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One in seven
U.S. workers could see his job jeopardized over the next five years as companies
fall victim to family feuds.
That sobering statistic is supported by numbers gathered
by those who make a living out of helping family-owned enterprises. Most such
business endeavors, they say, are destined to fall victim to the granddaddy of
all emotional issues -- who gets the company. The post-World
War II generation of entrepreneurs is retiring, says Wayne Rivers, president of
the Raleigh, N.C.-based Family Business Institute. As a result, he says, unresolved
succession issues could have a serious negative impact on the national economy
in the very near future. "It means at least 25 percent
of the 24 million family businesses in the country are subject to dislocation
in the next five years," says Rivers. "It's a frightening time if you're
an economist, because this could mean a tremendous attrition in jobs that will
disappear with these companies." Rivers' estimate is conservative:
Some analysts put that figure as high as 40 percent. Not
just a family affair
To a large extent, the national economy depends
on the prosperity of these firms, says Jane Hilburt-Davis, incoming president
of the Family Firm Institute, a professional organization for family-business
advisers. According to the institute, most of the nation's wealth is concentrated
in family-owned companies. Family-owned companies account for between 80 percent
and 90 percent of all business enterprise in the United States. They contribute
more than $5 trillion to the economy and employ 62 percent of the workforce. Despite
their relative role in the economic engine, however, the Family Firm Institute's
research shows less than a third of family businesses, nationally, have survived
into the second generation. After that, the odds get worse. Only 12 percent endure
into a third generation, and a negligible 3 percent last beyond that. Even
in the face of all this genealogical data, institute surveys show that 19 percent
of these firms haven't done anything about succession other than write a will.
Only 37 percent have a written strategic plan in place. Call
in the troops
The solution? Forward-looking business families find it
pays to add a behavioral specialist such as a psychologist or family therapist
to their advisory team to help with the unresolved emotional issues experts hold
responsible for the dysfunction -- or even outright demise -- of many family-owned
firms. "Unfortunately, our experience also tells us that
very few of the 'technically oriented' professional advisors, whether from the
legal, accounting or financial services industries, appreciate these differences." Lawyers
and accountants work with explicit contracts such as wills and estate plans, says
Family Firm Institute's Hilburt-Davis, who is also president of Key Resources
in Lexington, Mass. They tend to get stuck when these contracts are drawn up prematurely
-- before the implicit, emotional contracts are straightened out. | 
