What is the true meaning of being a shareholder in a family business?
In a recent interview with Carmen Riu, CEO of the Riu Group, she said “We have taught our children to be owners. They will only be the managers, if they are the best”.
In Arrabe Integra we are specialists in conflict resolution in the family-owned companies. And we know that one area where these often arise is in the relationships, roles and responsibilities of the shareholders.
Shareholder of a Family Business
Every entrepreneur would either try to have no partners or would know how to define his ideal partner profile. The one with whom he would get in touch to make a business grow.
What if the partner is a family member and does not work in the company? What would we ask?
In family businesses, partners are not usually chosen but relationships, rights and duties can be managed.
But, this is as simple to say as it is difficult to put into practice.
Few companies reach the generation where relatives who work in the company live together with relatives who do not work in the company. Both have new roles as owners of those who have no reference to imitate in their parents and grandparents. New roles with different motivations and objectives in some aspects.
So several feelings confronted:
- Those who work in the company do not recognize the property rights of those who do not work in the company. “The effort is made only by me”.
- And, those who do not work in the company, can from, make as if it did not exist and live outside the company until they do not recognize the effort that supposes for the working relatives and only demand their dividend. “If there’s no profitability, I’d better get out.”
How to be happy to be a partner in a family business and how to be a good partner for the company, for the family and for the environment?
This leads us to ask ourselves, what would be some of the characteristics of the responsible partner that every business leader would like to have.
The partner that every business family would need for its continuity would be the one who is informed about what is going on in the company, attends the meetings and studies the information sent to him. He respects and accepts the decisions of the majority and supports them even if his vote is against them. He offers his availability in case of any requirement.
Recognizes the effort of those who work in the company and the responsibility they bear for the benefit of the whole family; and recognizes and appreciates the privilege of their status as owners.
Partners working in the company respect and protect the rights of partners who do not work in the company and are willing to be evaluated and held accountable for their performance.
The efficient partner is one who does not demand more than what has been agreed upon. He or she does not misuse the resources and reputation of the company; and is concerned with developing and fostering among his or her own people a genuine respect and affection for the family business. It does not seek buyers for its participation in a unilateral way, it defends that the property remains in the family.
It would be those owners who, regardless of emotions, work together to define and agree on a long-term global vision and a stable framework of relations between the company, the family and the property. Always trying to add value, or at least not to subtract.
Therefore, the efficient partner, is concerned about their training, their personal and professional development.
As I said before, it is a new dynamic of family/company/ownership/environment relations that usually appears in the third generation and for which there are no mirrors to reflect. The family should prepare this new scenario, anticipate it so as not to improvise, put a framework, structure and rules of the game through which the future responsible owners can pass without doubt.
Ana Díaz Montañés
Family Business Consultant specialist in Family Councils