The media has been covering the lawsuit filed by 86-year-old Frank Stronach against his 52-year-old daughter Belinda. Stronach, founder of auto parts MAGNA, is asking for the court to remove his daughter as head of the family company, giving him back control of the family business, The Stronach Group TSG and claims damages in the amount of $520 million.
A month after the lawsuit was filed, there were more developments. Stronach’s son Andrew, who is 50, joined his father and mother in suing Belinda, alleging serious misconduct. These lawsuits affect not only Belinda and Andrew, but also the adult children of these two siblings who are the grand-children of the senior Stronach.
In my 23 years of consulting, I have helped many owners of family-owned businesses with their succession planning. I thought I had seen everything -- family disputes, rivalries, disagreements and quarrels -- but the Stronach story is on track to take first prize.
This family feud appears to qualify for the most interesting case because of many points:
• The dispute has reached the courts
• The fight is not between siblings (as is more common), but between the parents and their children
• The wealth of the family members is in the billions
• The age of those involved includes people beyond the average life expectancy in Canada (82)
Here are some tools I have used successfully in my career to defuse a potentially explosive situation and help produce an amicable succession solution:
From one box to three different boxes:
There is a difference between being a family member, a shareholder, and a senior Manager. Dividing these three roles and putting each one in different “buckets” is a more logical approach than having all three roles in one box. Separating these roles tends to bring some control over emotions and feelings. It does not suppress the emotions but puts them into context.
For example, a father may not agree with his son’s or daughter’s behaviour, but he will always have love for his son/daughter regardless of what the son/daughter does. The disagreement is over what the son/daughter has done rather than with the person them self.
In another example, a brother may agree that his sister is a bona fide equal shareholder, but he does not believe she has the managerial experience needed for a Senior Manager.
In a third example, a CEO may agree that a family member has contributed greatly to the success of the organization in the past, but their future contribution may be limited.
Ideal outcome defined:
I ask each individual stakeholder about their objectives and what would be the best outcome for each one. In a perfect world, what you want and how they turn out are the same. But we don’t live in a perfect world. So, we must ask, what would be the ideal outcome? And what could be an acceptable outcome?
As individuals explain their objectives and specific needs, a potential middle ground surfaces as an acceptable scenario for all stakeholders.
For example, people may agree to invest money in public shares and funds without having a direct role as a Manager or an Executive in the companies or funds they own. This usually brings some logic to one accepting the role of shareholder even though they may not be a Senior Manager.
A second example: Differentiating between receiving an income as a dividend vs. an income as a salary can resolve big disagreements between stakeholders.
In yet another example, differentiating between dividend and salaries explains that a dividend income depends on the business performance and profitability of the organization/company, while a managerial salary is more related to market conditions and average pay for certain positions.
Creation of a family council:
Creating a family council that meets on a regular basis to update family members on the organization or company performance helps improve family communication and with a focus on common objectives and shared goals. The family council is best managed by an independent professional who is accepted by all family members and appointed as the Chairperson of the family council. The Chairperson must be viewed as a trustworthy individual who is neutral, fair and wise. The Chairperson will also ensure that meetings are conducted in an orderly manner, and that all comments and opinions are welcomed and respected.
Giving people options and alternative solutions:
People like to have options and to be given alternatives that allow them to choose between different solutions and outcomes. Options give people a choice and makes them responsible for their decisions or selections rather than a yes/no choice which is less friendly.
Appointment of an arbitrator:
The appointment of an arbitrator who is selected and approved by family members can also serve when conflicts and disagreements arise. The arbitrator allows for an amicable solution without the use of the courts and has the ability to resolve the conflict at lower cost and usually in a shorter time frame.
While these five tools may not work all the time, they have been very effective in many of the family successions I have handled.
Hugh Latif is a management consultant and the author of “Maverick Leadership”. To know more visit http://www.hughlatif.com/