The headlines over the last few years have been covering family splits rather extensively. They have also reported the family splitting, with the resultant resignations, or division of companies and assets, and loyalties, either peacefully or acrimoniously, and sometimes within the family or usually overseen by a third person.

But the question is, are the family splits really bad? My findings based on my research on families have shown clear results.

Traditionally, most people have preferred to have joint families, wherein everyone stays and works together. This meant the pooling of all economic gains, and distributions, according to needs, somewhat like a socialist economy based on “from each according to his ability, to each according to his needs”. This worked well, with the young and the old being taken care of by the others, and the family structure enabling pooling together of resources and people to become a dominant force, with loyalty and trust amongst the family members.

This seemed to work well with the agrarian and trading economies, where the rate of growth and pace of change was pretty stable. This also led to, by my opinion, a situation where one considered the tradeoff of being in the family a better one, since one could not really do more significantly better than under status quo. Or the cultural and societal expectations were a strong influence, which led to the family members staying together and overlooking everything.

Post-liberalisation, with more opportunities and a faster pace of growth, the situation changed. Factors such as foreign education and geographically wide-spread family interests led to family members being away from the main joint family structure. Most of the newer generation had been operating in different environments, either while studying or working, and some having grown in a completely alien cultural environment. This led to loosening of family bonds and exposure to a different culture than the one at home. Some adapted to the new culture. And some did not.

Now when these siblings came back to the family structure, and the traditional culture was imposed on them, some could not accept this. This is what, to some extent, we are seeing today. India is on the verge of rapid change, both economically and socially, and increasingly we are seeing more people wanting to have a greater control over their lives and their destinies. This is reflecting on families and businesses also.

I have had the opportunity to see closely in many families where the members may not be clear of what needs to be done. They tell me that the family needs to stay together, but during discussions with each individually, they have expressed their desire to separate.

The main issue is, in such cases is, does it make sense for the family to be together, when they themselves see no reason to?

Maybe not.

Don’t get me wrong. I fully support of families being together and that the power of a joint family is undoubtedly tremendous. But we need to have the family members deciding, deliberately, and independently of wanting to stay together, because they are convinced of the need for and benefits of doing so. This is an unanimous decision, based on independent willingness to give up a few individual freedoms and rights, in exchange for greater good. This is the basis of any democracy or group to function effectively. In other words, this leads to members willingly sacrificing personal gains for the collectively well-being (the “others before self”).

Increasingly, we are seeing an increase in the number of cases, where the siblings want to work and live independently. This is also caused by our education systems and family cultures where individual performance is always rewarded and competition built up amongst the next-generation children, supposedly to help them raise their performance. But somehow, somewhere, no one tells them to stop, and this competitive spirit moves on to their adult working lives also.

Secondly, I have seen families where businesses or responsibilities are split alongside families so as to keep things clear, but there is no real inter-dependence or collaborative efforts put in. This leads to divisive thoughts being created at the very beginning, without any opportunity to see any benefits of collaboration. The family members soon informally start assuming their rights over the business, as they had been responsible for running the business profitability.

Additionally, the siblings could resist the supposedly usurping of powers or the totalitarian power of one sibling over the others. This could be a case of the elder sibling following the family seniority hierarchy, occupying the top position, and directing the other younger siblings. Or a younger sibling who was handling the affairs, while the others, including the elder siblings, were busy managing other family interests.

This could lead to the other siblings feeling stifled, dominated or their efforts not recognised in the family setup. Often they could also feel the need to break off and handle things independently.

The joint family setup could be subject to fights, disputes, and internal politics, which could overflow into the business, with camps being formed, and professionals having to choose sides.

Taken to an extreme, the entire efforts of the family is then diverted onto what the others are doing, and extensively resources are spent in these efforts in a senseless game to gain an advantage between the family members.

If matters become too large to handle, then they could go legal. This becomes extremely sensational with media coverage (if the family is significant) or cocktail chatter. Finally, the warring sides have to come to an understanding, monitored by a third party, or the courts. But the relationships are scarred for life and maybe the businesses have lost their edge, causing most family members to pick up the pieces after the battle and reconstruct their lives and businesses. Some never recover.

Under these circumstances, it makes no sense for the next generation to be forced to be together, and maybe a split in the families would be the best option.

Mature families are realising that if the family does not see any merit in staying together, and the members are not able to work out issues between them in an amicable manner, or the differences are too many and conflicts run too deep, then an amicable separation would be a preferable choice.

This would give the advantage of the family members having certainty of their businesses, and hence they gain the ability to start working on their businesses. The other side benefit is that family relations are maintained, since after the split the families can live and work independently. There could be cases again, where the rivalry could lead to them competing with each other regardless, but this would be merit-based, and the capabilities and competencies could create more wealth, instead of it dissipating amongst disputes.

What most people do not realise is that the attention taken by family members in case of disputes distracts the family managers away from their business, and the business suffers. This would mean that the family would suffer as it also stands to gain from the benefits of the business.  These could be avoided. It would also keep what is clearly an internal family matter which could also avoid the business getting affected by any fallout. There would be an impact on the re-alignment of management control after a split, but this is something which is normal, as it would also arise, in the case of an acquisition or management transition. But we do find that the wealth created post-split is generally much more, as each sibling is able to give his best to the business. There will be differences in the final performance of the companies, but this would be survival of the fittest, in terms of perfect competition. In other cases, members will have to learn very fast or perish, if they are not competitive.

The last impact is that of the cultural and societal impact on such a split. But the reality is that we have embraced a lot of factors from foreign cultures as a part of our culture, however loathe we may be to admit this. Under these circumstances, if a solution helps keep the family relationship alive even after the split, and is able to give each member an opportunity to realise their own life goals, then a family separation is actually a smart thing to do.

It will be quite some time, before society finally realises this and does not frown upon these. It was the same with divorces and second marriages, for example. But the smarter families are realising that it makes more sense to split up, if only to preserve the family wealth and relationships, regardless of what society thinks.

(Views expressed are personal. )

The author is a family business advisor and senior professor at S. P. Jain Institute of Management and Research.

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