By Wayne Rivers
Glock is one of the best known brand names in the world and is probably the most recognizable name in the firearms industry. Glock handguns have set the standard for law enforcement, military, and civilian applications for about three decades now. But while the Glock "Safe Action" Pistol's famed innovation and reliability remain unimpeachable, the Glock family itself has been less immaculate. A recent article in Bloomberg BusinessWeek by Paul Barrett (The Glock Family Feud: Founder's Ex-Wife and Kids Speak Out for the First Time) highlights some of the history and highlights of the family owned business's rise to fame and fortune while also shedding light on the feud that has destroyed their family relationships.
Gaston Glock, Sr., and his wife Helga started humbly in the 1960s running a small family metal business in Vienna, Austria. Although Gaston had no experience engineering firearms, his political connections allowed him to wrangle the chance to bid on an Austrian Ministry of Defense contract seeking a new military handgun. A colonel in charge of weapons procurement sketched a picture of what he thought the new sidearm should look like and gave Glock some basic descriptions. He then went out, hired the right engineers and other talent, and began crafting a new kind of handgun. Glock was so unsure of exactly what he was doing and his unconventional creation that he fired the first test shot with his left hand out of fear that it might explode and ruin his right. The pistol functioned as designed, and the Glock pistol came to life. It was shortly to revolutionize the industry; the company now generates about $500 million per year, and Gaston Glock, Sr. is a billionaire.
From the beginning, Helga and the children were integral parts of the business. Helga was the company representative, the only female present, at the May 1982 final military testing; Gaston was too nervous to appear himself. Brigitte joined the firm in 1983, and Gaston, Jr. and Robert joined soon after; none of the three children ever considered careers outside the family business. According to Brigitte: "Both parents told us, 'We're doing it for you. You will be taking it over one day.'"
Beginning in 1999, a series of odd events began to take place. Glock was attacked in a parking deck by a professional wrestler using a rubber mallet as a club. It came to light that Glock's financial advisor had hired the hit man who was to use the rubber hammer to make Glock's death look like a fall down a flight of stairs. Glock, 70 years old at the time, was able to escape his attacker, and the advisor and his incompetent henchman both went to prison. However, the attack had a profound effect on Glock. From that time on, he spent most of his time in the in a "windowless basement bunker" at his lakeside mansion in Carinthia. Not long after the attack, Gaston and Helga began to do intensive estate planning to perpetuate the business and provide for the family. Also beginning about that time, Gaston and Helga, while remaining married, began to travel and live mostly apart.
In 2003, Glock had a tremendous blowup with the highest-ranking executive at Glock's U.S. subsidiary, Paul Jannuzzo. The rumor was that Glock and Jannuzzo were pursuing the same employee, a woman who eventually became Jannuzzo's wife. Glock sued Jannuzzo for embezzlement and theft. Jannuzzo claimed he did nothing but was convicted; however, an appellate court overturned the conviction. There was speculation Glock used the legal system to punish the man who was his romantic rival.
In 2008, Glock called Helga and informed her that he wasn't feeling well. She offered to come and care for him. His response was "that's not possible. I'm not alone." The next day he suffered a stroke. When the family rushed to intensive care, they found a young blonde named Kathrin who was serving as Glock's gatekeeper; she was the proverbial "other woman." From that point on, Helga, Brigitte, Gaston, Jr. and Robert were only allowed to communicate with Glock via intermediaries.
In 2008, the three Glock children sent their father a written proposal describing how they envisioned sharing future management. They were informed, again through intermediaries, that Glock had rejected their outline.
In 2010, Helga and her children received a handwritten missive from Glock describing his "unconditional wishes for reorganization of the Glock group." The family members were to cease their "operational roles" in the company in exchange for a financial settlement. His letter requested the following: "there will be no harassment, spying, stalking, the violation of human dignity, or scheming toward me and my environment." The long and short of it: Glock had cut off both contact and employment for his wife and three children. They had no forewarning the family patriarch was considering such a move. Helga and Gaston, Sr. separated in 2008 and divorced in 2011; he married Kathrin after his divorce was final.
Today, there are lawsuits over Glock's proposed divorce settlement and what will ultimately happen to the ownership of the family business and other assets. Relations between Helga and her children appear quite cordial; however, none of the four has any relationship with Gaston Glock, Sr. Where did the Glock family misfire? What things led them to miss the family business succession target? From the perspective of a family business advisor, they had four fatal flaws in their system:
1. Poor situational awareness
Helga and her three children had unbelievably poor situational awareness. If Helga and Gaston had lived apart since the late 1990s, did the family not suspect that he would eventually end up in the arms of another woman? Did they not see that his post-attack isolation, fear, and paranoia represented a sea change in the behavior of the family patriarch? Did they not see the lawsuit against his trusted right-hand American executive as a warning sign that his persona had changed fundamentally? When members of a family and business observe stark changes in the behavior of a patriarch who wields as much power and control as Glock, it's incumbent upon them to begin to ask difficult questions and require answers. The Glock family's lack of awareness-or head in the sand avoidance-helped set the stage for all that followed.
2. Blind trust
Blind trust was the rule of the day in the Glock family. The successors never studied for and trained in careers outside the family business. Gaston, Jr. recalled "the most famous quote from my father: 'you don't need to go to university. Come to work for me and you will learn the most.'" They had no backup plans, no contingency plans. What if the company fell on hard times? What if Gaston had decided to sell the company? In addition, Helga allowed Gaston to handle the estate planning and relied on his verbal assurances that she and the children would always be the beneficiaries of his elaborate plans. Brigitte even went so far as to ruefully say, "I trusted him blindly."
On the subject of trust, Ronald Reagan had a great philosophy. When negotiating with the Soviet Union over a gradual drawdown of both nations' nuclear arsenals, the Soviets wanted the United States to rely on their assurances without onsite inspections. Reagan wouldn't give up his negotiating strength; his response was: "Trust, but verify." Trust, but verify should be a mantra for family businesses. Give family members the benefit of the doubt and your trust. But make sure they do their parts to justify the trust by fairly honoring their commitments.
3. Lack of courage on the part of Generation Two (G2)
Glock's successors were pushovers. They ""_thought they had a tacit deal: obedience in exchange for their eventually taking over." As we wrote in 2011, "it is our opinion, humbly submitted after decades of observing family businesses, that courage is often lacking among successor generation family business members." (Is There a Lack of Backbone in Today's Family Business?) The G2 members of the Glock family failed to insist upon a process of reasoned engagement with their father; they lacked courage. Courage is the ability to confront fear, pain, risk, danger, uncertainty, or intimidation. It allows people to overcome adversity and difficult circumstances. A common trait among entrepreneurs is courage, and they generally admire seeing courage in other people including- especially-their offspring. Why would a strong patriarch/founder respect G2 successors who were so eagerly willing to be compliant and obedient? Aren't compliance and obedience diametrically counter to the mental makeup of most entrepreneurs?
4. No accountability for the founder
Gaston Glock as the patriarch of the family and founder-along with Helga-of the business, was allowed to rule with an iron fist. Especially following his marked change of behavior in 1999, the family should have moved heaven and earth to create a true Family Business Advisory Board (FBAB). Having outside, independent directors who could look a strong entrepreneur like Glock in the eye and challenge him without fear of repercussion could have been a real blessing. In a family business dominated by one or a tiny handful of people, strong, independent, outside directors can be a wonderful balance point between the needs of the family, the needs of the business, and the needs of the individuals. Everyone in life is accountable in one way or another; however, for hyper-successful family business leaders, accountability is often in short supply. Having outside directors and a functional FBAB can go a long way toward providing necessary checks and balances.
The Glock family saga is notable because of the household name nature of business they created. The sad fact is that this story is repeated countless times around the world in family businesses which aren't so newsworthy. It would be easy to place blame in this case on Kathrin as a gold digger or on the lawyers representing G2 who did a poor job of looking after their interests. The fact is, however, that Helga and her three children did an abysmal job of standing up for themselves and their rights as individuals, executives, shareholders, and family members. The Glock family soap opera is a tale of warning about what can go wrong in even the most financially successful family business.
Wayne Rivers is the president of The Family Business Institute, Inc. FBI's mission is to deliver interpersonal, operational and financial solutions to help family and closely-held businesses achieve breakthrough success. Wayne can be reached at 877-326-2493, firstname.lastname@example.org, or on the web at www.familybusinessinstitute.com.