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Four Tips to Run a Successful and Drama-Free Family Business in Southeast Asia

Don’t let sibling rivalry kill your company

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BY Tanya Mariano - 30 Mar 2017

PHOTO CREDIT: Getty Images

Family-run businesses are a vital pillar of the Southeast Asian economy. According to a 2011 Credit Suisse report, over 60 percent of listed companies in the region are run by families.

There are many benefits, but because the personal and the professional more or less intertwine in a family business, a lot can go wrong, too. For instance, conflict can arise easily, and unchecked nepotism may derail progress. For Southeast Asian family businesses, the top source of stress is having to lay off underperforming relatives, followed by disagreements between family members, a survey by The Economist Intelligence Unit found.

But there are ways to keep the business, as well as family relationships, running smoothly.

 

1. Manage family dynamics actively

Set boundaries. As a general rule, family issues must be kept at home. Conversely, discussion of business matters at home should be kept to a minimum.

Says family business consultant George Isaac, “Positive family dynamics requires proactive management and an important success factor for multi-generational family businesses," as quoted in this Inc. article. One way to to do this is to set up a process for handling conflict both in and out of the office.

Try not to take business matters personally, too. Says Ryan Camarillo, who runs online crystal jewelry shop Soulgasm with his wife, “there is a tendency to overlap [relationship and business issues], and sometimes we can't help [but take things personally]. To counter this, family members should practice open communication,” he says.

 

2. Have third-party advisers

External advice can help the business from adopting a view that's too myopic, and it can also fill in any gaps in expertise.

Recommends Isaac, “Include non-family independent board directors or advisors to bring objectivity and an extra degree of professionalism to your board meetings.”

 

3. Encourage members to get outside work experience first

Even the Ayalas of the Philippines gained outside professional experience before joining the family conglomerate. Jaime Augusto Zobel de Ayala was with the Department of Trade and Industry and a London merchant bank, while brother Fernando worked at Shell in Brazil.

According to Family Legacy Asia, a family governance consultancy, work experience gives family members the opportunity to mature and differentiate from the business. They gain a wider perspective not just of work culture, but of themselves.

Hence, once they join the company, “they are going to be much better business partners with their siblings and it will give the family business greater immunity against family conflicts.”

 

4. Address the individual needs and goals of members

Isaac points out that families shouldn't lose sight of this one detail: that every member is an individual with their own goals, needs, and priorities—most of which will evolve as time goes by. He says, “The best rule is to treat family owners as individual investors… Understand and address their individual needs, both business and personal.”

He adds, “Remember, minority ownership problems can become majority ownership problems if minority issues and objectives are not addressed."