Family Business Coaches Others on Survival
by Elena Cherney
Staff Reporter of The Wall Street Journal
This article is reprinted by permission from StartupJournal.com.
Few people know better than Philippe de Gaspe Beaubien the perils of trying to pass a family business down through the generations.
For 11 generations, his ancestors traded fur, brewed beer, baked biscuits and traded stocks in Quebec. But none of their businesses stayed in the family for more than two generations.
Mr. de Gaspe Beaubien, 72 years old, and his wife, Nan-b, 65, vowed decades ago to have better luck in building their Montreal publishing and broadcasting company, Telemedia Inc., into a multigenerational enterprise. So they sought what little expert advice was then available on running a family business. They interviewed families around the world about their own experiences. And two years ago, they passed control of Telemedia to their three children. Their two sons now run the company.
Although their research and planning look like they are paying off, “it’s too early to tell,” says Mrs. de Gaspe Beaubien. “We have to see if the second generation passes to the third generation.”
But the de Gaspe Beaubiens are sharing their knowledge and experience. Seven years ago, with funds from an investment in a cellular-phone company, they started the nonprofit Business Families Foundation in Montreal, through which they now spread their message with almost missionary zeal. “There are just so many needy families,” says Mrs. De Gaspe Beaubien.
Since family-owned and closely held businesses generate half of the U.S. gross domestic product, their successes and failures play a big role in the U.S. economy, says Sidney Barton, executive director of the Goering Center for Family and Private Business at the University of Cincinnati. But according to most studies, only one third of family businesses are successfully transmitted from parents to children. And only 10% of family businesses remain in a family for three generations, Prof. Barton says.
“That has implications for the family, but it has broader implications for the people who work for these businesses, who end up dislocated and displaced” when a business fails or leaves a family’s control, he says.
The de Gaspe Beaubiens’s central lesson — based, they say, on their interviews with hundreds of families — is: Focus on family dynamics, not just business practices, in mapping out long-term strategies for succession.
Strains of Family Dynamics
That may sound obvious, but many families don’t understand the pressures family dynamics exert on family businesses, or the toll a business can take on a family, some experts say. “So many family businesses just fall apart over infighting or sibling rivalry,” says Louis B. Barnes, a professor emeritus at Harvard Business School and a pioneer in the study of family business.
During three-day immersion courses held at country resorts north of Montreal, the de Gaspe Beaubiens and their staff counsel families on how to set up a continuing, formal discussion forum, or “family council,” to deal with business and family issues. They also recommend using a trained discussion facilitator to sort through family members’ grievances and goals. The sessions can also offer tips on hard-headed management.
“It helped us wake up a bit,” says Jacques Deschenes, whose family runs a wholesaling business that brings in 250 million Canadian dollar (U.S. $168.6 million) a year. After taking a course with his wife and five children, three of whom now work in the business, the Deschenes, on the de Gaspe Beaubiens’s advice, set up a board that includes three nonfamily members.
“We choose people who are not connected to the family,” says Mr. Deschenes. “When they ask questions about the business, they’re not thinking about the family.”
People familiar with the de Gaspe Beaubien operation say it has attracted some of the wealthiest families the world, though the de Gaspe Beaubiens decline to name names. The cost is C$2,500 and they boast that it takes place only at “first class” hotels.
Growing as Academic Subject
Despite such luxurious trappings, the seminars have made important contributions to the study of family business, says Prof. Barnes, who has taught classes at the Business Families Foundation. When Harvard Business School introduced its first executive program for business families in 1997, “it was modeled somewhat after the de Gaspe Beaubiens’s course,” says Prof. Barnes, who taught the Harvard course. While few universities offered such courses to masters of business administration students or business families 15 years ago, between 50 and 60 universities do now, he says, adding that he isn’t aware of any other family-run programs for business families.
The de Gaspe Beaubiens sometimes sound abstract and vague when discussing their approach. But some graduates of the program swear by it. Clifford Gundle, whose family empire includes manufacturing, investment-management and technology concerns around the world, calls his family’s 1995 trip to Montreal “probably the best investment I ever made.”
Following up on the seminars, the Gundles have held semiannual “family council” meetings ever since — much like the sessions the de Gaspe Beaubiens have held with their children, now in their 30s, for decades. The family council exists to keep the business running smoothly, but also to keep the Gundles focused on long-term goals they have set for themselves.
According to their ambitious one-page statement of purpose, the Gundles aim to “help each family member achieve their goals …” and “to protect, safeguard and grow the family wealth for the family into the future generations, to be trustworthy, ethical, lawful, caring, courteous and efficient, paying equal regard to staff, clients, regulatory authorities, service providers, shareholders and the public interest,” and to uphold “the family’s good name and reputation.”
Mixing Serious With Fun
The Gundles’s semiannual meetings include such activities as baking bread, doing yoga and painting, as well as facilitator-assisted discussions and lectures by estate planners, accountants, conflict-resolution specialists and other professionals. “It’s important to mix serious things with fun,” says Mr. Gundle, 64, a native of South Africa who now divides his time between homes there and in London. He adds that the council unifies the four Gundle children and their spouses, and comforts their parents. “If I drop dead and my wife drops dead, our family council would continue,” he says.
Now, the de Gaspe Beaubiens want to bring their ideas beyond the jet-set and the Ivy League. They are training facilitators who they hope will then work with families in cities and towns across Canada. Mr. de Gaspe Beaubien says he is also negotiating with several universities interested in offering some version of his program for families. “If the universities would take over what we’re doing, it would be a big help to families,” he says. “We’d like to make it an accepted field of study someone could get a doctorate in.”
This article is reprinted by permission from StartupJournal.com, © 2002 Dow Jones & Co. Inc. All rights reserved.
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