The Family Dramas of Succession and Inheritance

The Family Dramas of Succession and Inheritance
by Dennis T. Jaffe, Ph.D.
Saybrook Graduate School, and the Wharton School

Viewing family business in many countries, I have been struck by how, despite great cultural differences and practices, the major themes of the family and its intersection with business seem to be universal. The drama of the business patriarch–fierce, confident and powerful–and sons and daughters who struggle to find a role and a place in a universe where the patriarchal shadow is writ large, always lies in the background for the overt challenges to sustain and develop family business. As each business faces forces of globalization, growth, diversification, and competition, each family must also resolve its own dramas around legacy, inheritance, succession and family justice. In this article, I want to bring these archetypal dramas out of the shadows, and suggestion some ways that families can reduce some of the negative emotional energy that can limit the future of a business.

Freud used the Oedipus myth to dramatize a violent model of family succession where the sons plot to overthrow their father, to take up his authority and split it among them. Freud saw this bloody drama in many biblical and historical tales of royal sons ending their father’s reigns, and saw this as a somewhat universal succession model. The drama of sons’ jealousy and rivalry for power has been told in the biblical tales of Cain and Abel, and Joseph and his brothers. Since such myths are strongly masculine or feminine, I will use such pronouns in my reporting, rather than make them sex neutral. The feminine side of mythology provides images and stories of nurture and fertility, and collaboration and partnership, personified in the Earth Mother, which may account for the cooperative nature of cross-gender succession.

A myth reveals a deep and common psychic pattern, that an individual and family reenacts in their own unique development. Myth can be thought of as providing a universal stage, where the particular drama that each family must experience is enacted. By experiencing the myth, an individual is left better able to handle the personal feelings that may cause difficulty and conflict.

Family business offers a grand stage for mythic behavior. If not completely universal, the patterns of myth are common. There is a family patriarch, who has built a kingdom, with many subjects (employees), buildings and visible achievements. The royal trappings can be seen in vast corporate headquarters, with lobbies containing statues and mementos, in grand boardrooms and offices at the top floor, and even in the name. Like a monarch, he is in absolute control of his kingdom, and he likes it that way. The sons know they will inherit the kingdom, but they are forced to wait, without power or authority, until succession occurs upon father’s death.

Business strives to make decisions based on rational self-interest. But the emotional currents of a family often make that an impossible ideal. In fact, the emotional realities of a family, set in early childhood and growing up together, are often timeless. No matter how old you may be, your parents, your brothers and sisters, will experience emotions together that may be at odds with their current relationship. The presence of a family emotional reality can lead to behavior, feelings and choices that are at odds with good business practice.

I will explore three mythic dimensions of family business: the parents’ quest for legacy, the heirs’ search for personal identity, and the whole family’s pursuit of family justice.

Parents’ Search for Legacy
Parents have two legacies they want to preserve—their family and their business. They may be in conflict. The founder/entrepreneur has an image of the business, and may want his heirs to follow his dream. James Stewart, playing the dutiful son in the classic film It’s a Wonderful Life, gives up his own dreams and education to take care of the business after his father dies, taking care of each family member except himself. But father’s dream is not his dream, it is his obligation, and he is stifled by it.

The family legacy often takes the form of giving family members things that the parents did not have, primarily not having to struggle or face poverty. Sometimes the parents want to make up to the children what they may not have received in the form of attention, personal support or nurture from them as parents.Money is given to make up for what they didn’t get, or to make sure they don’t struggle.

Traditionally, the king was the personification of his kingdom. In a recent talk an Asian entrepreneur was asked about life balance between work and family. He forthrightly made it clear that his family had to make sacrifices, and one of them was his lack of presence. He was married to his business.

The founder has several qualities that make both effective succession and acknowledgement of his children difficult. First, is his desire for total control, that leads to a business where everything goes through the leader. If his heirs work there, they must agree to be subordinates to his power and vision, even if they are beneficiaries of his money. Second, is the sense of confidence that leads the founder to see his way as the only way. The entrepreneur/business founder of the male variety is a powerful leader, but a poor teacher. He has difficulty letting go, listening to others, and most of all, being patient with other’s frailties. When Ted Turner was about to sell his company to Time Warner, his son asked him at a family dinner, what would happen to his job? Turner’s answer, “You’re toast.”

A business founder may want his children to follow in his footsteps, but most often under his terms. The legacy is that they run the business“the way I’ve always done it.” A son or daughter is a follower, not an innovator. The father may continually see problems in the successor. Henry Ford could not allow his son Edsel to take over his company, and undermined him until Edsel’s untimely death, when he returned to the company. Other founders like William Paley of CBS are known for firing potential successors.

If the son is talented, the battle between founder and son can be intense. One bank founder recruited his very capable son from a larger bank, ostensibly to take over. After a dozen years, the son began to make initiative, that the father undermined and overruled. The son finally had enough, and received an attractive job offer. Only then did the father see the son was serious, and yield real power to him. But it was difficult for father really to let go. He ended up starting yet another business. Thomas Mellon, whose capable and diligent sons became America’s richest family at the turn of the century, turned his business over to them, and then, at age 79, moved from Pittsburgh to Kansas City and started some new businesses!

But fathers and mothers have soft spots for their children. In many a family business, employment serves many non-business purposes. First, it is a way to give something to children who may not have received the personal attention and nurture they needed earlier in life. A couple who have had to scrap and struggle for success now find themselves raising children who they can give what they never had. But, it is possible that by giving all this to them, the children find themselves in the position of feeling entitled to their wealth, and not having a clear or strong motivation to work or strive.

A child who is aimless, or having problems with drugs and alcohol can be a prime recruit for a job in the family business. The business becomes a baby sitter, or a social welfare agency.In several families, the son who works in the business under these auspices, title and job but no accountability or responsibility, becomes a drain on the family, and on the morale of the company. When the company has difficulty, or is sold, or has new management, the firing of the family member sets off major seismic battles in the family. Added to this is that the family heir, sheltered from work and responsibility, feels no sense of confidence or capability to make their way in the world without the family job.

Heirs’ Search for Identity and Teamwork
Founding parents come with their identity written in their business, and their family. Their heirs have a tough act to follow. Feeling pressure to stay with the family and enter the business, setting out on their own to make their own life is especially risky. My self or my family, is the way one heir stated the dilemma. Either way I lose, he felt. How can you not come into the business, father asks, where could you possible do better, more quickly? The subtle bribery of a job in the family is seductive.

Second generation children often grow up revering “the founder” who is larger than life, just like his grand house. What can they ever do to measure up? One heir to a family fortune said that his only desire was not to be the first one in the family a mistake. There is no way to go but down. This struggle is not fully appreciated by the parents. The traditional path of personal development is for the children to grow up and seek their own paths. When a family business is in the equation, going one’s own way is often taken as rejecting the family. By going on one’s own journey, they feel they are sacrificing a chance to be part of the family future.

In some families family and work appear to be in harmony, as places in the business are assigned to reflect family hierarchy. The Ferragamo family, under the direction of Wanda Ferragamo, widow of the founder, placed each of her six children in a different division of the company. The family operated by harmony and consensus. In other families, such as in the middle east or India, each heir is given the managing directorship in one business. The family manages a portfolio, some large, some small and struggling, so that each heir can have his or her own place. Of course in reality, only one or two of the businesses in the portfolio really make money. The rest are businesses that preserve self-esteem.

Families where the founder or co-founder is a women have an interesting variation, often more harmonious, on the royal theme. The son of Estee Lauder, Leonard, found great success as the operations manager working for his mother. Donald Graham served a long apprenticeship until his mother Katherine, who had inherited her father’s Washington Post on the unexpected death of her husband, who was the chosen successor, gave him the reins.The rivalry that might exist between father and son, seems absent in cross-sex succession. Christy Hefner has had many years of harmonious relations with a difficult and famously controlling father Hugh, while their Playboy Enterprises has had many twists and turns.

Can the family grow as fast as the business? If not the family’s income shrinks with each generation. For five generations, one family always had an executive job for each family member. But by the fifth generation there were far fewer spots than family members. The oldest members of the oldest family branch entered the business first, and the other families wondered if there was any room for them in the business.How does this scarcity not lead to conflict?

If the business has less space at the top than candidates, a struggle can ensue. Each family member feels that he is competing with others. Some families feud openly, or plot in secret, just like royalty of the feudal era. The founder does not make his plans for the future clear, pitting his children against each other when he is no longer around. In one family, each son and son-in-law felt that the patriarch had told them that they would be the chosen one. Only when they compared notes years later, did they discover something was awry. They have been able to create a team among themselves, agreeing that they will run the growing business together until it is sold.

The heir can find his or her identity inside the family or outside. It is a crucial choice. If the whole family is turned inward, looking for power, acknowledgement or significance from parents, who will be looking at the marketplace or the customers? Many families lose focus or effectiveness when they turn excessively inward. The family drama negates the business reality. On the other hand, if each family member seeks him or herself outside, in other ventures, they come back with a sense of inner strength, that makes their focus on being acknowledged by dad or mom less acute.

The challenge for heirs is not just personal identity; the sons and daughters, must forge a team to run the business. While all of them may not be in management, frequently they all inherit some part of the ownership, and serve on the board. The siblings must learn to work together, and overcome their family based rivalry.

Here is how it can play out. In a large business, the oldest son began working, diligently, over a number of years. After a few years his talented older sister want on to become a corporate lawyer, with her husband. The “kid brother” had a more erratic history, but finally began working in the business. The parents made it clear that they all would inherit the business. They also wanted the two sons to work together. Kid brother had the same dream, but oldest brother had other ideas—he felt his years of service and hard work made him the leader. The parents had difficulty dealing with conflict, so when they passed on, the trio was left to deal with the situation. Their challenge—should there by one leader, or co-leaders, should one brother work for the other, or should the older brother buy out his brother?For the first time, they could not rely on mom and dad to regulate their relationship.

Father can make it difficult for siblings to be a team when he is around. In many families, the heirs have a deep individual relationship with the patriarch, and little or no business relationship with each other. In one family of seven children, the father died suddenly, and they found they had no history of working or even seeing themselves as a team, because all their work had been in intense relationships with dad. Learning to compromise and manage their widely divergent experiences was a deep and daunting challenge, taking several years.

The Pursuit of Family Justice
Family feuds in the form of lawsuits are always in the news. The famous lawsuit of the children of Seward Johnson, heir of Johnson & Johnson, who were suing their father’s late life companion and wife, who had inherited the bulk of his estate, was one of the longest and costliest suits on record. What was at stake was not so much the cash, but the feeling the children had never really been loved or acknowledged by their father. The revelations were highly painful and personal. Why do such fights go on so long and so publicly? Why can’t they be resolved easily?

The issue is that the estate, or the business, is linked in the family to personal feelings of deserving it, being entitled to it, or feeling hurt or wronged by the parents. One son who had worked in the family business with his father and sister, was outraged when she was picked as CEO by their father. Though he had only a minor role in the business, he expected to be a full partner. When she took over, his sister’s first act was to fire him.

The difficulty was that he was a one third owner of the business and member of the Board. Negotiations began for the business to buy his share, making him very very wealthy, but he spurned all offers, because he didn’t want to make his sister rich by selling his stock to the company at a discount. He had no funds of his own, and lived in a small apartment, but his anger at his parents and his sister kept him from doing what was in everybody’s self interest. The way that family feuds can get hung up on issues where nobody benefits is a mystery, unless we understand that the deep hurt that family members feel is do strong, that they can only feel validated by another family member losing. His real intention was keeping the family hostage, not getting free of the family.

Dealing with the business issue will not heal the hurt in the family, if anything in fact will. In a family the issue of inheritance is linked to a sense of family justice, which unfortunately can be contained in radically different perspectives of different siblings, and between generations. What seems fair to some is considered betrayal by others. The feelings often come to a head on the parent’s deathbed, so the loss adds to the pain.

The issues of family justice and inheritance are classic. First, there are issues between giving equal shares to all heirs by blood, or deviations from that because of gender bias (women get less), or due to differences in siblings who work in the business and those who do not. If you lead the business do you get more than your siblings who did not, but who feel they were not given the opportunity to do so? Parents feel they can’t do the right thing for everybody, so they often choose to ignore the conflict, and let the next generation fight it out.

Other issues have to do with recognition, and favoritism. Different children arrive at different stages in the parents’ lives, and they are very different. A slight or hurt can be magnified when there is an overall feeling that parents are not physically or emotionally available. A common example is the absent father, epitomized Cat Stevens’ song, Cat’s in the Cradle, about a father who never had time for his son, who finds that his son has grown up into a person who likewise has no time or connection to the family. One daughter said that she took a job in the family business so that she could finally have a relationship with her father. Another son kept working in the business, trying to please a father who had no idea that it was an issue for him.

Toward Conscious and Constructive Succession
Is there a common thread to the psychic dramas that can show a pathway to healing and common purpose? I think the common thread is that, given the strength and unconscious power of the family dynamics that operate in a family with a business, and around inheritance, that the family has to take great care to anticipate and respond to them with communication, compassion and conflict resolution.

What do families who are successful at these issues do differently from those who are conflicted? They tend to find ways to talk about the issues before they flare up. There are several direct paths that keep family dramas from overwhelming business:

1. Meet as a family.
Isolation tends to lead individual family members to work at cross-purposes. There are many questions that occur to children about the family as they grow up. What is our money for? What do you expect from me? What is the future of our business? What does the family stand for? Every family should come together at regular intervals, in a fairly formal manner, to talk about such issues. Every effort should be made to be inclusive, and to talk about difficult issues. The purpose of these talks is not to make decisions, but to learn about each person’s desires, welfare and futures.

2. Have concrete discussions between founder/parent and siblings about the business.
Family discussions are public events; often there are special things that fathers and sons, mothers and sons, and both parents and daughters need to say. A family cannot have only a public, collective relation between parents and offspring. There must be times for 1-1 conversations, especially about legacy, and individual expectations. These conversations are especially important between business owners and heirs who work in the business, because they concern expectations and the future. Asan example, I knew a father who was concerned about his son’s attitude and work ethic. His son, age 23, had just graduated from college, and father assumed that he was working in the business and ready to take it over. Son however, felt he was taking some time off by working there, to decide what he wanted to do with his life. The two spend hours together a day, but never discussed this tricky subject.

3. Create family guidelines to channel expectations.
Parents often avoid difficult questions like succession because they don’t know what they will decide. So things remain unspoken. But most families could create a clear document that specified the expectations and values of the founding generation, that they wanted to see carried on by their heirs. This document has several names, and several forms. It is crafted over time by the elders of a family. If can be a comprehensive document called a family constitution, or a shorter mission, vision and values statement. It can include specific guidelines for family employment, sale of assets and compensation, or can just contain value guides for behavior. At any level of specificity, the concrete guidelines create a stick in the ground that heirs can use to align their expectations. If they know they will always share in the business, for example, they may make temporary career choices or decisions about their lives.

There are many more lessons and ground rules that can guide a family from mythic to business relationships.They cannot be escaped. Rather, they lose their bite when the family faces them directly, and then tries to act without being caught in their power. In that way, the real legacy is for the family to find ways to share the positive power of working together, and preserving the family and business legacy, without falling victim to the emotional pitfalls.