Family businesses have been in the news lately for reasons good and bad.

Family businesses have been in the news lately for reasons good and bad. The Murdoch family demonstrated both its strength and weakness in how it dealt with the phone hacking scandal.

Under the glare of the press we saw the close relationship between Rupert Murdoch and his son James, but also the way families have a tendency to close ranks and forget that transparency must always be a priority.

I’ve seen many family businesses at close quarters. The pattern seems to follow much the same trajectory: a venture is set up by an energetic, entrepreneurial character with tremendous drive and what begins as a good idea grows into a substantial business that stands the test of time.

Historically, the son (or daughter) of the founder is well instilled with the company ethos, loyal to family values and tends the business in the image of its founder while gently bringing in new ideas and expanding carefully. The next generation is often more removed from the source of energy and there’s no guarantee they will want to continue in the same vein, have any interest in the business or be good at running it. This is where the problems can begin.

Enlightened family businesses will look beyond the family gene pool for talent. It is essential to have a degree of objectivity at board level. When faced with searching for chief executives for family-run companies I am always mindful of the solidarity of the family, especially when they make up the majority of the board and the shareholders. From the outside, the company may look attractive and buoyant, but on the inside there can be a minefield of power struggles and disagreement.

I’m often faced with finding a chief executive and support team for an entrepreneur who has realised it’s time to loosen the reins. Letting go, whether to a younger generation can be hard. But it is necessary. In business, nothing stays the same for ever. It’s important to embrace new ideas and have an ability to move with the times, even if it is painful to the founder.

The biggest danger to any business, no matter how successful, is when the chairman – usually a senior family member – stays on too long without giving others the opportunity to lead.

One example is South African company, Pick ’n Pay where the chairman, Raymond Ackerman, has only just retired aged 81. The sense that a family company should be run only by the family is misguided.

The saying goes “if you hire giants, you will have a company of giants”, and there is no guarantee that the family will produce generation after generation of giants. 

As the founder of MBS Group, I am aware of the strong pull to involve members of the family in the business if they are keen to be part of it. The family group is like no other in terms of the depth of understanding and trust.

However, no matter how close a family is, I would always recommend that the injection of new talent is vital and that a founder will, in the end, have to show generosity of spirit, in making room at the top for objective viewpoints.

Perhaps, now the working practices of the Murdochs have been scrutinised so closely, it will be clearer to shareholders that ‘keeping it in the family’ is not such a realistic approach.

  • Moira Benigson, managing partner, MBS Group

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