COMMENTARY | COLUMNISTS | PEGGY EDDY

What ‘Downton Abbey’ can teach family businesses

Contrary to Oscar Wilde’s thinking — that "Life imitates Art far more than Art imitates Life" — the critically acclaimed PBS program “Downton Abbey” does imitate real life in its snapshot of the opportunities and threats that business families face.

Through lack of oversight, minimal business acumen, and disastrous investing, Robert Crawley, the Earl of Grantham, almost bankrupts the family estate.

However, he refuses to modernize the estate’s farming methods. He steadfastly rebuffs suggestions from his son-in-law Matthew Crawley, who is determined to modernize the ancestral home and return its farms to profitability. Does this situation sound familiar?

Often the older generation is resistant to change and fights new ideas from the next generation, which can threaten the long-term survival of the family business.

On the other hand, one must remember that some of the senior generation’s reluctance to change can be the result of the next generation’s overwhelming desire for control and to promptly implement new ideas.

In talking about his new business ideas, Matthew was correct that a new business model was needed. However, he completely dismissed his father-in-law’s deep commitment to the estate’s employees who had been loyal to the family for years.

Matthew also insinuated that the senior overseer of the estate was incompetent, which caused this trusted family adviser to resign.

In one segment, we see Robert pacing and muttering to himself and finally acknowledging his lack of business skill to Matthew. The final leverage that Matthew has is to provide the sinking family home with an infusion of capital, which he inherited from a man who died without a male heir.

Having agreed that something different must be done, Robert is worried about implementing changes “without putting too many people’s noses out of joint.”

“Oh my dear,” says his mother, the cantankerous Dowager Countess, “I don’t think there is a way to achieve that. I mean, you must do what must be done, of course, but I can safely say a great many noses will be out of joint.”

Spoken by award-winning actress Maggie Smith, this marvelous line mirrors warnings from many senior family-business owners who fear change and fear alienating long-time employees. Fears such as this can paralyze the tough decision making that must occur for the family business to continue.

In another segment, we see the family traveling to a smaller estate thinking they can “let off some of the servants” and “manage” quite well on less. As viewers watch the family journey to the alternate property, one is amazed that they still travel in great style and comfort, seemingly oblivious to their impending financial ruin.

We see members of the Crawley family behaving much as other beneficiaries of a family business do — with an expectation that life will continue as normal despite the direst of circumstances.

Unless the family members are intimately involved with the daily operations of the business or regularly receive frank, concise financial information, the resulting avoidance of reality puts even more pressure on those “in the trenches” to perform a miracle to save the family business.

Estate planning, “Downton Abbey”-style, seems to be at the top of Crawleys’ worry list. Much of the early focus is on the need for a male heir to inherit the estate.

Robert can’t leave the estate to his eldest daughter, Lady Mary, so he plans to pass it on to Matthew, her husband, who is a distant relative. He is forced to do so because British law at the time required a male heir.

Today, inheritance by a male family member is not mandatory. However, for a title or hereditary peerage to continue, a British aristocrat must still pass his title to a son or male relative. If a peer dies with no son, the title could go to a male cousin or uncle, or even a distant relative the peer has never met.

Although heritance to the first-born son is no longer in effect in most countries, it is not unusual for families in business to allow only male family members to be owners and the firstborn son is often designated the successor. By doing so, however, some talented and capable female family members can be excluded from the next generation of leaders.

Additionally, as many family businesses sadly discover, restricting family ownership and leadership to bloodline relatives doesn’t guarantee continued business success.

Business acumen is not necessarily a genetic trait; often the best ideas come from in-laws or “married in’s” who have the vitality, creativity and energy to grow and expand the family business.

Taking cues from “Downton Abbey,” families in business would do well to:

• Advise the younger members in the family business to show respect for the older generation’s achievements and archival knowledge.

• Use scenario planning to show how rules and restrictions that the family has developed can play out in unintended ways.

• Consider the competence, leadership ability and energy demonstrated by “next-gen” succession candidates, regardless of gender.

• Plan succession and estate planning meticulously.

• Encourage the older generation to bring in the next generation’s leaders, listen to them and allow them to make small changes sooner, provided they don’t jeopardize the viability of the family firm.

Is it time for high tea in your family business or is it high time to do some real-life succession planning?

Tune in next time.

Eddy, CFP, is president of San Diego-based Creative Capital Management Inc. and co-founder of the Family Business Forum at USD. She can be reached at peggy.eddy@sddt.com. Comments may be published as Letters to the Editor.

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