Whether the family business is in Newport or Naples, chances are the issues are the same, but the coping mechanisms differ.
William T. O’Hara, Bryant College President Emeritus and executive director of Bryant’s Institute of Family Enterprise (IFE), said the differences in how families deal with conflict in the family business stem from culture.
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“In Italy, for instance, the bonding of the families is exceptional,” he said. “Here, if I don’t get along with my brother, I can move to Chicago or San Francisco to get away from things.”
A smaller geographic area means that “there, they are forced to deal with problems, whereas sometimes we choose to flee.”
After stepping down as the president of Bryant College in 1989, O’Hara founded the IFE in 1990 to help improve the survival rate of family firms.
The IFE assists family-owned businesses with planning and estate matters by connecting business owners with the organizations or individuals that can help with a given problem. The organization also helps lawyers by providing them with analysis for cases concerning family-operated businesses.
“I wanted to get back into the classroom,” O’Hara said. “I wanted to teach, but also not lose touch with the outside world.”
All of the staff is part-time at the IFE, which serves between 100 and 200 people per year, according to O’Hara.
“I teach a course on managing the family business,” he said. “An awful lot of research goes on in the office.”
In cooperation with overseas family-owned business organizations Les Henokiens (in France) and the Tercentenarians Club (in Great Britain), O’Hara is traveling the globe, working on a study of the oldest family-owned businesses in the world.
“I’ll be identifying the principles and practices and values that have allowed these companies to survive,” he said. “I think it’s probably the most exciting project I’ve been involved with in my life.”
O’Hara hopes to complete the first draft of the book — which he anticipates to
be a three to four year project — by the end of this year.
O’Hara said the most common issue the IFE assists families with is succession.
“There’s an awful lot of denial and deferral,” he said.
Entrepreneurs are independent and focused on action by nature, O’Hara said, and may not always be the best communicators.
“They’re not inclined to sit down and talk things out,” he said.
Many families are shifting to team style management — allowing different family
members to control separate divisions or departments of a company — when the succession
question seems like it could become a problem.
The key, O’Hara said, is to have a plan of guidelines and rules for succession in place before any decision has to be made, taking into consideration education and work experience.
“Unless you can do that kind of probing, it’s hard to know whether it’s Sam or Sarah who should run the company,” he said.
O’Hara estimated that a third of the Fortune 500 are family-owned businesses.
“There are more than most people realize,” O’Hara said. “Every business has the potential to be, of course.”
While between 75 and 80 percent of businesses in the U.S. are family-owned, O’Hara said the figure for Rhode Island is higher, perhaps as high as 90 to 95 percent.
“We expect that Rhode Island is pretty high,” he said. “Rhode Island is very ethnic. I think out of those kinds of environments, families tend to stay closer to a team kind of effort.”
Some of the Ocean State’s traditional industries — crafts, such as jewelry —
lend themselves to succession from within the family because of their intricate
nature and the need for long-term training.
“What I find from the international study is that the families that have been able to survive are those that provide for human needs, not that there are not exceptions,” said O’Hara, and cited transportation, foodstuffs, agriculture, textiles, hotels and construction as other examples.
Less than one-third of family businesses make it to a second generation, he said; about 13 percent make it to a third.
