Soriano: The deadly cost of weak governance: Business failure and family conflict

Where governance goes, succession follows, good, bad or worse. Critical factors like alignment of values and having a shared purpose should never be a side dish nor an afterthought. In a more desirable state, any initiative related to succession and legacy should be started at the onset and not when the founder is contemplating retirement or when there is a triggering event like death, incapacity, misconduct or marital conflict. In this Mayfull Foods Corp. case, the conflict was fatal. It is a clear lesson to founders and family business leaders not to take governance and succession for granted.

Ticking time bomb detonated after patriarch’s death

Mayfull is a US$3 billion business and one of Taiwan’s biggest food importers of meat products. Established in 1963 as a professional food supplier, it is heavily involved in wholesale, food service, retail, logistics and hotels and the family is behind the famed Miramar Group. Shortly after the death of their father, Mayfull’s founder Huang Jung-tu, a meeting took place between his six sons to discuss how to split the inheritance left by their father.

According to the China Post, after a heated argument and provocation, the fourth son, Huang Ming-Te, 54 allegedly shot his older brother, the second oldest son, in the head. Another older brother who was the chairman of Mayfull Foods, after rushing forward in a bid to stop Ming-Te, ended up being shot on the spot. In the conference room, two men lay dead or dying after being shot at close range in the head. When the police arrived, Ming-Te ended it all by putting a bullet to his head and fell from the 7/F building’s rooftop. The bloody scene that happened was the culmination of a bitter family dispute and a succession gone horribly wrong.

This particular conflict is a rare occurrence, but I have written many cases (Ilusorio, Sytin, Romero, Wong families among others) of families in dire straits where the hostility started with some petty misunderstandings, unresolved issues but escalated into a full blown conflict involving sabotage, litigation, intent to injure, fight for money, succession battles and sibling rivalries — sounding more like an entire season of “Game of Thrones” but family members are casted in real-life drama!

Learnings

To business owners, please take note: When you are no longer around, I can predictably expect an emotional roller coaster ride among your offspring. The shouting matches on a regular basis can lead to family members resorting to external bodies such as the courts, shareholder votes and media, while refusing to talk directly with each other. And when they turn to lawyers, it is very difficult to restore trust. In my work as family business advisor for many enterprises in Asia, creating solutions to work related rivalries can be quite complex as it entails a combination of a governance plan, solid management and business solutions done in real time.

Dealing directly with these issues in advance in an organized and professional approach remains the best insurance policy against sibling or cousin rivalry disrupting the family firm.

Why petty conflicts morphed into sibling rivalries? Without a doubt, the blame falls squarely on the leader. Many of them, mostly founders choose the “Do Nothing” option or carelessly select an unqualified, inexperienced family consultant. The former deals with the founder’s reluctance (procrastination) to move ahead by putting off important things because he believes he has time to do them later. On the other hand, choosing the wrong consultant can lead to ineffective planning and zero execution where the children are forced to sign the documents and the family led by its leader are left to implement and enforce the pre-agreed rules.

For many consultants that failed to effect the transition, the culprit lies in your limited experience related to corporate best practices making your governance initiative ineffective in carrying out solutions to manage any emotion or strategy (work based) based conflict.