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Fouad (Fred) H is a self-made man. He arrived in Montreal from Lebanon in the late 1950s at the age of 23 with $150 in his pocket and a pregnant wife, Nieves, whom he met while on vacation in Spain. He took a job as a messenger at a local pharmacy and was able to save enough money to buy his first fashion jewellery shop. Forty years later he had built a large empire with over 65 stores across Canada – with affiliations in the US.

In addition to importing jewellery from overseas, Fred started to design and manufacture his own products. Very quickly he became one of the largest fashion jewellery designers in North America with over 350 employees and a turnover in excess of $1bn.

Fred was an autodidact, a workaholic and a micro-manager. He never believed in computers or modern management techniques. He did not know how to delegate authority and acted as CEO, CFO, marketing director and chief designer.

His second-in-command was Arthur, an accountant/treasurer, and then there were the maître-joalliers, basically the managers responsible for the day-to-day operations at the 65 stores he owned. He had bi-weekly teleconferences with the maître-joalliers and received daily statements of accounts from all of them.

Fred and Nieves had five children – Marion, Anthony, Peter, Jack and Christine. Fred was away most of the time working hard and making sure his business prospered. He seldom took time off and he never took his family on holiday. Nieves stayed home to raise the children and then they all went to school and on to university.

Despite the fact that Fred worked almost seven days a week and 18 hours a day, he always managed to go to church on Sunday morning with the family and then they all had Sunday lunch together. It was a ritual he never missed. For him, it was the only time he could enjoy being with his children.
Marion, who was her father's favourite, earned an MBA from a prominent European school and worked for a number of years at a French enterprise before joining her father's operation. She worked by his side and was considered by management the likely candidate to take over. She had no official title, but was entrusted with overlooking the management of the stores and the workshops, dealing with suppliers and clients. She attended all management meetings and behaved as a COO. She gained the trust of all managers who used to avoid Fred and come to her instead with their problems. Her influence was limited, though. All major decisions were still taken by Fred. He never missed an opportunity to assert his authority and, on occasion, he even overruled Marion in public.

Anthony went to medical school and is a paediatrician. Peter was the brightest among Fred's children, but had no inclination for studying. He barely completed business school but always dreamt of taking over from his father one day. Upon graduation, he worked for six months at the family business but, after a vicious argument with his father, chose to move out and find work elsewhere. His father always picked on him and put him down in public.

Jack went to law school and graduated at the top of his class. He never practiced law but joined his father's business and became the marketing director at the family business. Christine studied music and became a piano teacher.
One Sunday afternoon, just after dessert, Fred (who had turned 67 a week before) announced that he was planning to retire on his 70th birthday, and that from that day on, he would only work every other day. For Christmas he was taking Nieves on a world tour and be away for three months. He then asked Marion to meet with him sometime during the forthcoming week to discuss succession procedures. He had worked out all the details with David, his trusted lawyer. He needed Marion to sign certain documents "to make things official". The other members of the family were told to expect a call from David who would need to go over some documents with them. This came as a shock to all those concerned.
Fred felt good about himself; a sense of mission accomplished. For several weeks, Marion avoided speaking to her father and every time he tried to fix an appointment to meet with her, she would manage to leave town on a business trip.

Eventually David managed to speak to her and explain that her father had been diagnosed with cancer. While he was sworn to secrecy, he nevertheless felt that it was his duty to get Marion to sign the papers he had prepared to insure a smooth transition "in case anything were to happen to Fred unexpectedly".

After several days, Marion confided in her mother, and explained that she was not interested in taking over the company. She felt that if she did, she would have no life of her own. She was still single at the age of 43 and did not want to dedicate her life to the business the way he did. In her view, despite appearances, Peter and/or Jack would be better suited to take over from Fred. Nieves called David and asked him to arrange for a meeting with a family business consultant.

Commentary 1
To achieve real understanding and explore different perspectives, family members need to speak to one another and communicate constructively. This case illustrates the absence of the father from the family environment, and the secrecy behind decision-making.

One would expect Marion to be flattered by her father's choice and as a result to get closer to him. Instead, she decided to challenge his decision. Is it out of fear or out of lack of self-confidence on her part?

When people argue it is often over conflicting perceptions. Such perceptions tend to be partly subjective based on feelings and emotions and partly objective, based on facts. The consultant to this family should make sure that Marion's perceptions are based on the facts.
The consultant should build an environment of trust and communication and encourage all parties to voice their ambitions and fears, to help them develop a common vision.
It is clear that the succession process the father has concocted in private with his legal counsel is being rejected by all concerned. The father seems worried that harmful conflict may arise if he discloses the subject of the future of the company. Family businesses have to learn how to plan productively together. The consultant should call for a family council and help the family members devise a corporate governance system to address their needs. This would force a complete separation between ownership and management. Positions will be filled based on meritocracy by family or non-family members irrespective of their entitlement.

All the members of the family would be invited to participate in elaborating the family governance policy. This would increase the sense of belonging and develop a sense of trust among them.
The father needs to talk to his children. It is always best to start dialogue and a constructive communication process while the father is still healthy and influential.

Josiane Fahed Sreih is director, Institute of Family and Entrepreneurial Business at LAU, and Middle East coordinator for the Family Firm Institute.

Commentary 2
The crisis at hand illustrates why it is so important to have ongoing family meetings and conversations regarding the future of the business and each family member's role after the founder dies or is incapacitated. These are not easy issues to discuss since we prefer to ignore our mortality.
Marion's calm and receptive nature has allowed her to work closely with her father. Her other brothers and sisters have chosen to follow their dreams outside the business. No mention is made of Jack's, who also works in the business, relationship to his father.

Nieves has called for a meeting, but the fact that she does not know about her husband's illness will create a huge challenge for the consultant. She will have to help the family confront some deep cultural issues. Will Fred insist on protecting his family from the truth? Can he accept his daughter's need for personal fulfillment or will he try to make her responsible for the well being of the family?
Why is Marion really turning down the offer to lead the company?  Is it really to pursue her dreams or is she worried that her brothers will not accept her leadership?

The consultant will have to be sensitive to the cultural issues and set the stage for family members to understand each other's perspective and express their truth in an honest, constructive way. If they agree to those ground rules the consultant can lead them through a discussion on the options they have for keeping or selling the business.
If they decide to keep the business they will need a completely different strategy that balances the needs of the business, family and personal well being of each family member.

Rosa A. Carrillo is a Consulting Associate at Doud Hausner Vistar and is based in Glendale, California.

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