The arrival of spouses to a business owning family can spark tensions that spill from the 40th birthday bash to the boardroom table. Some spouses are heavily informed and involved, even working deep within the business. Others are not.
Many family businesses are built on a tight family ethos and so they view the arrival of 'outsiders' as a potential threat or at least a disturbance to the 'norm'. Some may welcome the "shake up" and the new ideas a fresh pair of eyes can bring to the business, but more often than not this is not the case. Maybe outsiders have not lived through the lean years, or don't have the same emotional attachment to the business as the family does. Perhaps the fear is that spouses will come to rely on dividends, or would be unwilling to put up cash were the business to face a crisis. The biggest fear is of divorce: what if a spouse seeks a financial stake in the business, or to be bought out at an unrealistic price?
However, what if spouses were to be seen as an opportunity? An opportunity to boost the business with committed talent and a special understanding of the family. An 'outsider' can spot inefficiencies that are invisible to the old guard and they can bring fresh perspective. The global sports brand, Decathlon, was founded in 1976 by Michel Leclerq. Decathlon remains in family ownership and has a strikingly positive attitude to spouses who are welcomed into the business with open arms. As a result, they have a very high rate of spouse employment and spouses fill senior positions.
So: how does one foster a positive spousal culture without compromising the business? As ever, the key is preparation. Do not wait for a messy divorce or a disgruntled spouse to learn valuable lessons. Get the family together, think about your own family's 'pros and cons' for spouse involvement. Consider the different options: should involvement be limited to philanthropy? Would the family be happy to have a skilled spouse CEO? What qualifications might you require for employing a spouse? In thinking about these things, put yourself in the shoes of those marrying into your family. Think also about how long-serving non-family member employees may react to the introduction of a spouse, especially into senior and management positions. These insights will be crucial to communicating your family employment policy. Above all, any policy must be clear, ideally in writing, and entirely separate from the personal.
If you require further information about anything covered in this briefing note, please contact Alexandra Hollingshead, or your usual contact at the firm on +44 (0)20 3375 7000.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, February 2019