Family drama in the boardroom? Here's how to prevent costly feuds

MANILA, Philippines– The patriarch of a rich family dies. His children fight over control of their company. The plot is all too familiar for telenovela-loving Filipinos.

While soap operas highlight the drama, an expert on managing family businesses said they omit the most vital issue: a feud's potential impact on the overall economy.

Numbers

A study from the Asian Institute of Management (AIM) showed that almost 60% of publicly listed companies in the Philippines are owned by powerful families. 

Another finding by the Department of Trade and Industry is that around 80% of all businesses in the country are run by families and passed on to generations.

The same story can be seen in the rest of the region, according to Forbes Asia. (READ: LIST: Philippine companies among Forbes Asia's best firms in 2019)

Success 

Ateneo de Manila University professor Enrique Soriano III said businesses should keep the "spirit and essence of family" in order to remain successful.

Soriano, who has advised many family-run businesses in Asia, said these businesses outperform those that do not have common ancestry.

"They persevere more, have a shared vision, and more are driven," he said.

SM Investments Corporation, Ayala Corporation, LT Group, and Aboitiz Equity Ventures are just some of the country's biggest conglomerates, each one having compelling stories of growth.

Soriano said a rags-to-riches journey like that of the late tycoon Henry Sy Sr, for instance, drives and inspires SM. (IN PHOTOS: The wake of Henry Sy Sr)

Threats

Soriano noted that uncertainty arises when the founding family patriarch or matriarch passes away, and all the more so when the children fight over power and control of the company. The picture gets more complicated, too, when there are half-siblings aggressively demanding their share of the pie.

Soriano cited the case of the Yanson family, the owner of Bacolod City-based Vallacar Transit. It is the largest bus company in the Philippines.

When Ricardo Yanson Sr, the patriarch, died, his 6 children fought over the company's ownership.

The matriarch, Olivia Yanson, is backing Leo Rey Yanson, the youngest of the brood, to lead the company. Leo Rey was ousted as the firm's president by 4 of his siblings in a surprise boardroom coup.

Olivia was left without any shares, but was instead given properties.

Soriano said the Yanson case should serve as a cautionary tale to other family-run businesses, as instability brought about by a feud would affect thousands of employees and other related industries.

Tips

Soriano provided the following tips to prevent family drama from affecting a company:

– Rappler.com

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.

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