KEEP IT in the
HOW easy is it to sustain a family business from generation to generation? Do children necessarily want to follow in their parents' footsteps? And if they do, will they be allowed freedom of action while they are at the peak of youthful energy and creativity?
What's more, will the older generation be prepared to sit back and watch revolutionary changes taking place? And what of employees who are not members of the family? Is there room for them to aspire to promotion (and even in some cases to hold on to their jobs) when there is competition from members of the family?
Once you start answering some of these questions, you soon realise how much wisdom and discipline are required to keep a family firm together.
George Goring, part of the third generation of the Goring family to run the Goring Hotel in London, is mindful of thefact that with a family hotel it is your name over the door. "You make the decisions, you carry the can, and you alone are judged by the standards of your product. If you dismiss staff you cannot blame the decision on a remote headoffice," he says.
With his son Jeremy currently deputy general managerof the Stafford Hotel, London, George Goring has a more pronounced sense than most of being the curator of a family business. His portrait hangs in the front lobby of the Goring alongside his father's and grandfather's, and one day they are likely to be joined by a portrait of Jeremy. "I have never regarded the Goring as belonging to me," says George Goring, "but rather to the people who stay in it and the staff whowork in it."
He takes both a realistic and long-term view of family obligations to the staff. The Goring's general manager, William Cowpe, has worked at the hotel for 23 years and has left his mark on the hotel. What happensin the event of a clash of personalities or policy if and when the young Goring takes over? Security and confidence are essential - so Cowpe knows that in such an event he can fall back on a generous and better-than-statutory severance agreement. How other than by such methods can a family firm retain loyalty and continuity of service?
But some of the inevitable tensions and differences of approach must have come to light when George Goring's twin brother, Richard, joined the firm a few years ago. He took charge of the Spa Hotel in Tunbridge Wells, which had been run alongside the Goring and was essentially part of the same business. Now the Spa is run quite separately by Richard, whose approach to hotelkeeping and to business is more expansionist than George's. The Spa is flourishing independently of George's cautious and conservative style.
Gerald Milsom, with the recent departure of his son David to Woolley Grange, Bradford-on-Avon, has experienced an equally severe split in what was beginning to look like a two-generation family business. His small empire in the Colchester area at one time consisted of Le Talbooth restaurant and Maison Talbooth, the Dedham Vale hotel and restaurant, the Pier fish restaurant on the quay at Harwich, and a brasserie-style restaurant in Colchester. The last of these failed on account, one suspects, of its location, and now the Dedham Vale, too close to Le Talbooth for comfort and for the limited business in the area, is for sale.
With the market contracting, David Milsom and his wife Jenny have spread their wings, and David is now managing Woolley Grange. Meanwhile Gerald, with the help of his second son Paul and his wife Diana, is running Le Talbooth.
It was fortunate in the case of the Gorings that there should have been a branch of the business where a member of the family could find an appropriate niche. Less so in the case of the Milsoms. At best, family businesses are planned to expand as family members join them, along with training young members of the family in the disciplines needed to expand - although conventional wisdom accepts that parents can no longer presume their children will do what they want them to do.
As a publicly quoted company, Forte plc is not in a real sense a family business, but it still has Rocco Forte at its helm. This is neither by right of inheritance, nor, according to Lord Forte, because he was programmed to join the company. "I was keen Rocco should follow me into the business, but I was determined not to force the issue," he writes in his autobiography.
Despite deciding to join the family firm, the young Forte qualified as a chartered accountant first, the result being that even though Rocco Forte and his family own substantial shares in the company, he is its chief executive because he is qualified by training. It would be hard for him to remain at the head of a public company were he not outstandingly fit for the job. Yet if Forte was a private company Rocco's current role and that of his sister Olga Polizzi, responsible for interior design in the company, would be both logical and in keeping with the way family businesses are run. It is hard not to think of Forte as a family firm, and it might in some respects be the model for one. After all, the family name is over the door.
The Carnarvon Hotel in Ealing run by the Harris family is a family hotel business remarkably free from tensions. Here the different skills of members of the family are employed in a balanced and creative way. Albert Harris is a former banker who established Carnarvon 25 years ago. Gregory, the elder son, qualified in estate management at Reading University but took up a career in sales and marketing, while the younger, Michael, is a Stoy Hayward-trained accountant. At one time their business owned the 150-bedroom, five-star Branksome Towers Hotel in Bournemouth, the 120-bedroom Queens Hotel and the 150-bedroom Royal Beach Hotel in Portsmouth.
Though all three members of the Harris family areboard members and actively engaged in the Carnarvon, they have other interests which takes some of the pressure off the competition for responsibility. But, in pursuit of harmony and efficiency, they also apply strict rules to the way the business is run. These are worth noting.
First, each member of the family has his own area of responsibility, and members of the staff are as aware of these as are the family. Second, there is one undisputed boss: Albert Harris is chairman and managing director and is clearly in charge. There is as yet no question of passing on responsibility.
Third, the Harris family sees it as crucial to separate family relationships from business. The board must have a proper structure. It is, they say, very easy to fall into the habit of "paying lip service" within a family structure when it would make no sense in a corporate business relationship. And that should be avoided at all cost. Fourth, the Harris's believe that family businesses should recognise the talents of different members of the family and give each the scope to develop.
Those principles would be familiar ground to the Beale family who own the 49-bedroom West Lodge Park country house hotel and two other banqueting establishments north of London. The Beales are probably the longest-serving family in the hospitality industry. Andrew Beale, who is now general manager of West Lodge Park, in Hadley Wood, Hertfordshire, is the ninth generation of his family to be engaged in the business started by John Beale in 1769.
His father Trevor is chairman and managing director and 90-year-old Edward Beale, his grandfather, who added West Lodge Park to the company, still lives in the hotel and takes an active interest in it.
The Beales, with the wisdom of generations behind them, would probably agree with David Levin who believes that family firms are less constrained by the shareholder pressures common in corporate organisations. Small family businesses are, he maintains, better able to invest in lasting quality and reputation.
Shareholders are usually other members of the family content to see the business prosper in safe hands rather than expect it to yield an endless, accelerating flow of profits. Sometimes you do not even have to have family shareholders to contend with.
Levin, himself a hotelier and restaurateur, has over the past 30 years quietly built a business consisting of the Capital hotel and restaurant, L'Hotel, the Metro Wine Bar and the Greenhouse restaurant in the West End of London. Though activelysupported and assisted by his wife Margaret, and now by his Lausanne-trained son Joseph who runs the Greenhouse, he remains the only shareholder.
His is, nevertheless, nowa family business which Joseph is in line to inherit - and with the business, the responsibility for maintaining and improving standards. "Family businesses," David Levin says, "are not motivated by profit, rather by standards."
Similar family businesses in Britain include Longueville Manor in Jersey where the second generation of the Lewis family is now in charge, and the Castle Hotel, Taunton, where Kit Chapman together with his wife Louise, has taken over from his parents, Peter and Ettie. Although he is a graduateof the Surrey University Hotel, Catering and Tourism department, Kit Chapman took up a career in advertising before going to the Castle as marketing director in 1976. Peter Chapman remains chairman, Ettie and Louiseare on the board while Kit is now managing director. Kit's parents still live in the penthouse over the hotel, and there is a real sense of continuity as well as an instinctive awareness of how difficult it must be for the new generation to be in charge while the previous one is still in residence.
Perhaps the secret is belonging to a hotel family which includes Peter Chapman's brother Michael who made the Imperial, Torquay, one of the best hotels in the country, and Peter and Michael's father, the great Heinrich Pruger, who managed the Savoy in London at the height of its fame between 1903 and 1909.
Meanwhile the next generation is waiting in the wings. Kit Chapman's son Nick, aged 18, under no pressure to follow his father into the family business, is about to study hotels, catering and tourism at Brookside University, Oxford, although at present his preference is for large-scale popular restaurants.
It is intriguing to speculate how 20 years from now he might view the Castle, whether or not it still belongs to his family. And how his father might react to his ideas. For some, such speculation may seem idle, but for people in family businesses, it is a great deal more serious. o
