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It might look like an inevitability that Hannah Marriage should have entered the flour-milling business her great, great, great-grandfather co-founded in Chelmsford, south-east England, with his twin brother in 1824.
But that was not the way her father George, current joint managing director of Marriage’s, saw it when his daughter applied for the job of marketing director.
“He grilled me,” Hannah Marriage recalls about his interview of her as part of the selection process. “It was a bit of a shock as, in the other two interviews I had, the people had been quite nice.”
Family businesses might be as old as the hills, and today still account for 70-95 per cent of the commercial enterprises in most countries, but the challenge of handing on the baton to the next generation has not become any easier.
Just 30 per cent of EU-based family businesses survive to the next generation, according to European Family Businesses, a trade association. This figure is fairly consistent across the developed world, which means, statistically, just 1 per cent will progress from the fourth to fifth generation.
Hannah Marriage, now 31, and two of her cousins are the sixth generation of the family to sit on the board of Marriage’s. She admits that when she graduated from Edinburgh University a decade ago she imagined her career lay in public relations, away from the family business. “There was a bit of a flash moment,” she recalls. “Dad was looking to recruit someone in the flour marketing role and I thought maybe I would apply.”
She now shares an office with her father and says the biggest challenge is not to talk shop when they are around other family members, including her mother and two younger brothers, who do not work in the business.
“It is important to come into it of your own volition,” she says. “Looking back, Dad’s view was, if you are a member of a family with a business, it doesn’t mean you are best suited to run that business.”
Len Middleton, who worked for a period in the energy company founded by his grandfather more than 70 years ago, has for the past 12 years led the MBA family business course at the University of Michigan’s Ross School of Business. He says he wanted to teach on this subject because he had seen the pitfalls of flawed succession plans and was concerned that too many people were looking for simple solutions and failing to prepare early enough.
Middleton’s family brought in outside managers to run the company after his grandfather passed away a few years ago, but he says he has already started succession planning with his children for when they become part owners.
“I personally lived through all this, the good parts and the bad parts,” he says. “The biggest mistake is that families do not spend time on this early enough.”
The question most often asked by his business school students, many of whom are in family businesses themselves, is whether there is something in particular they can do to smooth the transition process.
“They think there is a magic bullet, but there is none,” Middleton says. He points out that one of the reasons succession remains such a thorny issue is that no two company situations are the same — and he sees that among the different experiences of the people he teaches.
One MBA student, for example, built a media business in his native Brazil and has just hired his father to run it.
Communicating with one’s relatives is key, according to Middleton. He suggests families go on “retreats” — not to discuss the business, but to enjoy each other’s company.
“Spend time just being family members, brothers, sisters and cousins. There will be tough moments in any family business, so it is important to cultivate that family time.”
It is never too early to start thinking about succession, Middleton says. “It is not a decision that can be taken in days or months, but should be looked at over many years,” he says.
John Cooney, a partner and family business leader at EY, the consultancy firm, recommends “future gazing”, which he says focuses the mind on what the whole family would like the business to look like in generations to come.
“This helps to shape present strategy and ensure the right person is selected to take the business forward,” he says. “Although a family business has a wealth of experience to draw on, gaining outside perspective, especially when hard decisions need to be taken, can prove valuable.”
Hannah Marriage and her father have undertaken a version of this by enrolling on the business growth programme, a part-time course at Cranfield School of Management. Every few weeks they drive to Cranfield’s rural English campus to discuss their longer-term strategies for succession with other owner managers, many of whom are not from multi-generational family concerns.
“We know there is a legacy, and my cousins and I would like to pass it on to our children, if we have any,” Hannah Marriage says. “But it is important people are coming into it of their own volition.”