Exclusive: Running in the FM family

Author : Angela Parry

18 March 2013

Facilities management is a close-knit, almost incestuous, industry but some organisations take the notion of family a step further

From multigenerational family businesses such as OCS, GSH, Europa and Alfred McAlpine to smaller family units such as Xenon Group Training to husband-and-wife teams such as David and Liz Kentish, Lucy Jeynes and Mike Cant; and even sisters such as the Bradley twins, the FM sector teems with family firms.

The business services sector, of which FM forms part, has the highest number of family firms, according to the 2011 report The UK Family Business Sector, produced for The Institute for Family Business (IFB) by Oxford Economics. Family firms account for two in three private sector enterprises in the UK economy - about 3 million firms producing a £1.1 trillion turnover, almost 25% of GDP.

So what makes a family business a great business? The answer, says David Morris, MD of family business and FM training provider Xenon, is a loyal team, with strong relationships but different skills who feel confident and secure enough to give and accept constructive criticism.

Xenon has fully embraced its family links. Morris set the business up in 2002 with the support of his wife Sue, who was working full-time in the health service. She joined the business in 2009 and was quickly followed by their son Chris. Chris then met his wife Anastazja Malejki-Morris through one of Xenon's training courses. If it sounds like an episode of Dynasty, then the plot thickens. Aneta Golebiowska, a close friend of Malejki-Morris, joined Xenon as admin manager in 2011 and was later maid of honour at Chris and Anastazja's wedding; while Geoff Johnson, one of Xenon's regular tutors was best man at David and Sue's wedding in 1977.

The soap opera potential runs even deeper in multi-generational family businesses. In the '30s Alfred McAlpine, a son of Robert McAlpine, ran the northwest branch of the eponymous family business. Following his father and elder brother's death, Alfred ran the northwest independently as Sir Alfred McAlpine & Son.

After Alfred died, his son Jimmie took over and, under Jimmie's son Robert James McAlpine the non-compete agreement was ended allowing the firm to compete with its former parent. In 2008 Carillion acquired the firm.

The McAlpine story is echoed in the experience of GSH, founded in 1895 by George Scarr-Hall as a small engineering firm which entered the FM market in 1982. GSH has been run as a family business for generations, with the former group president Ian Scarr Hall, the grandson of the founder, retiring in 2006. Ian's two sons, Gavin and Duncan have, at one time or another worked in the business. But Gavin left the company to work for Morrison, now AWG. He's now MD of Bureau Veritas.

Duncan Hall spent several years with GSH in several roles and now works in a different industry. The only remaining family member in the business is Duncan and Gavin's sister Rachael Scarr Hall who works in a client liaison role. Following this GSH has moved away from being a family run business to a business run by independent professional management on behalf of the family, so there are currently no family members on the board.

This structure enables GSH to take the long-term view and provides a stable environment from which to operate. Group chairman Ian Davidson, commented that "GSH has the best of both worlds."

Meanwhile international total facilities management provider OCS is proud of its family credentials. Set up by Frederick Goodliffe in 1900 and now in the fifth-generation of family ownership, it was recently named Family Business of the Year at the Private Business Awards 2012.About 20 of OCS' 77,000 employees spread across 40 countries are family members.

Family businesses generally take a longer-term view, are perceived to be more conservative in their decision-making, more caring and having a better approach to corporate social responsibility, says Chris Cracknell, CEO of OCS Group and director of the IFB with UCG Research Foundation. OCS has moved from being shareholder-owned and shareholder run, to being shareholder-owned and professionally run.

While the first, second and third generation family members took seats on the board, the fourth and fifth generation join the company in various roles. "There is no value in the business today by using your surname. That stopped at the third generation," says Cracknell. "We're typical of a more mature family business," adds his cousin Peter Goodliffe, the firm's business improvement director. "We recognise a meritocracy is essential for all staff, whereas earlier generations didn't."

In 1999, OCS modernised its articles and equalised the board - non-family members now sit alongside the family - and created a share option scheme for senior management. Now OCS is run like a PLC but with a family flavour and culture. The board is made up of three parts - executive, external non-executive and family non-executive.

There are pros and cons of the family business set-up, acknowledge both Cracknell and Goodliffe. "We have limited access to cash as we can't create more shares to raise cash. This means we have to work within our means and tailor strategy and plans accordingly. Some people may find that too restrictive and not dynamic enough," says Cracknell. "But consistency of ownership is a big benefit."

"We can take our time as we have time. But where we have to move fast, we can do so," says Goodliffe, citing the acquisition of Fountains in 2012 as an example of where OCS could move quicklyas it didn't have to go through the PLC governance.

Xenon's Sue Morris believes the family element is a selling point. "The majority of students are aware that we're a family and they take a real interest, especially when Chris got married. They've embraced the family business element."

But there are downsides. Liz Kentish admits to keeping flip charts at home in case inspiration strikes. "It's our business, it's something we've invested a lot of time in. It's a 24/7 thing."

Keeping family life and business life separate is harder, says Lucy Jeynes, who set up Larch Consulting with colleague Mike Cant before they became involved on a personal level. "You can go to work and have a really difficult day with a colleague, and then you go home and find they're at your kitchen table." There is a big difference between a generational business and a partner business, she adds.

"You're never off duty," agrees Sue Morris. "When David and I are on holiday together, essentially it's two company directors on an away day and we end up talking business." Son Chris concurs, but says it's more of a downside for friends of the family. "During Christmas lunch with Anastazja's parents, I could see their eyes glaze over as we talked about Xenon. We need to be careful not to alienate others around us as they're not involved to the same degree."

Victoria Bradley, FM consultant at Bradley and Bradley Consulting, and Rebecca Bradley's twin sister, recalls similar experiences when their father was alive. "When Rebecca, my Dad and I were in FM, every dinner time was like a sitcom with strong opinions on everything FM related... our poor mother! And whenever we went out, we would talk about buildings. Mum would say she wished we could go somewhere without a discussion about how to maintain the gardens or the lamps at high level."

That inability to switch off can be fatal. I spoke to several people, who didn't want to be quoted in this article, whose marriages, and other family relationships, had been put under pressure by being involved in family businesses.

But family businesses do appear stronger in many respects. They are less vulnerable to corporate dissolutions - insolvency rates rose in family firms from 2006-2009, but they were lower for family firms across all size bands than for their non-family counterparts, possibly a reflection of stronger balance-sheet fundamentals prior to the recession. And family businesses are recognised for their role in driving entrepreneurship.

Secret societies
Xenon's Chris Morris admits to calling his parents "Mum" and "Dad" in the office. But other businesses are more secretive about their family ties. Several organisations within the FM sector who have family members either at board level, or dotted around the business, were reluctant to publicise their family ties or, like GSH, deny that they are a family business.

That approach is quite understandable, says David Clements, managing director of lighting manufacturer and designer Future Designs. Clements owns the business and employs his son, but is keen to demonstrate that he won the role on his own merit, rather than because of his surname. "Being a younger family member in a family business can be a disadvantage as people may feel that you didn't get the job on your own merit and you really have to prove yourself."

It is something to which the Bradley sisters can relate. Rebecca worked for five years as British Airways cabin crew before being attracted into a career in FM by Alison Hartigan who she met through her late father - then head of property at BA. 'I heard about the assistant FM role at BA through Alison and was successful. My father was torn - as a father he was proud I'd made the career move. But on the professional side, he was nervous about how it would be perceived and that people would think I'd only got in because of him." The pressure was strong to prove to everyone that she earned the right to the job.

OCS's Cracknell and Goodliffe agree. Although Cracknell's daughter has done an internship with OCS, none of their children currently work in the business. There are two issues, says Cracknell. "Firstly, one of self-respect. Its easy to encourage an 18-year-old into the business, but 20 years later they may feel unfulfilled and wonder how they would have fared outside the group. Secondly we want them to have experience outside the business first. And if they choose to join, then that's fantastic. But it has to be their choice."

Jeremy Waud, MD of Incentive FM Group has also chosen not to bring his two sons into Incentive, although his eldest son Charles is employed in his father's website and wine businesses. "It means that my co-directors and shareholders don't have to put up with the "boss's son" nonsense. It takes all that politics out straight away. I wanted them to do something else, do something that motivates them, follow their heart rather them having to follow me."

Larch's Jeynes agrees. "It would never occur to me that the girls would come into the business. They come to the office in the school holidays and occasionally help out with minor jobs like stocktaking the stationery cupboard. That's a good opportunity for them to understand how businesses work from the inside but they need to strike their own path."

Challenges for family businesses
If the strength of a family business is its unity, when that unity is broken the effect can be calamitous. In 2001 Jeremy Waud, OCS family member and board member who had worked for the company for 22 years, left the business to set up Incentive FM.

Waud says although he enjoyed much of his time at OCS and he learnt an awful lot, he was frustrated by what he perceived as an inherent glass ceiling and people being pigeon-holed. "In some ways it's nice to work with cousins, uncles and your father, but a lot of family issues can get in the way of getting the work done. There are invisible barriers to doing the right thing and saying what you really think."

The parting of the waves was an awkward, even traumatic time for the family, particularly for Waud and his brother Stephen who remains on the OCS board. Ten years on, Goodliffe is sanguine when asked about the defection. "Jeremy chose to leave and set up own business and he's done a good job. A number of family members came into the business because they felt they should. But if you don't enjoy it, you're not chained here, you can go and do your own thing."

Victoria Bradley, who worked with Jeremy Waud at Incentive, says she suspects he felt stifled in the large organisation and, with his own clear vision and direction, wanted to do his own thing. Victoria, who has set up a consultancy called Bradley and Bradley, which eventually Rebecca will join (she is currently senior property manager at Tishman Speyer) says that not everyone gets on with their family. "Rebecca and I get on. We are nearly 40, but are still each other's best friends. If your twin says 'I really don't agree with you', you think twice, and know it's genuinely worth re-examining your view.".

It's a view held by Liz Kentish, who set up Liz Kentish Coaching with husband David a few years ago. Although it was primarily her business, David took an active role when the business grew quickly. The couple have very clear roles within the business with David in charge of finance, processes, bookings, and Liz doing the relationship building, although they are both qualified coaches. "We've had to learn to give each other constructive feedback in a business format so that it's not taken personally. That's quite an art."

The challenge for family business is growth and succession, says OCS's Cracknell, citing various adages from around the world suggesting that family businesses die out in three generations. "In China they say "wealth never survives three generations"; in the US the equivalent is "shirtsleeves to shirtsleeves in three generations"; in Brazil it's "rich father, noble son, poor grandson" and in Mexico "father merchant, son gentleman, grandson beggar"." Only 10-15 per cent of family businesses survive to the third generation and only 3 per cent make it to the fourth generation and beyond.
"Success for OCS is looking ahead and addressing the current issues and not living in the past."

His comments are backed up by the 2011 Oxford Economics report which argues "Scaling up is an issue for family businesses that have growth ambitions. Building greater management capability is therefore critical to enabling family firms to develop strongly".

The most recent PwC survey revealed that 48% of family firms surveyed had yet to identify their successor. Succession is becoming a larger issue as the 'baby-boomer' generation reaches retirement age over the next few years - it has been estimated that over the next five years an average of 172,000 family firms will leave a generation's control each year.

"It is a critical event with a high probability of business failure," says Cracknell. Almost half of family businesses have no succession plan and of those that do, two-thirds pass down to at least one family member.

In the Small Business Suvey (2010), over 15 per cent of family SMEs identified a general shortage of skills in the labour force as an obstacle to growth, and anecdotal evidence suggests that the same issue affects large-sized family firms. Liz Kentish agrees but argues that family businesses can be their own worst enemy when it comes to employing people. She cites the example of a cleaning company, which is a third generation family business. Two family members had been recruited in senior roles, but did not have the right skills or experience. "You need the right people not the right surnames," she says.

What is a family business?
Although the term 'family business' invokes an image of a small firm which has been passed down through generations, family businesses vary in size, extent of family involvement, and age. The Institute for Family Business (IFB) by Oxford Economics defines a family business as an organisation where the majority of votes are held by the person who established or acquired the firm, or their spouse, parents, child or child's direct heirs; at least one representative of the family is involved in the management or administration of the firm; and in the case of a listed company, the person who established or acquired the firm, or their family, possesses 25 per cent of the right to vote through their share capital, and that there is at least onee family member on the board.