On Mixing Family, Business

In her book The House of Mondavi, Julia Flynn-Siler tells the story of how family politics ultimately destroyed the Mondavi Corp. The book, which details how the Mondavi family founded the hugely successful winery of the same name, brought it public and ultimately ended up losing it, serving as a warning to executives in family owned businesses of what to avoid. Flynn-Siler, a writer for The Wall Street Journal, recently spoke to Workforce Management New York bureau chief Jessica Marquez.

Workforce Management: What does the story of the Mondavi family say about the dynamics of running a family business?

Julia Flynn-Siler: The big picture is that mixing family and business can be very challenging. Oftentimes, business decisions get mixed up with emotions. In the Mondavi family, you saw recurring sibling rivalry ending with Robert Mondavi pitting his sons to compete for the CEO position.

WM: What’s the key to making it work?

Flynn-Siler: Early on in my book, one of Mondavi’s advisors tells Robert that he needs to make decisions with his head and not with his heart. That was in the late 1970s and Robert wanted both of his sons to be part of the business. I think the lesson is that if you have outside advisors telling you that your son is not the right person to run the business, then it’s probably wise to listen to them. Robert had some of the best advisors that money could buy, but in the end, he didn’t listen to them.

WM: The House of Mondavi demonstrates how difficult it is to plan for a successor to the CEO in a family-operated business. How can this be done without family politics and emotion getting in the way?

Flynn-Siler: One pattern that I have seen is that many families give the job of managing the succession planning process and the final decision to an outsider. So instead of Dad making the decision, he hands that out to someone who is neutral. This could be a consultant or it could be someone on the board of directors.

WM: Are there advantages to running a family-owned business? Or is disaster inevitable?

Flynn-Siler: The ultimate value of the Mondavi Corp. is a positive testament to families working together. In the beginning it was Robert and his son Michael, and they worked really hard and well together. Even though it ended so sadly, the business did very well.

WM: What processes can family-run businesses put in place to make sure that emotion doesn’t get in the way of the company’s success?

Flynn-Siler: One pattern that I saw with the Mondavi Corp. was that often family members played by different rules than the rest of the employees. For example, there was a rule they put in place that employees couldn’t date each other. But then Robert Mondavi had a long-standing relationship with an employee and Timothy had an affair while he was married with an employee. But then a vineyard manager had an affair with his secretary and she ended up getting fired. That’s a double standard and it caused problems for the company.

Workforce Management, October 8, 2007, p. 8 — Subscribe Now!