In my last post, I summarized the situation of Sharpe Enterprises, a family-owned business that became the largest producer of citrus fruit in the United States. Fred Sharpe, founder, brought each of his four children into different areas of the business.
Along the way, he created a holding company that held the stock in the various business units. When the time was right, he passed equal shares in the holding company to each of the children, reserving the “golden share” – the one that had complete control of the holding company – for himself.
When the time was right, Fred offered his daughter Helen the position of chairman of Sharpe Enterprises. Helen held a degree in business and had gained experience outside the company, where she demonstrated great skill as a business leader and became CFO of the company where she worked. It would be Helen’s job to “watch the money.”
As Helen settled into her position as chairman of the family business, Fred was fully aware of her efforts to use International Best Practices for Family Business. International Best Practices include clear responsibility for positions and accountability for performance and outcomes, all measured as compared to pre-approved budgets and more. In order for a company to be successful as it grows, such practices are necessary and professionally prudent.
Two of Helen’s siblings, Paul and Elaine, who headed up different divisions in the company, didn’t like answering to Helen or following the mandates of International Best Practices. Fred and his wife, Alice, were losing sleep over the battle between Helen and her siblings. It was a mess, both from a business operations point of view and for the family. Fred was determined not to allow his children to pull apart the fine business he had given his heart and soul to create.
Finally, Fred had had enough. He called a joint meeting of the Board of Directors and the family, including both husbands and wives. It was a very tense moment when the meeting was called to order by Helen. She announced that Fred was first on the agenda.
Fred began by reviewing the early challenges and how the family had pulled together to make Sharp Holdings an economic success and a force in the community. He reminded the family of the fine life that the business had provided.
As Fred continued to speak, the tension mounted. Then he dropped the “Golden Share” bomb. “Either you all get in line with International Best Practices for Family Business or I am going to sell the entire enterprise!” As he sat down, he reached over and held Alice’s hand, looked at her with great resolve and said nothing.
Helen declared a 30-minute recess and some of the people left the room. No one doubted Fred’s resolve to sell for they all knew him to be a man of his word. I was in the room when all of this happened. It happened so fast that we didn’t observe who left the room together, but Elaine and Paul came back together. In her role as chairman, Helen asked who would like to speak first and Paul stood up. His voice was shaking as he reported that he and Elaine wished to apologize for opposing Helen’s “Best Practices” efforts. He said that both he and Elaine knew Best Practices were the right thing to do but they felt they were being treated like children and even cited some childhood events that they all remembered, events where fairness and control were issues. He acknowledged that neither he nor Elaine wanted to be responsible for their father’s decision to sell the family company. Paul made it very clear that the sale of the company would lead to family members being estranged from one another and would be tantamount to the end of the Sharp family as they had known it.
I worked with the Sharpe family to help them work through these challenges. After the “golden share” ultimatum, it took a series of meetings to heal the family riff. They resolved to do whatever was necessary to make Sharp Citrus Products (the new name of the company) the leading business in their industry. Working together and using International Best Practices, that’s just what happened!
If your family business isn’t using International Best Practices for Family Business, it should be. A family-owned business is, first and foremost, a business. If you want your business to be a success, it must be run the way any successful business is run. As I wrote in The Little Red Book of Family Business, “Keep the focus on the business! Its success is what makes other things possible. Don’t be distracted by family matters!”
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