External control stops in-fighting in a family-run business

External control stops in-fighting in a family-run business

The client was an interior design company owned by a woman and her two daughters. It had been founded during the 1940s by the woman’s mother. Turnover stood at £3 million.

There was no formal board, but the company was managed by the three owners and their respective spouses. The mother was formally the MD. One daughter was in charge of the company’s finances and the other was responsible for marketing.

Our challenge

The three individuals managing the company were constantly at loggerheads, disagreeing regularly on almost all issues. This continuous bickering was having a detrimental effect on the business and reducing the influence of the CFO.

What we did

First, we produced an owners’ directive in conjunction with the company owners. They were in agreement that they should all continue to run the company, but they also wished to alter their business roles.

The MD wanted to work more in the area of artistic design, rather than actually running the company. She also wished to scale down her working hours, as she was now 62 years of age.

The financial director was constantly irritated by the somewhat uncertain leadership qualities displayed by the MD, and reckoned that she herself had the requisite training and experience for the job.

The marketing director considered that the others were always criticising her new ideas and were completely reactionary. She wished to set aside more time for marketing and development of the company’s sales potential.

To stop the constant bickering we brought in a financial controller, who was able to show the officers how much their disagreements were costing the company. To achieve a balance on the board, an experienced chairperson was recruited.

A new board that included both the financial director and the marketing director was established. They were joined by a senior staff member who was well versed in the structure of the company. The controller was appointed to the board to act as a neutral sounding board and to provide advice for all. He was eventually appointed as the new CFO.

The new chairman of the board appointed the original financial director as the new CEO. The former CEO reduced her working hours and took on responsibility for a design development project.

A new business plan was drawn up, and the marketing director was able to use this as a basis for a more active sales strategy.

The outcome

After a year the CEO resigned, realising that the job was not really what she had expected it to be. The company recruited a new CEO who was not related to any of the existing officers.

After two years, turnover had increased by 30% and profit before tax was 20%. By then the company had taken on a further seven staff and opened another shop.

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