If your daughter or son gets married, does that union create expectations that the son- or daughter-in-law will take a place in the family office or business? How should the elders, owners or the patriarch/matriarchs handle such assumptions?
In a word, “carefully.”
We’ve all heard stories of companies where the spouses of the “next generation” have taken roles within the enterprise. We’ve written about when the business or family should come first, or how distributions to the family might be handled in the event of a business sale.
Some next-generational families turn out like a textbook example of succession planning. Firearms maker Baretta was founded in 1526 and more than 15 generations later, Fabbrica d’Armi Pietro Beretta S.p.A. is still led by the family. William P. Lauder, grandson of The Estée Lauder Companies founders Estée and Joseph Lauder, has been executive chairman and chairman of the board since 2009.
Consider the Cargill family. The marriage of William Wallace Cargill’s daughter Edna Clara Cargill to John H. MacMillan Sr. ultimately transformed the global agri-business. With Mr. Cargill’s passing, MacMillan guided the company out of a debt crisis and to success.
The company came to be known as the Cargill-MacMillan family, and today – a year shy of its 150th anniversary – the company’s board is represented by the family’s fifth generation.
Conversely, consider Mondavi Wines. Acrimony, some of which reportedly stemmed from feuding between sons and their wives, led to the two brothers to split and Peter Mondavi to launch his own winery in 1966. They reconciled in 2005.
Followers of the TV show, “Succession,” saw how siblings and at least one in-law exert their influence to elevate their own stake in the operations and largesse. Spoiler alert: The strong-willed patriarch, Logan Roy, wasn’t having it.
In my own experience working with families, family offices and closely held businesses, I’ve seen in-laws who defer to their spouse’s own relations within the family enterprise and seek no outsized role. But I have also seen some sons or daughters in law who exert – or attempt to exert – influence upon their spouse to game their role, standing, position in the organisation or financial tidings.
These expectations run the gamut. The son- or daughter-in-law might believe themselves worthy of and competent to hold a position in the family office or business. It’s up to the family to draw and hold the line on how or when spouses of their children can expect a role in the organisation or how or whether they can expect a seat at the table or to ascend the leadership ladder.
For example, many families demand that any adult children seeking a role in the organisation must first graduate from college, graduate business school, or work outside the company for a pre-determined number of years, before considering a non-leadership position to learn the business “from the ground up.” This should apply equally if not more so to the spouses of children, allowing family leadership to become better acquainted with their work habits, business experience and management style.
If it’s lacking, leadership must not be bashful about saying, “you’re not ready,” or worse, “you’re not the right fit for our organisation.”
Ideally, such issues as these should be addressed in the family’s governance documents, which outline how, when or whether in-laws – or any adult children, for that matter – may expect to take a role in the company.
It’s important to anticipate how a child will respond to their spouse being denied a seat at the table. Given the role of confidant each play in the other’s lives, acrimony could ensue. This must be handled deftly, with a strong consideration of how the child will respond, no matter whether the elders feel they are in the right.
Another issue that frequently arises is when the in-law wants the family to invest in an ongoing business or startup opportunity, they – or their own family, such as parents or siblings – are involved in. Such investing can be a success, or it can fail and potentially lead to acrimony.
When such offers are presented and the family wishes not to invest, especially if it raises more questions than answers or you doubt the borrower’s ability to repay any investment, they can fall back on the family’s own investment philosophy or strategy. Simply say, “We don’t invest in outside opportunities” (boundaries or rules should be written in the family’s governance, which we will discuss in another article).
If you’re facing issues deciding whether to afford your child’s spouse a role in the organisation, a neutral third party could help navigate the situation, prepare governance documents to codify the family’s formal position, or to be there as a buffer if or when hard conversations are held. If your family office or business finds itself in this position, let’s talk. Ideally, we can help diffuse the situation and keep in-laws from becoming outlaws.
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