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Even When You Do It Right, Be Wary of Talking About It

Dear Advisor:

My brother, CEO of our family's business, recently was interviewed by a local newspaper. He talked about his role in "transforming" the business and "balancing family and business goals." He explained that the business was improved by replacing family with outside directors. And he said that his actions were guided by family business experts.

Several family members are embarrassed by my brother's comments. They feel that they've been labeled incompetent in the newspaper and that he disrespected our father. The conflict is opening old wounds. Any guidance?

 


Communication is often labeled as a major problem confronting family businesses. Within the family, there's often too little. Sometimes with the media, there's too much. Even when family businesses are being constructively transformed in ways consistent with the best practices and advice, how and with whom that process is talked about is another matter.

The chairman of one of the world's leading family firms recently learned this lesson -- the hard way. Krister Ahlstrom was chairman of the $2.2 billion annual revenues, 149-year-old Finnish paper empire Ahlstrom Corp. He granted an interview to the Harvard Business Review (see The Family Business Advisor, October 1998), in which he said that family board members came up short in the "business realities" department. A cousin accused him of not respecting the family's values: "How can a CEO glorify his own work and overlook the contributions of other colleagues and family members working for the company?"

Krister seemed to be developing a model family business. He sought to put in place an "enlightened ownership system" in 1991 to involve 200 family shareholders in the family system. A family council and family assembly were established. Young family members received family business education. Company performance improved as did family harmony.

Then Krister told the Harvard Business Review about the "high gap between perceptions of the owners and business realities," and how in family-run companies, "the level of professionalism on the board is frequently a problem." He compared his own role to Winston Churchill's during World War II.

Said a prominent family member in response to Krister's words, "It's difficult to understand how he could be a cohesive force as chairman."

In 1998, he was challenged as chairman but was reelected with 60% of the vote. After an April, 1999 letter urging his replacement, he resigned. Now the company is being split into a publicly-traded industrial firm and a private company for the family's real estate and other assets.

There are lessons here:

  • Be careful when speaking to the media. Have a good reason that serves the family and business to do so. 
  • If you hope that other family businesses may benefit from your family's experience, get the family's support for that position.
  • Share credit for family business accomplishments with the family. 
  • The best leaders don't need to claim the credit, especially before the general public. And to repair damage: 
  • An apology at the next family meeting might be in order
  • The family should consider developing a policy concerning interaction with the media.

The Advisor

 

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