THE mortality of patriarchs and a high sense of entitlement among children are sending more family-run businesses to ruin all over Asia, including in the Philippines, according to a professor at the Ateneo Graduate School of Business.
At the Pandesal Forum in Quezon City recently, Ateneo Professor Enrique M. Soriano III said 8 out of 10 families who ask to consult with him for intervention are already on the brink of a breakup.
Soriano said the parents’ fear of losing control of the companies they built, as well as the consequence of bad parenting that makes children feel entitled to their empires, contribute to family boardroom squabbles.
“Out of 10 families that go to me for intervention, 8 are on the verge of a breakup. That bad,” Soriano told the BusinessMirror on the sidelines of the forum hosted by Kamuning Bakery.
“When they [are] constantly in conflict with the family and the patriarch or the matriarch, the children become entitled, they continue to receive unlimited amounts of support even if they perform or do not perform. So back to fair is equal and equal is never fair. So there is conflict the moment the founder is no longer around,” he explained.
Soriano said many major firms and jobs have been lost due to these squabbles. One such example was Cosmos, the leading softdrink manufacturer in the 1970s.
He said that if family differences were only resolved before everything came to a head, Cosmos would have celebrated its 100th anniversary this year. The company was instead sold and is now owned by San Miguel Corp.
Bloody sometimes
Soriano said some conflicts can even lead to death. During the forum, he shared the tragic story of the Taiwan-based Mayfull Food Corp., which saw the death of three brothers after a heated boardroom discussion.
According to a report from the Taipei Times in 2015, brothers “Huang Ming-huang and Huang Ming-jen were killed by bullet wounds to the head, allegedly fired by their younger brother, Huang Ming-te.” The latter subsequently shot himself.
The Taipei Times reported that the siblings were having a meeting to discuss how they were going to divide the business after the death of their father, Huang Jung-tu.
“Stop the madness. Every single family member involved in [a] conflict must be willing to throw their animosities, their deep-seated [resentment], their hatred for each other and go to the table and, minus the lawyers, start meeting,” Soriano said.
Yanson vs Yanson
News of the Yanson family feud has recently led the Philippine National Police (PNP) to deploy 100 of its personnel to secure the south terminal of Vallacar Transit Inc., which operates Ceres buses. It is the largest bus transport company in the country.
Soriano added that some of the 18,000 employees have already filed a notice of strike. Reports earlier said the CEO Leo Rey Yanson was booted out by his siblings Roy, Emily, Celina and Ricardo Jr.
The Ateneo professor listed three possible outcomes if a conflict like this continues. The first, the employees will continue to protest and the courts will step in to divide the company into Luzon, Visayas and Mindanao.
The second scenario, if the situation continues in court, will have employees filing cases to protect themselves. This will leave the Yanson family with “practically nothing.”
The third scenario is, given the business has a public service aspect, the government could step in. The Securities and Exchange Commission (SEC) could convene a receiver team to run the business until the problems are resolved.
“It will no longer be the same. You know why? The children of the next generation will become strangers. And that’s the demise of the family relationship. So when there’s conflict, so goes the business. It will disappear. So this is so predictable and somebody must stop this madness because sayang [it’s a pity],” Soriano said.
One recourse, Soriano said, is for the matriarch to take over the business and prevent herself from siding with any child. This, he said, happened to the Ambani family in India.
The Ambani matriarch had to take over and resolve the situation. Soriano said the mother decided that way because the employment of 130,000 employees was at stake.
His unsolicited advice to the Yanson family? They should sit down and try to settle their differences without lawyers to prevent any loss of trust. Soriano also said the matriarch of the Yanson family “must be the beacon” in the situation.
Yanson drama ends
THE Yanson matriarch’s being a “beacon” seems exactly what happened more than a month after Leo Rey Yanson was unseated by his siblings. He was re-elected on Monday (August 19) as president of Vallacar Transit Inc.
In a special stockholders’ meeting, the shareholders, including the family’s matriarch Olivia V. Yanson, elected him, together with Olivia V. Yanson, Ginnette Y. Dumancas and Charles M. Dumancas, as members of the board of directors, according to a report in the BusinessMirror.
Leo Rey then regained his position, alongside Charles M. Dumancas as vice president, Ginnette Y. Dumancas as treasurer, and Olivia V. Yanson as corporate secretary, when the board held a re-organizational meeting.
Vallacar Transit is the company behind Ceres Liner and Sugbo Transit. It is the largest subsidiary of the Yanson Group of Bus Companies.
Established in 1968 by Ricardo Yanson Sr., the conglomerate provides transport services to 700,000 passengers daily.
The parent company is among the biggest bus conglomerates in Southeast Asia, and operates more than 4,000 buses nationwide.
Domestically, it has 15 bases of operations in the cities of Bacolod, Iloilo, Dumaguete, Cebu, Cagayan de Oro, Butuan, Davao, Pagadian, Dipolog, Bohol and Batangas, said the earlier BusinessMirror report.
It’s fortunate for Vallacar Transport to be able to resolve in timely fashion the internal feuding that has torn it apart, given the 18,000 jobs at stake. In many cases, however, Soriano said, employees are also among the casualties in conflicts in family-owned businesses, apart from the company itself and harmonious family relations.
“They [employees] are definitely compromised, their families affected and, most often than not, will likely have to take sides out of survival so they are the end recipients of any nasty family conflict, so it’s really unfortunate,” Soriano said.
Indeed, when businessmen tell their employees to consider the company like their “family,” that sort of metaphor can sometimes backfire for the workers when the owners get embroiled in a bitter—if not bloody—family feud.
Image credits: VALERIY KACHAEV | DREAMSTIME.COM, ANDRII YALANSKYI | DREAMSTIME.COM