As the dust settles, what should we make of the Rogers affair and Edward Rogers, chairman of the board of Rogers Communications?
Edward Rogers got his way. That’s how some will remember the outcome of a bitter dispute that pitted him against his mother and two sisters, board members of the Canadian media giant. It should also serve as a cautionary tale to entrepreneurial families that robust governance mechanisms are not only critical to stability, but they must also be stress-tested for flaws.
The conflict at Rogers Communications erupted after Edward Rogers attempted to replace the company’s CEO, Joe Natale, with CFO, Tony Staffieri this past fall. His actions got him ousted as chair of the corporate board. But as chair of Rogers Control Trust, the controlling shareholder of the company, Edward Rogers fought back and removed five board members and substituted them with his own appointees.
He did so without consulting the board, his opponents argued in a court filing. Did Edward Rogers have the right, without a meeting of shareholders? The Supreme Court of British Columbia thought so. Rogers Communications reinstated Edward Rogers as chairman after the court backed his petition to compose a new board, ending a public battle for control of the company amid rising family turmoil.
Dysfunctional board
Oddly, the dispute left the media company with two boards that each claimed to be in power, and soured family relations amid negotiations to buy rival Shaw Communications Inc. Martha Rogers, who sits on the board of Rogers Communications, calls the B.C. court ruling “a black eye” for good governance and shareholder rights. Allowing independent directors of a public company to be removed “at the stroke of a pen,” she says, sets a dangerous precedent.
With Tony Staffieri in place as interim CEO, Rogers is on the hunt for a permanent CEO. That will prove difficult says Richard Leblanc, professor of governance at York University, who warns that as the family remains “at each others’ throats” the talent pipeline of candidates willing to come forward will dry up. “A dysfunctional board is kryptonite to a prospective external CEO,” Leblanc says.
Family Council matter
Family businesses are complex. At their best, they are models of agile, quick decision-making. Yet their unique nature can complicate decisions. This has played out all too publicly with Rogers. It could have been prevented.
One lesson entrepreneurial families might draw is the value of family councils, to give both the business and the family the attention they deserve. In short, family councils help business families govern themselves. They balance the needs of the family and individual family members with the demands of the business, and with less conflict. Yes, some owners believe family councils only make sense for families that own large companies, yet they benefit enterprises of any size.
Their advantages cannot be understated. Family councils promote consensus‐building and unity. They help groom family members as leaders, shareholders, and directors engaged in stewardship of the business. They focus the discussion on business succession. They are a way to teach family values and discuss rights and responsibilities. They help families become “learning families.” Ultimately, they provide opportunities to share, and support each individual’s dreams and goals, and recognize individual achievements.
Building sibling partnerships
Family councils can also be a powerful agent in building stronger sibling partnerships. An owners’ council, for one, can add a vital pillar of stability. This governance mechanism is a representative group of owners focused on understanding how shared ownership of the business impacts shareholders, family, and the business itself. It does not replace the corporate board or family council.
Establishing a high functioning sibling team requires siblings to commit to a shared purpose, actively seeking common ground. Defining this shared purpose is work the siblings do together, whether parents are supportive and actively involved in the transition process or not. It is important for siblings to clarify their shared purpose by asking – and answering – key questions. For example: Why do we want to be in business together? What does ownership mean to each of us? What are our values, our vision, and our goals related to our business?
The late Ted Rogers saw family ownership of the empire he built as a bonding exercise. He said so himself in private internal documents filed with the B.C. Supreme Court. Families that own active businesses and work together are “more serious-minded and family oriented,” he wrote, and have so much of their financial resources tied up in the business that it imposes moderation.
Find and share purpose
As for family ownership being a bonding exercise, the feud suggests the strategy failed. As for the family’s siblings, it appears that they failed to agree upon, implement and stick to a plan that honoured their father’s values and reflected their own shared values. Answering the “why” questions and sharing them allows siblings to find their voice and purpose and sets the stage for many other key decisions they need to make.
The Rogers boardroom battle was resolved quickly, but friction between Edward and his family might linger forever. The family’s shareholder agreement will almost certainly be a point of contention. “Our family has disagreements like every other family,” Edward Rogers pointed out in a recent media statement. “I am hopeful we will resolve those differences privately, as any family would. I know every member of our family wants the brightest future for Rogers Communications.”
That might begin with a thorough review of Rogers’ family purpose and upgrades to its governance mechanisms. For the rest of Canada’s family enterprises, time is short. Ownership of more than 60% of them will change hands in the next decade. Alarmingly, just 47% of current owners expect to see ownership stay fully within the family, according to our latest research on transition intentions. That needs to change for the better.
It can. There is no shortage of high-quality tools and educational resources for entrepreneurial families to prevent conflict, resolve conflict and leverage proven governance and shareholder mechanisms that promote enterprise longevity and family harmony.
The time to act for a better, stronger family enterprise is now.
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Related Resources:
Read our latest report: Ready, Willing and Interested — or NOT? Canadian Family Business Transition Intentions
Become a learning family, take the Family Learning Discovery Assessment!
