Double jobs in family businesses: a source of conflict?

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Monday, June 9, 2014


Enrique Soriano
Inside Family Business

ONLY one who devotes himself to a cause with his whole strength and soul can be a true master. For this reason, mastery demands all of a person. Albert Einstein said that.

A major rule that I place strong emphasis on in my coaching work and governance lectures throughout Asia is to discourage double jobs or moonlighting.

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Lance Gokongwei, president of JG Summit Group, said the family rule is that if one is working for the family firm, one can only own passive assets that do not require their attention such as property, shares, bonds and the like.

“If you work for the company, you must be either fully in the business or completely out. In running the business, you must be actively involved, with full-time commitment and focus,” he explained.

Family members often come into the business with vague job descriptions, compensation packages, and placement in the business hierarchy. Confidence that everything will work out substitutes for careful discussion of the pros and cons for joining the business. Hence, in the event that the income they derive from the family business is not enough, some resort to moonlighting in order to augment their earnings, thinking that this is permissible and practical as well.

Outside employment or “moonlighting” is a term used to refer to holding a second job outside of normal working hours. It is generally defined as: 1) employment or consulting in an outside work or activity; 2) receipt from an outside source of a regular retainer fee or salary; or 3) regular or periodic involvement with a business or company in which the employee has a principal interest or a non-profit organization in which the faculty is an officer, board member, etc.

Double jobs by family members involved in the family business may require disclosure of the nature of such job and approval as well from the family council or board of directors.

Misrepresentation or confusion of others may be a concern. For example, when a family member runs his own trading business outside of the family business wherein he is also involved, there may be concern that his/her own customers think the work is performed under the auspices of the family firm.

The absence of a code of ethics defining the parameters of moonlighting does not relieve one from the responsibility to operate with the highest ethical standards of business conduct. Employees, officers and members of the Board of Directors must conduct themselves accordingly and seek to avoid even the appearance of improper behavior.

In any business, there exists the possibility that an employee’s, officer’s or director’s personal interests or those of any of such person’s family may conflict with the interests of the employer. A conflict of interest exists when a person’s private interests interfere in any way with the interests of the company.

A conflict situation can arise when an employee, officer or director takes actions or has interests that may make it difficult to perform his or her duties objectively and effectively.

Conflicts of interest may also arise when an employee, officer or director, or members of his or her family, receives improper personal benefits as a result of his or her position in the company.

A family business member must do his/her utmost to avoid situations where conflicting loyalties may cause principles and responsibilities to be compromised for personal gain.

“Finding time to do both” is how one moonlighter sums up the challenge of working in a family business and managing another business.

Information is a key corporate asset and is considered the property of the company.

Safeguarding the confidential nature of information concerning the company’s transactions, present and prospective customers, suppliers, and shareholders is essential to the conduct of company business.

Caution and discretion are required in the use of such information and in sharing it only when required in the normal course of business. Obeying the law, both in letter and in spirit, is the foundation on which ethical standards are built in a successful family business.

(Prof. Soriano is an Asean family business advisor and chair of the marketing cluster of the Ateneo Graduate School of Business. He is a National Agora Awardee and book author of “Kite Runner, a book on Family Business Governance and Succession.” sorianoasia@gmail.com)

Published in the Sun.Star Cebu newspaper on June 10, 2014.

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