Keynote speakers among Transitions East ‘13 highlights
Attendees at the Transitions East 2013 conference gave high marks to the event's three keynote speakers. The conference, presented by Family Business Magazine and Stetson University's Family Enterprise Center, took place at the Grand Hyatt Tampa Bay on April 17-19. More than 230 people, representing 77 family companies, participated in the conference.
Thomas J. Pritzker, executive chairman of Hyatt Hotels Corporation, set the tone for the conference with his opening keynote address, in which he shared the lessons he learned about business and life.
In a keynote address entitled "Reclaiming Our Heritage," Bernadette Castro, CEO of Castro Convertibles, reminisced about starring as a young girl in the furniture company's early television ads. The business, founded by her father, was sold in 1993 to a company that eliminated the Castro name and later went out of business. Today, Castro and her children have revived the Castro Convertibles brand.
Dini Pickering, vice chairman of the board of directors at The Biltmore Company, presented the closing keynote speech, entitled "Governance, Bringing in Outside Talent and the Successful Transition." Pickering, a fourth-generation descendant of George Vanderbilt whose family operates the Inn on Biltmore Estate and related businesses, presented the history of the family enterprise, her family's succession journey and the policies and procedures they have established.
Transitions East 2013 also featured panel discussions centered on several main topic areas: "Family and Business Challenges by Generational Stage," "Getting Succession Right," "Developing the Next Generation for Leadership and Ownership" and Harnessing the Expertise of Non-Family Executives." Other conference offerings included breakout sessions, a workshop and a group dinner at the family-owned Columbia Restaurant in historic Ybor City.
A full report of Transitions East 2013 will be published in the July/August 2013 issue of Family Business Magazine.
Transitions West 2013 will be held Nov. 13-15 at the Marriott Coronado Island Resort in San Diego. For information, see www.familybusinessmagazine.com/transitions.
I can quit you—but please don’t quit
As the song says, breaking up is hard to do ... especially when spouses work together.
Last month, Cablevision Systems Corp. announced that Kristin Dolan, wife of CEO James Dolan, had been promoted -- a few weeks after the company said the Dolans had separated on a trial basis, the Wall Street Journal reported.
Kristin Dolan has worked at Cablevision for 23 years; she and her husband met at the company, the Journal report said. Her role at the company has been increasing since 2011. Her new duties will include sales oversight of cable TV, Internet and voice products, plus product management and marketing, according to the Journal. Prior to her promotion, she had participated in company earnings calls alongside her husband, the article noted.
What happens when you don't want your ex in your life, but you need that person in your business? Family Business Magazine pondered that question back in 2008. Our article cited a study by family business researchers Patricia Cole and Kit Johnson of nine former couples who despite their breakup continued working as business partners.
Cole and Johnson told Family Business that the couples trusted each other in business matters -- even if trust in their personal relationship had been violated through infidelity! "They were able to compartmentalize business trust as separate from their personal relationship," Johnson said.
In other words: Even if someone turns out not to be your soulmate, he or she may be the best person for the job at your company.
Of course, trust goes only so far. As our 2008 article pointed out, family business advisers say carefully negotiated documents such as a shareholders' agreement and a buy/sell agreement are crucial when former romantic partners continue as "co-preneurs."
As for Cablevision, James and Kristin Dolans' marital troubles don't seem to have altered the company's view toward married-ins. As the Wall Street Journal article noted, at the same time Cablevision announced Kristin's promotion, it also announced that it had promoted Brian Sweeney to a new position focused on corporate strategy. Sweeney is married to James Dolan's sister.
Is it time to revamp your board?
In my "From the Editor" column in the current issue of Family Business, I note that later-generation family firms can fall prey to insularity and other foibles that can stifle innovation. That is often a fatal flaw in today's rapidly changing technological and competitive marketplace. Every generation of family owners, I write, must assess the business "with an eye toward creating opportunities, changing what isn't working and moving forward."
A board of directors that includes experienced outside members can help a family business leader to spot changes on the horizon and determine which products, processes or procedures should be rethought. But every so often, some strategic rethinking should be applied to the board itself.
At a roundtable discussion in New York in December, a group of prominent private company directors noted that while many business owners engage in rigorous planning to form their boards, they don't put any thought into changing their boards for the future. While term-limiting directors is considered a best practice for public companies, all too often private companies keep the same group of directors on their boards past their ability to help take the business to the next level.
Your company's concerns will change as your business grows, your products mature and your family prepares to transition to the next generation. Your board should evolve in parallel to the evolution of your business. Think about where you see your company in five years. Then consider bringing new members onto your board who have already taken their businesses to that place and beyond.
A group of business owners and directors will be discussing this and other topics at the Private Company Governance Summit, a national conference focused on the unique governance challenges facing family-owned and other closely held businesses. The Summit, presented jointly by Family Business Magazine and Directors & Boards Magazine, will be held May 16-17, 2013 in Washington, D.C. You can learn more about this exciting new conference at mlr.cvent.com/pcgs2013.
Every year, take some time to ask yourself these questions: What do you want from your board? And are your current directors capable of giving you what you need?
The case for sharing your story
Here at Family Business Magazine, we are humbled by the families who generously share their stories with our readers -- including not only the history and growth of their family enterprises, but also the mistakes they made along the way, the measures they took to resolve their disagreements and what challenges they see on the horizon.
As it turns out, these families aren't just sharing the secrets of their success; they're fostering healthy family relationships and resilience in future generations.
Bruce Feiler, a New York Times columnist on faith and family and a bestselling author, recently wrote about the benefits of developing "a strong family narrative."
Feiler cited a study by psychologists Marshall Duke and Robyn Fivush that assessed how much children knew about their family history. The kids who knew more family stories had a greater sense of control over their lives and higher self-esteem than their peers. They also believed that their families functioned more effectively when compared with kids who didn't know much about their families' past. And after the terrorist attacks of Sept. 11, 2001, the children with a strong sense of family history were better able to cope with the fear and stress that gripped the nation.
According to Feiler, Duke's term for this phenomenon is a strong "intergenerational self." Duke told Feiler that the most healthful narrative includes an honest account of the family's lean years as well as the good times, with a moral along the lines of, "No matter what happened, we always stuck together as a family."
Sticking together as a family doesn't mean that family members must always agree on everything. As we note in The Family Business Conflict Resolution Handbook, conflict isn't on its face a negative thing; rather, it's an opportunity for all parties to air their concerns and work collaboratively to arrive at a solution that's best for the group.
The most effective families don't neglect the periods of difficulty and conflict when telling their family stories. But they do put anecdotes into a positive framework. Feiler wrote:
When faced with a challenge, happy families, like happy people, just add a new chapter to their life story that shows them overcoming the hardship.
We in the family business community are grateful to those who share their family narrative with others.
Each time a new generation joins a family firm, new family and business life-cycle challenges arise. When the transition has proved to be successful, family members can't afford to sit back and congratulate themselves -- they must begin planning for a new cartload of generational baggage.
Founder to G2. The generation gap between the founding entrepreneur and his/her children is a quintessential challenge. Another classic source of strife stems from sibling rivalry. But there are other issues, as well.
• By the time the second generation comes aboard, most businesses have grown. Middle managers must be hired. The business may have to take on debt to fund its expansion.
• At the founder stage, there was a single decision maker; now, decisions are made by a group of family members, and perhaps key non-family managers as well. Consensus building is required.
• It may be difficult for the founding parents to accept their children as competent businesspeople and to relinquish control of their other "baby" -- the business.
• Siblings must begin to think of each other in a new way: They are now business partners as well as brothers and sisters. The presumption of equality in a sibling relationship poses problems when siblings have different business roles.
• The addition of spouses/significant others to the family can be a source of stress.
• The family must determine how the founder's retirement will be funded.
G2 to G3. Many family business experts say that this is the most difficult generational transition of all. The exponential increase in the number of heirs results in complexity that can overwhelm a family, causing a return to the proverbial "shirtsleeves."
• In order to support a larger group of family members, the business must grow significantly.
• Unlike G2 siblings, the G3 cousins didn't all grow up in the same home; they lack a shared history.
• A larger shareholder group requires a formal decision-making structure.
• An imbalance in ownership can occur if one of the family branches has more G3 descendants than the others.
• Conflicts can develop between active and inactive owners over payment of dividends.
• For these reasons, many business families consolidate ownership -- known as "pruning the family tree" -- at this stage. This process can cause resentment.
G3 to G4+. By this point, the family is likely to be widely dispersed; they are scattered all over the country, or even around the world. Some of the cousins may not even know each other.
• Later generations may not feel the same connection to the founder and the business that their forebears had.
• With a large shareholder group, it's impractical for everyone to vote. The family must develop a representative governance structure.
• Voting blocs can arise within and between family branches.
• Differences between active and inactive owners are magnified. Inactive owners may feel ignored by company managers.
• Younger-generation members may not take a stewardship approach to the family's wealth.
• Family members who rely on dividends to support their lifestyles may be more risk-averse than those who work in the business.
How does a family manage these challenges? By instituting policies (covering family employment, share inheritance, premarital agreements, etc.), creating family documents (like a mission statement and family constitution), developing governance structures (an independent board and a family council), communicating constantly and seeking outside help.
I will be discussing these issues, along with a panel of business owners representing the second, third and fifth generation of their families, at the Transitions East 2013 conference in Tampa on April 18. The panelists will discuss the work their families have done to meet the challenges of the current generation and to set themselves on the right track for the future.
The greater the number of people involved in a family enterprise, the wider the disparity of interests, talents and concerns. This diversity need not be a source of strife. Indeed, it can be a family's great strength -- if family stakeholders work on their relationships at every generational stage.