Workshop Session I
Richard White Pty. Ltd.
- Case Study -
Professor Alden G. Lank
UBC C1
Alden G. Lank
BMO Harris
Private Banking
2003
Outstanding
Workshop
Determinant I
Achievable Strategies
UBC C 2
Alden G. Lank
Session IV
BMO Harris
Private Banking
2003
Outstanding
Workshop
Determinant II
Common Vision
UBC C 3
Alden G. Lank
Session IV
BMO Harris
Private Banking
2003
Outstanding
Workshop
Determinant III
Appropriate Governance Institutions
UBC C 4
Alden G. Lank
Session IV
“Appropriateness” is a function of…
(for the Business):
BMO Harris
Private Banking
2003
Outstanding
Workshop
 Trans-national, national, local laws and regulations
 Cultural traditions
 Size of the business
 Age of the business
 Complexity of the business
 Ownership stage:
 Owner-manager
 Sibling partnership
 Cousin consortium
 Etc.
UBC C 4a
Alden G. Lank
Session IV
“Appropriateness” is a function of…
BMO Harris
Private Banking
2003
Outstanding
Workshop
(for the Family):
 Which generation(s) in power
 Family traditions/values/history
 Number and ages of family members
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(active and non-active)
Number of in-laws
Geographic distribution of the family
Type, size, complexity of the business
Degree of cohesiveness of the family
Availability of talent to lead and staff
Breadth of distribution of ownership
Family wealth
Etc.
UBC C 4b
Alden G. Lank
Session IV
BMO Harris
Private Banking
2003
Outstanding
Workshop
Determinant IV
Clear Separation of Roles
UBC C 5
Alden G. Lank
Session IV
BMO Harris
Private Banking
2003
Outstanding
Workshop
Determinant V
Effective Conflict Management
Mechanisms
UBC C 6
Alden G. Lank
Session IV
BMO Harris
Private Banking
2003
Outstanding
Workshop
Defining Conflict
1. Competitive or opposing action of
incompatibles
2. Antagonistic state or action
(as of divergent ideas, interest, or persons)
3. Hostile encounter: fight, battle, war
4. A type of behaviour which occurs when two
or more parties are in opposition or in battle
as a result of a perceived deprivation
caused by another or others
UBC C 7
Alden G. Lank
Session IV
Conflict Management
BMO Harris
Private Banking
2003
Outstanding
Workshop
Proposition No. 1
Over time, conflict is inevitable in families and in family
businesses
Proposition No. 2
Conflict can be healthy or unhealthy, functional or
dysfunctional
Proposition No. 3
How conflict is managed is one of the key determinants
of effective families and family businesses
Proposition No. 4
There are several conflict management strategies: no
single one is a panacea
Proposition No. 5
Pre-establishment of “rules of the game” can obviate
many conflicts
Proposition No. 6
Goal should be to maximize win/win for all parties
concerned and arrive at the best decision given the
family’s and the family business mission/ goals/
objectives
UBC C 8
Alden G. Lank
Session IV
2.
BMO Harris
Private Banking
2003
Outstanding
Workshop
Family Business:
The Ultimate Paradox?
Family businesses have BUILT-IN CONFLICTS due
to the intersection of two worlds which are governed by
DIFFERENT VALUES AND LOGICS*
Family World
• Mutual cooperation
• Loyalty
• Unity
• Permanence
• Stability
Conflict
UBC C 9
Alden G. Lank
Business World
• Competition
• Opportunities
• Diversity
• Impermanence
• Instability
Disruptive
Constructive
Session IV
BMO Harris
Private Banking
2003
Outstanding
Workshop
Conflicts: within the Business Family; within the
Family Enterprise; between the Business
Family and its Enterprise - I
• Same as in any family or business
but
• In addition unique causes and impacts,
e.g., conflict within the family can have shortor long-term negative consequences for the
business and vice versa!
UBC C 10
Alden G. Lank
Session IV
BMO Harris
Private Banking
2003
Outstanding
Workshop
UBC C 10a
Alden G. Lank
Session IV
BMO Harris
Private Banking
2003
Outstanding
Workshop
Conflicts: within the Business Family; within the Family
Enterprise; between the Business Family and its
Enterprise – II
- Battlegrounds 
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Who gets what percentage of ownership, of voting shares?
Can one get rid of (or acquire) shares and at what price?
Who represents the family as owners in the company?
What are his/her/their responsibilities and rights?
How can we fire our representatives?
What are the ground rules for election to/tenure on the board?
Who of the family has the right to work in the family business?
For that matter, who is family?
How are career decisions made for family members in the business?
What’s our philosophy: Family first? Business first? Other?
UBC C 10b
Alden G. Lank
Session IV
BMO Harris
Private Banking
2003
Outstanding
Workshop
Conflicts: within the Business Family; within the
Family Enterprise; between the Business Family
and its Enterprise – III
- Two Fundamental Triggers of Conflict  Sense of inequity
 Desire for power
UBC C 10c
Alden G. Lank
Session IV
BMO Harris
Private Banking
2003
Outstanding
Workshop
Conflicts: within the Business Family; within the
Family Enterprise; between the Business Family
and its Enterprise – IV
The goal of conflict management in the family business and
the business family should be to apply conflict management
strategies that are most likely to produce positive outcomes
for both the family and the business
—Win/Win —
N.B. Easier said than done!
UBC C 10d
Alden G. Lank
Session IV
Generic Conflict Management Strategies
BMO Harris
Private Banking
2003
Outstanding
Workshop
Avoidance
Referral
Confrontation
• Ignorance
• Arbitration
• Face-to face
• Withdrawal
• Triangulation
• Problem-solving
• Denial
• Fate
• Dialogue
Degree of long-term effectiveness in resolution of
major actual and potential conflicts
UBC C 11
Alden G. Lank
Session IV
Positive Outcomes of Constructive Conflict
BMO Harris
Private Banking
2003
Outstanding
Workshop
 Higher motivation and energy
 Higher innovativeness of individuals
 Better understanding of own position
 Greater understanding of own identity
 Means of managing own internal conflict
R. Walton
UBC C 13
Alden G. Lank
Session IV
Prerequisites for Effective Conflict Management
in Business Families and Family Enterprises
BMO Harris
Private Banking
2003
Outstanding
Workshop
 Supportive value system
 Written “rules of the game” preferably before
they are needed
 Structural/institutional mechanisms for
maintaining constructive dialogue
 Known and accepted process when
agreement not possible
 Sense of humour
UBC C 14
Alden G. Lank
Session IV
BMO Harris
Private Banking
2003
Outstanding
Workshop
The Four “Pillars of Peace”
in the Puig Family (Spain)^
 Truth
 Justice
 Love
 Freedom
^1998 Distinguished Family Business of Year - IMD
UBC C 15
Alden G. Lank
Session IV
BMO Harris
Private Banking
2003
Outstanding
Workshop
Two Key Forms of Justice
 Procedural Justice
 Distributive Justice
N.B.
UBC C 16
Alden G. Lank
Perceived procedural justice can have a
major impact on perceived distributive justice
Session IV
BMO Harris
Private Banking
2003
Outstanding
Workshop
Determinant VI
Explicit family personnel policy
UBC C 17
Alden G. Lank
Session IV
Explicit Family Personnel Policy
- Issues BMO Harris
Private Banking
2003
Outstanding
Workshop
 Who is family?
 Philosophical considerations; right or privilege?
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Why is it important to have family in the business?
What prerequisites for entry?
Conditions of employment over the career: N.B.
Same or different than non-family employees?
Monitoring of career progression by whom? How?
Who takes decisions on career issues of family
members?
How are grievances handled? By whom?
UBC C 17a
Alden G. Lank
Session IV
BMO Harris
Private Banking
2003
Outstanding
Workshop
Determinant VII
Attracting and retaining competent
non-family managers
UBC C 18
Alden G. Lank
Session IV
BMO Harris
Private Banking
2003
Outstanding
Workshop
Determinant VIII
Effective management
succession process
UBC C 19
Alden G. Lank
Session IV
BMO Harris
Private Banking
2003
Outstanding
Workshop
Determinant IX
Effective ownership succession process
UBC C 21
Alden G. Lank
Session IV
Some Thoughts on Ownership Transfer
BMO Harris
Private Banking
2003
Outstanding
Workshop
 What is desirable and/or doable is a function of tax
and family
 From the family viewpoint, “fairness” – procedural
and distributive – is often the key criterion
 Three basic approaches to fairness:

Capitalistic: To each according to his/her contribution (may be
OK if primary goal is to ensure business productivity)
 Egalitarian: To each in equal measure (may be OK if primary
goal is family cohesion and no one is working in the business)
 Communistic: To each according to his/her needs (may be OK if
primary goal is collective family welfare)
 If family tree is not pruned, need to keep many non-
active family shareholders informed and, hopefully
supportive. Beware of golden handcuffs.
UBC C 21a
Alden G. Lank
Session IV
BMO Harris
Private Banking
2003
Outstanding
Workshop
Determinant X
Developing enlightened owners
UBC C 22
Alden G. Lank
Session IV
Developing Enlightened Owners
BMO Harris
Private Banking
2003
Outstanding
Workshop
 Keeping informed
 Becoming and/or staying educated
 Understanding legal rights and obligations
 Creating stock liquidity mechanisms
 Verbalizing realistic but demanding
expectations
 Spreading the news
 Sharing the wealth
UBC C 22a
Alden G. Lank
Session IV
BMO Harris
Private Banking
2003
Outstanding
Workshop
Determinant XI
Continuous building of family cohesion
UBC C 23
Alden G. Lank
Session IV
BMO Harris
Private Banking
2003
Outstanding
Workshop
A word to the wise…
Gather around business issues
and
gather to have fun together
virtual or real
UBC C 23a
Alden G. Lank
Session IV
BMO Harris
Private Banking
2003
Outstanding
Workshop
Determinant XII
Creating and up-dating family protocols
UBC C 24
Alden G. Lank
Session IV