

And finally, we have Andreas*, who grew up in Argentina, son and grandson of entrepreneurs who had everything to prove, and who built highly successful, and ultimately separate family businesses in construction materials. Both father and grandfather had strong doctrine about what it meant to be part of a family business empire, frequently repeating the adage that it was both an honor and a duty to be included.

His talents were recognized from the outset: his gift for English was rewarded by trips to England, his knack for maths encouraged by extra lessons. And his inclusion in the broader family, despite the tensions created by his father having splintered off and started his own enterprise, was pleasurable and comforting. All his relatives worked in some part of the business. However, behind all the commitment was the unhealed wound of the father-son rift: “my dad went to work full of anger and hatred, to prove that he had done the right thing”.

After only six months of mechanical engineering at university, the young man was invited to join the firm. The plan was predicated on the fact that he was the only one of the brothers to have inherited a fraction of the technical savvy that had led to the company’s success. He continued to study, sharpened his English and Italian skills and was ultimately in the family company for good by 21. His first stop was on the factory floor where he worked on fundamentals, and built trust with the 500 or so employees.

Having proved himself technically, Andreas moved on to management roles, and became more and more interested in what it was going to make an impact. He realized his motivation was coming from the need to create a space to carve out his name; to work harder, learn more, to prove that he could be better than everyone else and also than himself. This made him a very serious young man, who did not have time for friends or partying.

Andreas was “allowed » to go away and do an MBA, which he chose to do at INSEAD. But the experience was more transformative than he had expected. He spent the early months focused on applying the new learning to the question “how could I use this in the family business?” But by the time he had done an internship at Amazon, he was exploring the question of “what if I did not go back to the family?” Then he received an offer to join BCG “that changed everything”. He was aware that he would learn more new concepts and work with smarter people at BCG, that it would open different doors, and that he was still young, with plenty of time to return to the fold. The smaller salary was a concession he was prepared to make, and he announced his choice.

In his mind, there had always been a permission to not go back, although he explains that, with hindsight, there was an unspoken assumption on his father’s part that he would return. Pride prevented his father from stating this clearly. So, there was sadness, frustration and tension involved in making the choice, but Andreas states that it has been more positive for him than negative. He has been able to create healthier relationships and boundaries with his relatives, and he has managed to leave behind the overly serious, rigid young man he had become. “Now I had reconnected to my true, inner self”.

He is happy at BCG, having been on a series of fascinating projects in multiple sectors, with challenging and fun colleagues. He has changed cities in the process, making it easier to avoid thinking constantly about the family business. But, his father is not getting younger, and he knows that if and when he goes back, he will be able to have that desired impact, and make far more money than he can ever make as a consultant.

“When you have always been in a family business, you don’t see some things that need to be seen, so getting out has taught me so much. One of the most dangerous assumptions you can make is that being a family member makes you a great hire for the company.” A significant additional challenge is “how to relate to the family business, in the sense that I have useful things I would love to share, but don’t want to appear arrogant, or how can I show sufficient empathy to see what I could learn from them? Respecting each other’s journey requires a lot of humility, transparency and communication, which most families don’t have.”

Will he go back? “You never really leave – I am not sure if that is good or bad. I need to learn

how to deal with it, as does my family. All my grandfather’s assumptions and traditions are now being challenged, and I am the one who broke the circle. The script we all followed does not work any more. And so we need to create new assumptions, to avoid missing out on new opportunities – and I want to shape that in a new way. I am trying to be conscious and see that my narrative is not “right” but the only way to make the narratives meet is through conscious and radical communication. I know there is no growth without pain, and that is a family value I recognize – just one that is very hard to exercise!”

It is far too early to speculate on whether Andreas will return, but we sense that his enlightenment and personal growth, along with the pull of participation and impact will take him back one day, though not yet. Meanwhile, he is in an extraordinary place for learning and development, and for opening his eyes wider.

 

Overcoming career and succession management challenges in family businesses

As we step back and reflect on these stories, we are struck by several crucial and distinctive themes that recur in family business careers, that those not in or around family business would seldom experience.  These fall into a handful of categories: values and culture, family identity, emotions, communication, and attitude to change.

  • Values and culture are omnipresent, with a deep sense of meaning at work. Emotional attachment to the firm is inevitable, and can lead, frequently, to over-implication, sometimes at a cost.
  • Within the family identity area, there is the role of “name” and its impact internally and externally; family figures, mentors and aggressors, and then there is the belonging that can pull so hard. What is more, the specter of parental pressure before, during and after never seems to go away. There are also more far-reaching stakes involved in interpersonal dynamics, making it tough to separate rationality and emotions.
  • Emotions are heightened in family-business environments, and this seems largely to be associated with the tension between freedom of choice or agency and the sense of honor and duty that working in the business implicitly confers. The umbilical cord and the sense of “you never really leave” appears universal.
  • In terms of communication, the “unspoken” prevails, and encompasses many aspects, including assumptions about joining or staying in the business, as well as the heavy notion of duty and honor associated with that.
  • Change, as they say, is a constant! A new generation brings new ideas and desires, which may or may not be in tension with the older ones. The quest for legacy and short-term impact is hard to balance and get right. Study and limited but high-value experience outside are valued, often unequally between generations.

Recognizing these themes and seeing them objectively can bring clarity to a family member, and becomes crucial vocabulary and compass to anybody considering joining a family business as a non-member.

On the other side of the coin, Morten’s work over the years has some clear and critical pointers for the succession management of family businesses. First and foremost, CEO succession does affect deeply family business performance; therefore it is important to understand how. In a 2007 paper, it was revealed that the tendency to appoint CEO successors from within the family as opposed to externally may have a negative impact of several percentage points on profitability. Conversely, a more recent study revealed that a return to a family member as CEO after a period of professional leadership can be beneficial in profit terms, to the tune of eighteen percent! So, the timing and the nature of succession planning is not only difficult but also absolutely key for family firms.

Morten has identified five challenges that could derail a succession plan:

1 – Understanding the culture of succession

2 – Transferring family assets to the next generation

3 – Developing competent children

4 – Communicating across the generation gap

5 – Engaging in long-term planning

Family-owned businesses that have survived these five great succession challenges have lived to be hundreds of years old, some more than a thousand years. Examples include: Peugeot, Kikkoman, Tata Group, Ford Motor Company) They continue to thrive because they have ensured smooth successions from one generation to the next.

 

Do’s and Don’ts for your career inside a family business

 

Do’s

1 – Understand the stakes, and smartly play with the tribal codes, traditions and spoken or unspoken rules, while being willing to challenge using the “right” language

2 – Distinguish the value and values that each generation brings or has brought, and play on the strengths of each one, while recognizing the need to evolve

3 – Communicate, communicate, communicate – to clarify the unspoken and build alignment and trust with all family stakeholders

4 – Understand that there is no absolute correlation between being a member of the family and being able to make a sound contribution to the business, but look for where you can make one

5 – Assume that time outside the business will be valuable, for experience, for perspective, for innovation

6 – Consider consciously your belonging and contribution to the family, both within and outside the “business” aspects

 

Don’ts

1 – Assume that your belief about “how things happen around here” (i.e. Culture) is the only one, or indeed accurate. Don’t forget to check in to understand the other family stakeholders

2 – Make moves without being inclusive. Expectations will differ and feeling seen, heard and listened to is crucial for all family stakeholders

3 – Assume that your ideas about the longevity and sustainability of the company are widely held. What motivated your grandmother may not be motivating your father or aunt just now

4 – Correlate value for the company with blood ties

5 – Leave for a short or long period without establishing the value of so doing and what your eventual return will look like Leave rifts and misunderstandings un-dealt with, however painful

 

* true identity was changed

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