shareholder. If a shareholder dies or becomes unable to work, that person or their dependents may want to realise the value of their equity in a hurry, and that can be a massive burden on the remaining
death, divorce, illness or financial woes and can quickly spread to the workplace from home. Again, communication is key. Use the clearly defined roles that you have set out to minimise the conflict and try to keep the decision- making logical and business-based. If there are problems, identify them quickly and use those processes to deal with them. Employee theft My experience has taught me that it’s family-owned businesses that more often get hit by employee theft and dishonesty, because they are always very trusting of their staff. They don’t have the level of checks and audit that a corporate entity might have and that leaves them vulnerable. I had several unpleasant conversations with clients over the years where an ongoing repeat pattern of theft has come to light that has been going on for some time. Quite often, things will be fine – until they aren’t. Because of his passion for family business, Mr Cockle hopes to use his new company to help as many family firms prosper as he can – while being ready for any problems that may occur. “I am passionate about family businesses, because they are the core of what my business is about,” he said. “Family businesses operate for very positive reasons. It’s because they want to make a difference, prosper and have fun together. “But, and there is a but, it’s vital to make sure that they have all the Is dotted and Ts crossed and that’s where I can help.” Rob Cockle from the Business Insurance Partnership is happy to deal with any questions regarding risk and insurance issues arising from running a family business l For more information visit www.bip-ltd.co.uk contact rob.cockle@bip-ltd.co.uk or call 07910 355948
shareholders and the business as a whole. Directors’ and officers’ concerns
The same legal liabilities apply to directors of family businesses as in non-family business. The potential trap is making decisions that are for the family's benefit, but not necessarily the shareholders’ benefit. Whether family or not, shareholders can hold directors responsible if they (the directors) don’t look after their investments. It’s also possible to have conflicts of interest. Take a majority shareholder, for example, benefitting from the selling or buying of assets that he or she controls to the detriment of minority shareholders. Alternatively, a minority shareholder forced into selling their holding at less than market value may have a right of action. Duties that apply to a normal private business apply to family businesses too. Communication problems Problems can occur in businesses where family members work alongside others and the non-family members aren’t kept in the loop in the same way when changes are made. It’s not good for morale or efficiency if that happens. There is a need to have open, inclusive two-way communication for all members of staff – whether they are relatives or not. It’s also important to communicate professionally at all times. Families can joke and tease, but it’s best not to keep that as your standard communication. Also, family members have been known to pursue each other with harassment claims when the joking and teasing got out of hand! Conflict resolution Family-related conflict can arise from deep seated historic resentments or sudden trauma – such as
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