NO IN-LAWS. This is the first of 10 unwritten commandments that John Gokongwei, founder of the Gokongwei group of companies, followed in running the family business “the Gokongwei way.” (I will discuss the remaining nine commandments in succeeding issues.)

In an article written by Mary Ann Ll. Reyes for The Philippine Star, Lance Gokongwei, president of JG Summit Group, shared his and his father’s secrets in running a successful conglomerate and in effectively transitioning from a company that is basically family-owned to one publicly-owned and listed.

At an Ateneo forum, the younger Gokongwei said that during his father’s generation, his aunts (married to his dad’s brothers) and his mother were involved in the business, but the elder Gokongwei soon discovered that this was not always ideal.

“There were situations where some of the marriages did not work. Loyalties change. Sometimes relationships between the different in-laws from the second generation become strained. Feelings get hurt. It is tricky deciding who among the in-laws is more deserving, who is smarter, who would do a better job,” he said.

And so for the second generation, led by Lance, the rule of no in-laws was instituted, with some exceptions.

In consulting with family businesses, the ultimate question of “should I include my in-law in the business” is often asked. The underlying fear is that in-laws may bring down the family, the business, or both perhaps due to their sense of entitlement, greed, or worse, a hostile family separation.

For instance, a member of a fifth-generation family business in the southern part of the Philippines explicitly stated that in-laws are prohibited from working in the family business.

When asked, he simply said the family wanted to avoid any potential problem (Santiago, 1998).

In another case, the relations among second-generation family members were strained when one of the male in-laws, who had previously performed well, brought the company he was managing to near-bankruptcy.

Yet for a third company, it was an in-law who brought a family business from the brink of closure back to life (Mendoza, 1997).

In the course of my coaching work in Asean, I had a client who also suffered problems with an in-law who used to help out in the family business but relationships were strained when the marriage broke down and the spouses separated.

So far, anecdotal accounts of in-law participation have shown that the experience can have positive or negative outcomes (Berglas, 1988; Estess, 1999; Lee-Chua, 1997; Mendoza, 1997). Initial studies by Lee-Chua (1997) on five Filipino families have led her to infer that the following factors lead to positive in-law participation: flexible family boundaries, excellent parent–child relations, affectionate and caring siblings as well as a “match” between in-laws’ personality and background with that of the family. Her findings suggest that an optimal relationship should exist between and among in-laws and family members for successful integration of in-laws in the family business.

Impermanent relationships

In-laws who become too familiar and consider the family business as their own, to the disadvantage of blood family members, are likely to create tension in family and business relationships, thus signaling an end to their participation in the family business. A marriage that ends badly leads to the termination of the family business relationship as well, regardless of the competence of the in-law.

Many families are willing to forego competence for trustworthiness. When in-laws enter the picture, maintaining the family harmony becomes doubly challenging.

Some families would rather not put that trust to a test. As one interviewee quips, “It is better to hire a stranger than my son-in-law. At least, if he doesn’t perform, I can fire him. If I hire and then fire my son-in-law, I may lose my daughter’s love. Why risk it?”

If you’ve got in-laws in your team, communicate your values to them but keep your boundaries.

(Prof. Soriano will facilitate a one-day workshop on June 6, Friday, entitled “Family Governance and Constitution-Building: The Key to Ensuring the Family Business Legacy” at the Richmonde Hotel, Ortigas Center. For further inquiries, please visit wongadvisory.com or contact Allen at 09228603186 for details.)