Christine Harland is director of Camden Writers. www.camdenwriters.com
Don't leave it to the children
by Alan Crosbie, Marino Books
Alan Crosbie, whose book Don't Leave it to the Children is peppered with good family business tales, opens with a story about his great-grandfather, Thomas Crosbie. In 1850, aged 15, Thomas went to work for the Cork Examiner where, as a budding journalist, he industriously rowed his dinghy into Cork Harbour to pick up the latest overseas news from transatlantic liners. Thanks to him, the newspaper scooped Lincoln's Gettysburg Address and the end of the American Civil War.
In 1856, aged 21, Thomas Crosbie was in a position to purchase the Examiner. The paper has remained in the family for five generations and has now been parlayed into Thomas Crosbie Holdings, which includes, among other things, newspapers, two radio stations and property holdings.
Alan Crosbie, the current CEO, believes that family businesses fail for predictable reasons, most of which are avoidable. "Sometimes," he writes, "the idea of quality of product, continuity of family tradition or good corporate citizenship obscures the central commercial truth, that the business of business is business."
"Equating love for your kids with love of your business," Crosbie asserts, "you end up with the worst possible situation".
Succession, according to Crosbie, can be equated to take-off and landing, points at which the aircraft is most vulnerable.
"The key lesson any family business can learn from the crashes of the high flyers is that when the time comes to relinquish control, that control must be handed over carefully and to the right person."
According to Crosbie, in trying to be fair to the family, company heads sometimes fail to make the right business decisions. You cannot, he explains, be completely fair to a business and completely fair to all members of the family, nor can you appoint a chief executive then allow other family members, as shareholders, to cripple him. There must be a clear line of authority.
Turning to another family story – one of the great strengths of Crosbie's book – he holds up Guccio Gucci as a man who "suffered from a bad sense of parental fairness."
By dividing his empire equally between his two sons, he set the stage for a lethal situation in the third generation, when shares were split again: one 50% share was divided among three siblings who hated each other and one 50% share was passed on to their cousin, Maurizio. The situation proved to be literally murderous when Maurizio's wife, Patrizia, who believed she would rather be "unhappy in a Rolls Royce than happy on a bicycle," had her husband killed. At the other end of the spectrum, Crosbie dedicates a chapter to the Codorniu family, now into the 18th generation of their Barcelona-based winemaking company. They serve as a good example of a family that has instituted strong checks and balances and applied wise principles to ensure growth and perpetuity.
Because the skills that were ideal for starting the business may not be the same as that required to move it forward, the founder should, in many cases, avoid passing the torch automatically to a carbon copy of him or herself. A case that illustrates the very different stages of company development is the Irish firm, Moffett Engineering, where the originator of the business wasn't necessarily the real 'founder' of that business. Second generation Carol and Robert Moffett, took their father's small company, developed a stellar product in the Moffett Mounty, a transportable forklift, and moved the company onto the international scene. The company is light years away from the two-employee company they inherited.
Closely tied to succession is the issue of clear directives expressed through a will. "Any business person making out his or her will should keep one consideration in the back of their mind – you might die." A will, Crosbie believes, should never be a vehicle of self-expression, reflecting personal favouritism and bias, but rather a serious instrument for future family business planning.
Crosbie also exhorts his readers to identify non-family talent and take full advantage of those strengths. The same rule applies to both employment in the company or appointment to the board.
"If someone, a relative or outsider, does not have a set of demonstrative competencies which match a previously identified set of company needs, they do not get a job in the company or a seat on the board." Period.
Crosbie quotes Yeats, "Tread softly, for you tread on my dreams," as a sentiment that founders should never communicate to their heirs. "You have no right to wish your dreams onto your successors, nor to demand that your successors subordinate their own dreams to the family business. Think long and hard before you make the assumption that what you have created is a family business. It's your business, your dream and your asset."