Family Business
A recent report created by DCU (Dublin City University) Business School, entitled “Irish Family Businesses by Numbers” makes for interesting reading.
The report drew on data collected from the 2016 census as provided by the CSO (Central Statistics Office) and here is an extract of the report’s introduction.
“In our investigation to assess the contribution of family businesses to the Irish economy and labour market, we adopted the Central Statistics Office’s (CSO) definition of family business, derived from the ‘common European definition’, whereby:
- one family holds more than 50% of voting shares, and/or
- one family supplies a significant proportion of the senior management and effectively controls the business, and/or
- a family or a family relationship influences the enterprise, and the latter is perceived to be a family business”
But what I found more interesting is the following:
- There are 160,700 family businesses in Ireland
- 64% of all businesses in Ireland can be classified as a family business.
- Irish family businesses employ 938,000 people.
- Nearly two-thirds (64%) of the 1,480,000 people employed in the Service and Distribution, Building and Construction, Industry and Financial/ Insurance sectors work in family businesses.
- 70% of all businesses in the Service and Distribution sector are family businesses. More than 90% of family business in Ireland are Micro Enterprises, that is, they employ between 1 and 9 people.
- Just 8% of Irish family businesses are a Small and Medium-sized Enterprise (employing between 10 and 249 people). While this is only about 12,300 SME family businesses, these family businesses employ 380,000 people
Given that there are so many family businesses in Ireland and that they employ nearly a million people, it is important that these companies put in place strategies for a smooth management transition to ensure their survival.
Of course, conflict is normal in business and indeed among families. However, where business and family are intertwined, conflict can be very difficult to navigate.
Whether it is a generational issue or differences of opinion over strategies and growth planning, the difficulty with conflict within family-owned businesses is that the emotional aspect is usually greater than that in a non-family workplace environment. This is often since lines between roles and function and authority and responsibility are blurred.
Remember the Kilkenny Group family case which came before the Commercial Court in 2017?
This was a dispute between a mother and son over the ownership of the Kilkenny Group, a very successful company, employing over 300 people and with a chain of stores nationwide in Ireland.
Greg O’Gorman, who was the company’s marketing director claimed that his mother Marian, who was CEO of the group, dismissed him summarily and that a promise of a share transfer was being denied to him.
At the time, the case came before the Commercial Court, Mr Justice Brian McGovern said the case was “peculiarly suited” for mediation and urged the parties to consider that as it would be very undesirable to have this family dispute involving a successful business being explored publicly.
After protracted negotiations, the matter was resolved in late 2018 and, this case, shows that given the choice, most family businesses would prefer a process that allows for resolution within the family without the need for litigation.
This case also highlights that when it gets to a point where the only way that family members are communicating is through lawyers, there are no winners. The damage to family relations in such situations can be severe and wide-ranging.
Family members outside the dispute may unwillingly be forced to take sides and it is often the case that it leads to relations never speaking to each other again and this gap is passed down to the next generation.
Mediation is therefore an attractive option:
- It is less expensive
- It is private – the details do not become public for all to hear and consume and comment upon
- It is more time sensitive – the mediation process generally takes much less time than proceeding through the courts (and therefore, will be less expensive)
- Mediation is immediate – this is especially useful where there are strong emotions surrounding the dispute. A protracted situation is harder and more emotionally draining for parties involved.
- It is flexible – it offers solutions that are particular to each individual case and the solutions are limited only by the flexibility of the parties involved
- Mediation is non-adversarial – mediation does not pit parties against each other and seeks to bring about a resolution that has acceptable elements to all those involved. By contrast, litigation is adversarial; there is a winner and a loser. This does not help resolve the conflict and can exacerbate the situation
- Positive outcome – mediation focuses on positive outcomes by allowing parties to work together and reach a mutually agreeable solution. This is especially important when parties continue to work together
- Mediation can be used in almost any situation to help resolve issues within a family organisation
Workplace Mediation
Mediation has become an indispensable tool in dealing with workplace disputes. Without intervention, conflict can be very costly, very time consuming and potentially damaging. Mediation offers the chance to seek resolution in an informal and confidential manner by focusing on finding solutions in each individual case.
Elder Mediation
Elder Mediation is future planning for all the family, while putting the elder person(s) to the fore of the conversation. Talking about aging is never easy but having that conversation with the help of a trained mediator reduces uncertainty, confusion, tension and importantly, reduces the potential for family fallouts or disputes.
Family Mediation
The breakup of a relationship is never easy, and it is understandably a process that many people find difficult to navigate. Every situation is unique and, regardless of whether parties are married, cohabitating, or heterosexual or same-sex couples, mediation is worth considering as it allows people to focus on finding the best solution to their own situation.