Four paths to building a great business family

It’s common knowledge that only a handful of business families continue beyond the third generation as a family with a shared enterprise. How can younger families prepare to join that exclusive club? To gain insights into this question, our research team interviewed members of 100 large, global families. We call these families “generative” because they have succeeded beyond their third generation as both a thriving business and a connected family. A generative family is more than the owners of a successful business — they continually create both financial and non-financial wealth across generations.

After the first generation, these families shifted their attention from creating new wealth (although this was still important) to building and sustaining a great family. They became more attuned to creating non-financial “wealth” through personal relationships, the skills and capabilities of their children, and shared activities that sustain their community and environment.

By investing in family relationships and family activities, they created a legacy, building a strong and productive family culture and developing the capability and commitment of rising generations. While they value family building as positive in itself, they report that development of a strong, aligned, caring and well-organized family also helped them extend their business and financial wealth.

Family building occurs naturally when a nuclear family lives together. A household is a safe refuge, where kids can learn and grow and where family members care for and trust each other. By the third generation, the family has expanded into multiple households, with increasing diversity of interests, talents and goals. To succeed, each new family generation must reaffirm their shared values and mission and develop a cadre of leaders to extend family wealth. As family branches grow and disperse, owning an ever-changing portfolio of business and financial assets, it becomes a huge challenge to preserve the special features of an intimate, interdependent family.

The great dynasties of recent centuries — the ­Rothschilds and Rockefellers — offer some models. The Rothschilds leveraged their family bonds for cross-national collaboration and internal family communication and trust to create a global banking and financial empire. The family became one of the first global intelligence networks, sought by national leaders. The Rockefellers, with the largest family fortune of the last century, continue today as a philanthropic and investment family. Generations ago, the Rockefellers began to meet as a cross-generational family and develop an internal family culture of social responsibility, with many shared investments and projects.
The generative families in our study combined the best features of business and family, pursuing the following four paths, each of which relates to a different form of “non-financial” family capital:

Great business families actively commit to an agenda of intentional activities to develop each of these paths.

Path 1: Aligning identity around shared purpose and values
Generative families share more than ownership of profitable investments. They are united by a shared purpose, financial and non-financial goals and a long-term desire to pass their entity across generations. They need to affirm a shared purpose and long-term perspective to continue as a shared enterprise across generations. As a fifth-generation member of the Hermès family noted: “You don't inherit a family business; you borrow it from your grandchildren.” This defines the concept of stewardship, in which an owner can enjoy the wealth, but with a responsibility to pass it on to the next generation in stronger shape.

As families grow into a new generation, they might ask: “Who are we, and what do we want from our wealth?” This inquiry engages the whole family, which needs shared purpose to avoid drifting apart. The legacy of the founders is inspiring but is not enough. Each new generation needs a reason to remain together into the future. They find it beneficial to develop a set of family values and forge a new path.

By the second generation, each of the families in our research began to ask each other whether they wanted to remain together as a shared family enterprise and what they wanted to do together:

• "We asked each other, 'Do we want to work together in a family business?' And there was a unanimous yes. So we set a vision of what we wanted to achieve together, why we thought there was benefit and what the negatives were."

• "The first 80 years were basically surviving and building up wealth. With more wealth, there could be a change in behavior, so we have to be conscious about how this wealth is deployed and how we manage to keep our values."

This is not a task for the older generation alone, or the business leader. Each new individual who joins the family has personal values and life goals; these must be shared and balanced with the legacy values, to create a path forward for each new generation. This process reportedly takes time, energy and inclusion of all members of the family.

Path 2: Building personal relationships in a working family entity
Mission and values do nothing for a family unless they are implemented and have a positive impact. Building upon shared values, a generative business family actively develops caring, trusting relationships with the younger generation, including far-flung members, to establish an engaged and active family organization. It has productive get-togethers, celebrates the family legacy and history, maintains shared vacation properties and other real estate, develops new businesses, manages conflict and engages in community service. These aspirations need more than good intentions; they require organization, resources, planning and commitment. These non-business activities can be realized only through an organized family structure.

Generative families have regular business and financial gatherings, but they also gather regularly as a family. They have annual family assemblies — inclusive, multiday gatherings where the whole family gets together and engages in relationship building.

Family organization begins by building personal relationships among the widespread family members. If they do not maintain personal relationships and connection, they may be a business but not a family. Generative families realize that to remain vital, the family must invest in knowing and caring about each other. When together, they build family values and culture and create opportunities to bond as a family.

The families report that a majority of the family attends their retreats, not because they have to, but because they want to:

• "What encourages everyone to come to our annual retreat is our children making relationships with their cousins. So, by the time they get into the boardroom or family council, they have relationships with each other."

• "When my daughter and her husband, who are fourth generation, hosted our annual gathering for the teenagers, they had 15 teenagers show up — and they’re instantly friends."

In order to transfer their values and commitment across generations, the business family develops a parallel organization to take care of family matters alongside their business and financial governance. Family members select an organizational and leadership team for their family, who are different from the business leaders. This leadership team, often called a family council, helps organize the family’s many activities. They resolve conflict and develop policies and procedures that respect each individual, not just the major owners and shareholders.

The family is more than the business, but the business is the family’s fuel and foundation. In succeeding generations, members change from hands-on owner/operators to stewards, hiring non-family leaders for the company and taking on oversight and transmission of their values to the business. They are not just looking for a business successor, but rather preparing everyone in all generations to take productive and active roles in family affairs.

Family enterprise leaders and trustees are often reluctant to share information about the business with family beneficiaries. They “take care” of the rising generation but do not feel the need to inform them. This paternalistic model is common, but the family members we interviewed found this tradition did not allow for the development and engagement of the next generation. Without being informed, how can they learn about the legacy and prepare themselves for possible employment in the business?

To develop a family organization, important guidelines include providing information (with invitation to comment) and sharing ideas. As a family leader stated, “It’s critical to our success that communication channels with family members remain transparent in both directions. That’s how we ensure there’s trust, harmony, and support from the family.” Inclusiveness is a core aspect of building relationships. Opportunities are created for family members who live far away or pursue independent careers to get to know each other. Those who are not full owners are encouraged to participate in family activities.

All of our generative families hold some variant of an annual business meeting, where family members are invited to attend and learn from the business and financial leaders. These events can be traditional one- or two-hour presentations of numbers and charts, but many families find ways to make them more interactive. One family with a large business produced “a very detailed annual report, not unlike that of a public company.” Activities can include visits to the family business or foundation, conversations with key employees and tours of company plants.

Path 3: Developing human capital of the rising generation
A great business family’s main “product” is its rising generation. The family wants to see their children become capable, responsible adults who care about each other, share the family values and are ready to take on stewardship of family enterprises. The elders can’t ensure that every heir will turn out as they’d wish, but they invest in activities that make this outcome likely:

• "People don’t understand the importance of education and underestimate the time, care, and devotion it takes to build a strong family. Our family business is a combination of individuation and collectivism."

• "The important matters include what we expect heirs to do, values for parents to instill in their kids and access to foundation programs. We have community projects, sending some kids to do hospital work or  to Habitat for Humanity, to give them a flavor of the business stuff we think is important."

The families in our study identified values and qualities they encourage in their children:

Generosity: Give back to the community.

Respect: Value people of all wealth backgrounds.

Work ethic and skills: Develop the capability to earn their own money and find work at which they can succeed.

Self-esteem: Find value in themselves independent of their wealth.

Financial literacy: Handle money wisely.

Responsibility for wealth: Understand wealth as a tool, not an end in itself.

Frugality: Spend prudently.

Appreciation: Value the opportunity wealth offers.

Generative families also create educational and skill-development programs for the rising generation. These go beyond information sharing to develop the new generation’s capability to take on leadership in the family enterprise. They teach relationship, financial and business skills — not skills that are necessarily taught in higher education.

Family business education is not simply “delivered” to the youngsters. It combines active engagement from them and leadership from the elders, as this elder observes: “It’s essential to have a commitment to family education. In the early days, we held workshops on understanding personality types, communication skills and financial things. Utilizing an outside source to provide programming makes a huge difference, because developing things on a one-off basis is incredibly time-consuming.”

In these family education programs, the young members learn to work effectively as a team, overcoming rivalry:

"We have done age-appropriate work with the young generation, including self-development, leadership, understanding self, and basic entrepreneurial practices. We review every acquisition we’ve conducted and review our financials twice a year with them. They’ve gone through our tax returns in detail and been to such things as product launches, grand openings and site expansions. If they want to have a car [when they turn 16], they have to make $5,000 on their own by, say, lifeguarding or cutting grass. We’ve also designed a summer experience for teenagers where they spend time in finance, IT, strategic planning, human resources and small-business initiatives."

Mentoring is the pairing of a young family member with a trusted senior person (a family member, independent board member or non-family executive) who helps them develop skills to work in the family business, and to whom they can confidentially open up about their anxieties. Young family members are often encouraged to get hands-on experience in the business, as this family council leader reports about their fourth-generation members:

"Our G4 are juniors or seniors in high school, ready for summer jobs and internships. We create opportunities for them to work in the business at age 15. We also focus on educating our G4s about the business, what they’re a part of and what they’ve been born into, along with talking about wealth and stewardship."

Mentoring and career development serve a dual purpose for qualified family members, helping them prepare for their career of choice or part-time governance roles. Being part of these efforts offers the rising generation visible opportunities to add to the family’s social and business mission and demonstrate their leadership abilities.
Since they are to become the keepers of the legacy, the younger generation must learn the skills and responsibilities to lead the family for the future.

Path 4: Recognizing the responsibility to give back
Once a family has been wealthy and successful for a long time, working for the family business may not have great allure for young family members, who have many other wonderful career options. So how does a family achieve their active engagement and commitment? One way is to appeal to their sense of social justice.

The family’s values can be expressed through philanthropy, corporate social responsibility and impact investing. These activities offer a path for the family to work across generations while serving others; they can even furnish career options for young family members. If this is missing, many members of the younger generation may fall away from each other.

A common theme among our generative families was gratitude and responsibility to give back. Ginny Esposito, founder and former president of the National Center for Family Philanthropy, notes, “It all starts with a sense of gratitude. They feel there have been blessings and gifts they’ve received. They’re grateful for those gifts, they’re grateful for those who made them possible, and they want to give back.”

As one generative family member puts it: “We offer a decent job to more than 1,000 employees on our farm and help their families put food on the table. To make our surrounding community healthier and more secure, we are constantly looking for innovative ideas to give back to them and decrease the unemployed poor.”

Working together as a family to do good, particularly in one’s community, becomes a powerful win-win, benefiting not only those to whom the service is directed but also the family as a whole. It deepens family relationships and brings families the joy of making a positive difference in the world. This is particularly impactful for the rising generation, giving them a sense of their ability to effect positive change in the world.

Some families go on service vacations, offering help in community projects. One family recalls a trip to China with some as young as pre-teens. It was a trip that became a touchstone learning for the family, helping them define a global focus for their philanthropy.

An essential investment
Our research found that successful generative families who survive beyond their third generation attend to the care and development of their family and their business. They consider this internal investment one of the most important ways to use their wealth. While business savvy and adaptability are important, these families view the foundation of future success as lying in their extended family and non-financial capital, including the development of the character, capability and commitment of each new generation.            

Dennis T. Jaffe, Ph.D., is an adviser to families focusing on family business, governance, wealth and philanthropy. This article presents insights reported in his book Borrowed from Your Grandchildren: The Evolution of 100-Year Family Enterprises (Wiley, 2020).

Copyright 2021 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact    


A culture of continuity is the key to family business longevity

Family businesses can represent both the best and worst form of capitalism. We’ve seen families build and nurture businesses that invest in the long term, in their communities and in working and growing together as families. But we’ve also seen the other side: At their worst, family businesses can generate conflict that destroys their wealth, scores of jobs and their family relationships in the process. What separates the best from the worst?

Josh BaronMany family businesses look for one “silver bullet” or best practice to create a healthy, enduring enterprise over generations — perhaps the right governance structure, or a family constitution or a thoughtful trust structure that somehow guides successive generations. Those things can help, of course, but they alone are not the secret to creating an enduring family business. What makes family businesses successful across generations is something else: a culture that enables the business, the owners and the family as a whole to evolve and grow together over time. We’ll call this a “culture of continuity,” and it’s built through three common traits that we have seen in family businesses that endure.

1. Curiosity: They are led by lifelong learners. These leaders ask great questions rather than assume they have all the answers. They’re always exploring what others are doing and looking for new ideas, behaviors and approaches.

2. Teamwork: They embrace the fact that keeping their family business functioning well requires sustained effort, together. They understand that a family business demands collaboration in addition to individual excellence, since virtually all important decisions require alignment. They make tough choices and compromises across inevitably competing interests.

3. Adaptability: They embrace the challenges that come their way, and they are open to changing to meet them. They recognize that just because something has worked brilliantly up until now doesn’t guarantee it will work going forward.

Such a culture isn’t built overnight and can be a challenge to maintain, but the commitment to curiosity, teamwork and adaptability clearly helps families thrive over time. We have seen these traits expressed in family businesses of varying sizes, industries and locations around the globe that have managed to endure not just over decades, but over generations. Here are some suggestions on how to develop these traits and take action to foster your own culture of continuity.

Many family businesses prize their history and their legacy. There’s much focus on where they’ve come from and Rob Lachenhauerwhat they’ve achieved. But that can mean, in turn, that they become too insular. The most successful families we work with understand that they have much to learn from others: their industry peers, other family firms in different industries and even the rising generations. Great family businesses are led by are lifelong learners. Many families we work with have made a point to continually benchmark themselves on a wide variety of topics, such as bringing spouses and next-generation members onto the board, implementing best practices for starting and running a family council and developing family employment policies. They attend conferences, build their networks and organize peer-to-peer conversations with other successful family businesses.

They use those conversations not to find the answers, but to help them ask better questions.  As the 72-year old patriarch of a family business told us: “In our discussions with other great family businesses, we never find the complete ‘answer’ from one conversation. Rather, we find specific approaches and practices that make us question how and why we do things. The conversations open our minds to change. We find our new approaches by piecing conversations together into a package that works for us.”

The families who are successful generation after generation take the time to instill a sense of curiosity. The leader of one third-generation family business we work with made a point of having a weekly lunch with his daughter and son in which he promised to answer any questions they had about the business. He himself had always been inherently curious — he was constantly looking for better ways to solve problems for customers and as a result had grown the business substantially over time. But he wasn’t sure if his children, at the time in their 20s, were fully engaged, so the lunches were a way to stir that curiosity.

The time he put in with his children paid off. He knew their engagement had finally clicked in, he told us, when they started asking tough questions at lunch. “They weren’t always easy questions to answer,” he reported, “but they were the right ones to ask. It was then that I knew that bringing them into the business was going to work.” 

Family business is a team sport. You win together — but you can also lose together. As one of our clients told us: “The only thing that can destroy this family business is us.” There is work in every corner of a family business: work to run the company, work to keep the family connected, work to maintain harmony in the family and so on. One piece of the “work” is seldom highlighted but essential to longevity: the work of ownership. It some ways it’s the most difficult work to do. It requires a continual commitment to work through problems, agree on mutual goals, find a path to alignment among the owners — and not get up from the table until you’ve made progress. The work of ownership involves making good decisions, together, over time.

We know one group of third-generation owners who, during a four-year period, undertook a full buildout of their generation’s approach to ownership. Specifically, they worked to understand their current complex ownership structure, crafted and gained approval of a new shareholder agreement, clarified how they would make decisions together as future beneficial owners, explicitly worked on their long-strained group dynamics, started an ownership development program for their next generation, created a new dividend policy, crafted a statement of ownership goals to guide their board of directors, reshaped their board of directors to include spouses and their next generation, and created a family office. Progress required creating more than 10 task forces to tackle specific issues and working through some “skeletons in the family closet” regarding poor behaviors. Family members who also had full-time, “real” jobs put in many hundreds of hours.

This work challenged them intellectually. Trust structures, tax law and financial policies all needed to be mastered. Their emotional work, however, was more difficult. The issues they tackled together made them face long-simmering resentments among the cousins, inequities across their family, and even their own mortality and that of their parents. Their success in setting the stage for another generation of family ownership resulted from a willingness to do both the rational and emotional work together. Their commitment to invest the time required came from their parents, who had instilled in them not only a love of the business but also an understanding of the effort required to sustain it. 

As family business owners, you can hire people to handle many aspects of your business and your life over time. But you can’t outsource ownership. And that involves a commitment to sustained hard work, with your fellow owners.  There is no substitute for that.

Even in the most successful businesses, nothing stays static over time. Family businesses, like all businesses, will face disruptions of all kinds — to the business and to the family. So great family businesses incorporate an expectation of adaptability into their culture.

We’ve seen families work to actively “disrupt” their own business. They anticipate and create their own “competitor” for their customers rather than waiting for other companies to do that to them. That’s one of the benefits of family ownership; you can think in terms of years or even generations rather than quarters, the way a public company has to. One family we worked with has evolved its business across generations from distributing coal, to delivering heating oil, to running gasoline stations, to trading in oil futures, to managing a convenience store chain and most recently to managing its real estate portfolio. The goal is to be in business together, not necessarily in a particular business.

This adaptability should extend to issues of governance, as well. Nothing should be set in stone for generations, because the way one generation of owners chose to govern their business may not be right for the next generation.
One large global company we work with actively reviews and redesigns its board every decade to incorporate the next generation and their unique perspective on both the family and the business. Even something as fundamental as the ownership structure must be reviewed periodically to ensure it fits the needs of the next generation. If, for example, owners are required to work in the business, but the next generation has a number of members with strong professional passions outside the family firm, should the ownership policy be changed to accommodate that?

Change is extremely hard for a generation that has worked, with great success, in a particular way. Those who encourage adaptability recognize that differing circumstances in turn require an evolution in how the family business will function. For example, one company’s senior generation has been clear with the next generation that they have no interest in changing their governance structure as long as they’re all still alive. But they recognize that the next generation will need to do things differently. So the senior generation blessed the formation of a next-generation working group so they can figure out for themselves how they would like to structure the company’s governance when it is their turn to lead. It’s a compromise on both sides, but one that acknowledges that each generation must build governance and decision-making structures and processes around its own needs.

We encourage you to foster these cultural traits — with the necessary behavioral changes. We recommend a couple of actions to take for each cultural trait.

• Talk to other family businesses and share what you learn with others in your family.

• In discussions with your family, ask questions and explore options rather than provide answers. This approach will encourage others to think rather than react.

• Explicitly consider whether your family is doing the necessary work on ownership: Do you need to update your shareholder agreement? Are your goals as owners explicit? Is it clear which decisions the owners want to make themselves and which ones they are willing to delegate?

• As new issues arise in your family business, form cross-branch, cross-generational working groups to develop options.

• Write down and discuss the assumptions your family makes about how it operates and will transition.

• Ask next-generation members what changes would make the family business more attractive to them.

An enduring family business that expresses and reinforces what your family most values is within reach, if you’re willing to work at it. We wish you good luck on your journey to create a culture of continuity in your family business, together.          

Josh Baron is a cofounder and a partner at BanyanGlobal Family Business Advisors and an adjunct professor at Columbia Business School. Rob Lachenauer is a cofounder and the CEO of BanyanGlobal. They are the authors of The Harvard Business Review Family Business Handbook (Harvard Business Review Press, 2021).

Copyright 2021 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact     



A survey of enterprising families' governance practices

Research over the past three decades suggests that family assemblies, family councils and other governance structures help a business-owning family sustain their enterprise over multiple generations. As families become aware of the value of governance activities, they wonder how other families set up their assemblies and councils, how much they spend on governance and how the various governing bodies operate.

After a request at a recent Transitions conference, we decided to gather concrete information on how enterprising families conduct family governance. Subscribers to Family Business Magazine’s newsletter were asked to complete an online survey in December 2019 and January 2020. We received 320 responses.

Of the total who completed the survey, 35% (113) report that their families have a family council, the basic unit of family governance. (See sidebar for a definition of terms used in this report.) Their responses show substantial engagement in family and business governance. Most of the data in this report are from this subset of 113 families.
Your family can use this information as a benchmark to assess your own practices, as well as to consider pathways to develop or expand the nature and extent of your family governance.

The vast majority (90%) of the 113 families with a family council have been in business for many years and continue to operate their original, legacy family business. Most are more than 40 years old:

In addition to their legacy business, 35% of the families have diversified to include a family office, an entity that manages family wealth and family activities that lie outside the family business. Of this group, 30% have a single-family office; the others are affiliated with a multi­family office or other investing vehicle.

Family assemblies: Convening the whole family
What is special about a family business is that the owners aren’t just business partners; they’re also related to each other. This connection means they share interests, values and concerns beyond business. They want to build upon and share a legacy and family identity, and to be engaged together in activities centered on more than just making money. They have philanthropic goals and ties to their hometown. They may share ownership in a vacation property. Governance is a pathway through which family members organize to fulfill their larger mission.

Having passed beyond the first generation, these families face the challenge of aligning the desires of increasing numbers of family households. The older the enterprise, the greater the number of generations involved. 

With each succeeding generation, more effort is needed to maintain family ties. Cousins are raised in separate households, perhaps located far from each other. Each household has its own interests and values. Furthermore, later-generation families are often the stewards of not one but several enterprises. Because of these complexities, family gatherings must be organized with intention and agendas.

Family governance begins with the family making a commitment to get together regularly. A gathering of the full family is called a family assembly. Most (89%) of our 113 families hold a regular family assembly. Of these, about three-quarters (74%) meet annually, and 17% gather every other year. Even families without a family council realize the merits of bringing the whole family together. More than half (56%) of the 320 people who responded to our survey said they regularly convene a full family assembly.

Getting people to attend the assembly is a continual challenge. While family members have good intentions, it is hard to clear the schedule and attend a meeting lasting several days, often at a location far from home. Despite such logistical difficulties, the assemblies are well attended. Of our core 113 families, 75% report that three-fourths or more of their family members attended the last assembly, and another 21% saw a majority of family members present.

The 113 families realize they must provide incentives and assistance to encourage people to get together. Almost all assemblies are paid for by shared family funds, rather than by individuals. More than half of these families (56%) also compensate family members for travel to family gatherings. Young adults have particular challenges: young children and lack of available cash. To overcome this difficulty, 48% of the families report that they pay for babysitting during meetings.

Whole-family assemblies are more than social gatherings. They combine fun, education, quality family time and business meetings. They offer family members of each generation a place to get to know each other, strengthen their bonds and catch up on what’s happening in their lives, in addition to conducting family business.

Families reported many activities taking place at the family assembly:

Family education. One of the most important shared family activities is an educational program for younger family members. Given their wealth and resources — which might include not just a business, but also a foundation, investments, a family office and real estate — family members who will inherit ownership have a responsibility to be stewards of the wealth. The families want to teach responsible behavior to their children. They must learn things that are not taught in school.

Nearly half (48%) of the families report having a formal family education program. Of these families, 58% have separate programs for different age groups. Families offered many examples of topics covered in these programs (see accompanying list).

The families also encourage young family members to attend business programs in the community and at business schools. They offer support for education in degree and non-degree executive education programs. The families value education, and they want an educated rising generation to sustain their family and business focus.

Family communication networks
Assemblies and other family gatherings strengthen bonds among family members and develop shared interests. However, families also must sustain and build on these relationships and activities by staying in communication between meetings. Many families have created family portals and social media connections. These personal networks offer privacy and security for confidential family sharing, as well as informal and personal channels for families to keep in touch and move activities forward.

• 41% of the 113 families have an intranet or dedicated family web portal.
• 31% have a print or electronic family newsletter.

The larger the family, the more communication tools they use regularly:

One anomaly in this data is that the largest families appear to be less likely to use these tools. It may be that larger families have more difficulty creating shared commitment and deep personal bonds. They may find it more effective to conduct family communication through liaisons who represent branches or geographic regions.

Some families hold generational or shared-interest meetings, which bring together members of each generation with common concerns or talents. These meetings can be an exciting and meaningful bonding, learning and planning opportunity for young family members. For example, in one family, the third generation meets monthly for educational programs contracted through a local non-profit organization.

The family council
When a second- or third-generation family has expanded to contain more family members than can sit around a table, someone must coordinate activities. In the early years of a business when the family is smaller, the founding generation or family business leaders take charge of these tasks by default. When there is a larger stakeholder group, overseeing family ownership of the business becomes more complex, and a team of people is needed to manage the workload. Hence, a multigenerational family enterprise creates what is commonly known as a family council. The council is the executive group that coordinates activities such as organizing the family gathering, keeping people in touch, and developing family education and philanthropy.

In addition to organizing activities, the family council is responsible for governance, such as setting policies to manage complexity (like the family employment policy) and creating the family constitution. Many families have a board of directors and a governance structure for their business. But the desire of the family to strengthen relationships; celebrate the family legacy; and develop skills, knowledge and commitment for the future means they must engage in family activities that lie outside the business (even though some of them have an impact on the business). The business structures and the business leader, who faces many other challenges, cannot take on these tasks. So we see families creating the family council as a parallel structure to the business: a family organization that takes on the task of organizing, growing and developing the family.

The council does not operate like a business board. While the business organization has strict rules for decision rights, the family is a voluntary organization. Family members have to decide to be part of it, and the organization of the council reflects this voluntary nature. The council often decides by consensus and is by nature a collaborative organization. When policies and rules are established, the family must be part of the decision, or family members simply will not abide by them. Creating a family council reflects a move by the family to a collaborative, engaged and democratic structure. These collaborative values often influence business governance.

A family council represents all members of the family, not just the elders or owners. It’s important for families to make sure council members reach out to all stakeholder groups that make up the family, such as younger generations and family branches. Councils also face the challenge of integrating newly married-in family members into the family and encouraging their new energy and ideas, so that these newcomers feel they are really part of the family (and therefore want to attend the gatherings and bring their children).

Selecting council members. Family members realize that council membership should not be honorary; an effective council requires real work.

Families want their council to represent the family in all its diversity. When a family is small, the whole family can serve on the council. But by the second generation, the family is often identified by second-generation family branches. Branches often represent shared ownership entities like trusts, so there is a natural tendency to select members to represent each branch. More than two-thirds (68%) of the councils in our survey utilize branch representation.

Some councils consist only of the family owners. But as a larger third generation emerges, the council often includes younger members (who may not yet be owners) and married-in family members. To ensure that new generations and new ideas are included, 42% of councils have term limits.

Each council develops its own system for selecting council members, one that reflects the values and dynamics of the family. They may use more than one system for selection:

Here are some responses to this question:

• “Each family branch assigns two family members. Some are voted on and others assigned. We also appoint a member of the board of directors, which rotates.”

• “One family member from each of the original six families (of six brothers) serves on the council. The family member is chosen by the members of that individual family in a manner which that particular family decides. The family council is renewed on a yearly basis.”

• “Candidates have a prerequisite of having attended a particular family business governance seminar. Those qualified are identified by the current family council. The number of open slots and the number of people willing to serve has matched rather well so far. Members who have previously served can serve again if we do not have sufficient prospects who have never served. The current council would use its judgment on prioritizing which prospective members to invite first. The chair reaches out to the prospects and works her way down the list to fill the required number.”

Because organizing family activities is a lot of work, councils tend to meet frequently:

Many councils have some meetings by phone or online conferencing, and others in person. Other councils meet when issues or projects are pending. Larger councils delegate committees or task forces, which may include family members outside the council. For example, there may be committees focusing on philanthropy, next-generation education, planning the family assembly or managing family vacation properties.

Inclusion of in-laws. Many families take an inclusive approach to council membership. In our survey, 62% of families permit married-in family members to serve on the family council. By contrast, only 29% allow married-in family members to become owners of the family business.

Families face the challenges of funding and compensation to ensure the council is effective. Families that recognize the value of family governance understand that they must allocate resources to make it successful. Larger and more dispersed families require higher family council and governance costs:

In the early years of a family council, the council chair is generally not compensated. But as the amount of labor involved becomes clear, the issue of value and fairness comes up. The council chair works for many hours on “family business,” taking away from family or work time. The chair then feels taken advantage of or expresses a desire to resign from the role. Families come to see that compensation is needed as an acknowledgment of the value they place on family governance and their respect for those who perform this work.

Of the 113 families in our sample, nearly a third (31%) compensate family council chairs. One-fifth pay up to $3,000 annually, 26% provide between $3,001 and $10,000 per year and 31% offer more than $10,000 in annual compensation. (One-fifth of respondents said they don’t know how much the council chair is paid, and 3% said travel reimbursement is the only compensation offered.)

Most (77%) families reimburse council members for travel to council meetings. Some also compensate members who must miss work to attend a council meeting, and 38% report that they schedule meetings to avoid work conflicts. 
Some also compensate council members. More than a quarter (28%) pay up to $3,000 per year, 12% provide between $3,001 and $10,000, and 10% pay more than $10,000.

The owners council
The complexities of a larger family can result in a desire to address issues related to ownership of the business in a forum that is separate from a family council (which deals with issues relevant to the broader family). The owners council provides a setting where shareholders can express their values, intentions and concerns with the goal of communicating with one voice to the business board. The forum is bi-directional: The board turns to the owners council when it needs direction from the shareholder base (for example, regarding risk tolerance) or when important information must be communicated to the family.

Of our 113 families, 28% have an owners council. Older family enterprises are more likely to have established this governance body:



Family constitutions
A family constitution (also called a protocol or charter) is a document that codifies family governance. The constitution combines various policies and agreements into a single document that is subscribed to by all family members. When a person marries into the family or reaches a defined age (often anywhere from age 16 to age 25), they are asked to read and agree to the document.

Unlike a shareholder or operating agreement, a family constitution is not a legal document, although families consider it to be morally binding. Many constitutions include the values and mission of the family, its legacy and history, and details about how family assemblies, councils, foundations and ownership groups work.
The majority (61%) of survey respondents with a family council also have a family constitution. Of this group:
• 29% have had a constitution for more than 10 years
• 25% for six to 10 years
• 23% for two to five years
• 23% for less than two years

The family constitution is not a static entity. Most (71%) families with a constitution have had occasion to revise it.
We asked the families to describe the contents of their constitutions (see box on page 61). Their responses show that these documents are very diverse, containing many sections and considerable detail.

Final reflections
The practice of forming a family council and harnessing its power to benefit the family enterprise is fairly new. There are many models of how a council can serve as a tool for development of the family and support of the business, and for cultivation of the family’s non-financial “capital.”

Families that have embraced family governance practices tend to be larger, and their enterprises older (beyond the 50-year anniversary). Financial support of the council leadership and funding for family meetings evolves as the “business of the family” grows in size and complexity and as the council matures.

The council and other family activities are described and codified in a family constitution. The constitution also documents the family values as well as policies and guidelines for family governance.

With a mature family council, an annual family assembly and a growing family comes the need to provide a conduit for clear communication between the shareholders and the board, which brings about the formation of an owners council. We see in the data an evolution of governance from organizing a first family meeting to launching an owners council.  

We can make some inferences that financial support for governance, documentation of policies and separating shareholder responsibilities from broader family communication and development are steps families see as effective ways to manage the family enterprise. One of the key questions this survey raises is: How impactful and useful are these practices for families? The answer is found in families’ behavior — in their efforts to learn together and provide opportunities for the personal and professional development of their rising generation family members; in their philanthropic activities and work to improve their communities; and, ultimately, in their ability to stay together as a family.

This survey offers a picture of how business families practice family governance. It will help a family that has a family council or wants to develop one to understand the terrain ahead and benchmark what they have done and what they might do as they develop. We invite families to share their learning and let us know what they are doing so that we can periodically update these findings and add to our knowledge of family governance.                                                                 

Dennis T. Jaffe, Ph.D., is an adviser to families focusing on family business, governance, wealth and philanthropy. He leads Wise Counsel Research’s “100-Year Families” study. Peter Begalla is Family Business Magazine’s conference chairman and an adviser to business families. Jane Flanagan is director of family office consulting at Northern Trust.


A glossary of terms used in this report.

Family assembly: A formal gathering of family members to discuss business and family issues. This meeting, usually held once or twice a year, is generally open to all members of the extended family.

Family constitution: A set of documents that record the family’s values, hopes and goals as well as a framework for how to achieve them. The constitution provides guidance on the activities of the family, the business, the enterprise, the family office and more.

Family council: A formal governing body that represents the family. It makes decisions on issues that overlap the family and the business and makes recommendations on behalf of the family to the board.

Family enterprise: The various businesses and shared investments, including real estate, owned jointly by family members. A family usually begins with a single legacy business and then, over generations, diversifies into other investments, often selling their family business.

Family governance: Agreements and shared activities that organize the family to remain aligned in support of their values, ventures and investments through multiple generations.

Family office: A private wealth management advisory firm that serves ultra-high-net-worth families. A single-family office serves one family. Multifamily offices serve multiple families. Family offices can also manage non-financial issues, such as travel and household arrangements.

Owners council: Shareholders of the family business (or a representative group of shareholders) who meet to discuss their vision and goals for the enterprise and relay that information to the board with one voice.


Business Topics:
Branding, markets
Business operations
Business strategy: markets, SWOT analysis, risk, manufacturing
Compliance in digital era
Digital awareness
Family and business history
Information about business operations
Meetings with executives of the family business
Talent management

Family Business Governance, Organization:
Buy-sell agreements
Board responsibilities and governance structure and responsibilities
Reading the annual financial report
Trust and estate education

Financial Topics:
Financial well-being
Investing; asset classes; risk; environmental, social and
  governance (ESG) issues
Reading and evaluating financial statements

Professional Skills Development:
Communication skills
Leadership development
Managing transition
Personal development
Philanthropy and social responsibility


Basic Principles/Values/Legacy:
Definition of family
Family history and legacy
Family philosophy
Founder’s values
Shared values, mission and vision held by family and company or enterprises

Code of conduct
Social media policy
Use of family vacation property

Family Governance:
Family assembly
Family council
Council member elections
Chair tenure, mandate, term limits
Family roles and participation
Resolving disputes and conflict
Amending constitution
Financial Policies:
Dividend policy
Funds for family support
Employment and other policies
Education policies
Personal loans

Next Generation:
Education policies
Information access
Next generation meetings


Wealth and Ownership Policies:
Board composition
Board director elections
Voter share restrictions, transfer, sale

Copyright 2020 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact     


Dueling Perspectives: Family education programs

MacLean Fogg Co., a global enterprise that makes engineered components for the electrical, telecom and automotive industries, has 23 family stakeholders. The Mundelein, Ill.-based company has been conducting family education for eight years. Fourth-generation member Gillian MacLean Growdon, executive vice president of shareholder relations, leads MacLean-Fogg’s family education effort.

Vermeer Corporation, a global manufacturer of industrial and agricultural equipment based in Pella, Iowa, has presented family education programming since the 1980s. Allison Van Wyngarden, a third-generation family member, chairs the ownership council education committee for the 70-member Vermeer family.

We asked Growdon and Van Wyngarden: What major topics are covered in your family education program?

Gillian Growdon, MacLean-Fogg Co.:

“My generation began its education journey eight years ago with professional coaching that helped us understand the key constructs of family business and developing our mission and values that we would then take forward to educate the NextGen with.

The main [setting for] our NextGen education program has been our family assembly. We’ve had our third annual assembly. We typically gather around Chicagoland for 2½ days.

“What we’ve done for the NextGen is a values-based curriculum that spans multiple years, starting with legacy and stewardship the first year. The second year, [the curriculum focused on] ‘What is work?’ Some work you get paid for, some work you don’t. And then the third year was communication.

“It’s very intentional that we’re not describing the business at great length. We’re talking about values and doing workshops together with them, to teach them about communication and all the legacy and stewardship values that we hold dear.

“On top of that, there is some coaching and mentorship that we’re doing with some of the older young adults. They are starting to work in our business and thinking about what jobs they would like to have. We allow them to have some leadership positions within the family assembly planning, so that we can understand what kind of work they like to do and be able to coach them, as well.

“Right now one of my objectives for the year is doing some work with my generation on transfer of ownership and trust configuration. I like to call it just-in-time learning or decision support — helping them get what they need in order to make the decisions that they need to make.

“We do the sessions all together for the most part. But we do have some programming for 18 and older, about the business itself, and sometimes we do workshops where we have something for the 8-year-olds, something for the 10s, something for the emerging adults.

“At the moment the family assembly is run by our family office. I put it on. As we go further from my generation and move to more of a family council model, I would think that this is a project that could be handled outside the family office. In order to get there, we have somebody from each household who has been on the committee. Even if they’re 10 years old, they participate in the phone calls, and we support them, meet them where they are to get the work done. This year I put on a scavenger hunt for the younger kids, all around Chicago. The younger kids like to help with those activities.

“We fund it through the business. We firmly believe it’s a shareholder activity. We’re gathering so that our family is a strong, capable working group to support the business.”

Allison Van Wyngarden, Vermeer Corporation:

“We started in the late ’80s with family education — discussions around what it means to be an owner and the three spheres of family, business and ownership. What triggered that was our third generation, which I’m part of, coming of age.

“Over time, we developed an annual family camp. We will have our 10th one this summer. That is a more multigenerational education time.

“Some key areas of education are around ownership. What does it mean to be an owner? Especially as you join the adult assembly, what are the things that you are going to need to be good stewards, and expectations around that?

“For little kids, when we talk about ownership, we’ll help them understand about what being an owner is. What does it mean to own your dog? My dog’s named Klondike. Would I be a good owner if I never did anything with him and didn’t make sure he had what he needed to be healthy? Am I a good owner if I’m making sure I’m feeding him and walking him and doing the things I need to do to care for him?

“And then we also talk about employment. What does it mean if you want to be part of the business? What [other] ways can you be engaged? But then also helping them understand what the business encompasses. For example, last summer we focused a lot around business acumen. We had them develop lemonade stands, and come up with marketing plans for that, and understand their costs, and different things like that. We also married that with talking to [employees in] those areas of the business. So talking to people from finance, and understanding what they do. And then talking to people from sales, and talking to people from procurement, so that they could understand those aspects of the business and translate it over to the lemonade stand methodology. It was really fun.

“From a family standpoint, we do a lot of work around relationship building — how all of us together can operate together as a team, even though we may come at it from different angles and different perspectives.

“Stewardship is extremely important to us. So understanding about our charitable foundation, the importance of giving back, the importance of being a good steward of our business and all of the lives that are affected by owning this business.

“Our family camp is our big education event of the year. Everyone comes to Pella for it, to our headquarters. We’ll break it into tots’ camp, a kids’ camp, the NextGen group and the adult assembly. Each year, we’ll try to have a different theme. The past family camp, we talked about building for the future. Our company was hit by a tornado in 2019, so a huge part of what has been going on for us as an organization has been the crisis that happened, and then rebuilding the business and coming back and building for the future.

“Number one, we learn some things about Vermeer, especially for the kids; two, we have fun together, we build relationships; and three, we give back. Those are three big elements that we try to incorporate in every single family camp.

“We’ve used family business consultants [to present] specific topics. We’ve developed some of the programming on our own and utilized local teachers in the summer to help with the kids’ program.

“We’ve [also] collaborated with our corporate training group. This is our second year of being fully immersed in collaborating on family camp. Working with our corporate training group has made it a lot more cohesive and easier to keep it sustainable long-term.

“We offer two learning forums a year. We do a one-hour session in an evening on a real specific topic. It may be about a company we just acquired, or teaching your kids about financials, or it could be about some estate planning work that needs to be done. People can come in person or they can connect via webinar. We record them.

“Within our ownership council, we have an education committee, and I chair that committee. Our committee meets monthly. We have a shareholder relations budget that our ownership council manages, and out of that budget comes the family camp development.”

Copyright 2020 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact     

Developing effective governance: Persistence pays off

Our family business, E. Ritter & Company (ERC), was founded in the 1880s as a general merchandise store. ERC entered the communications business in 1906 when our founder, Ernest Ritter, installed a 10-line telephone switch in the back of his general merchandise store. Today Ritter Communications, a subsidiary of ERC, offers advanced internet, phone, video services and cloud solutions to wholesale, business and residential customers, primarily in Arkansas and Tennessee.

In August 2019, ERC entered into an agreement to sell a majority stake in Ritter Communications, a long-held family business. This difficult decision required over a year of business planning and family discussions, disagreements and feedback. Both family and business governance were leveraged to consider the sale from every angle.

Our governance structures helped our family grapple with this unprecedented sale. But it took years, and several variations on these structures, before we arrived at a system that would help us make such a big decision.
We are proud of our hard work and the progress we have made. We acknowledge, however, that during our governance journey we encountered some stumbling blocks. We’d like to share our experience to help others understand that the road to family governance often involves some bumps.

Trial and error: The evolution of Ritter family governance
The Ritter family culture is likely similar to many others in multigenerational businesses — patient, inquisitive and open to change but sometimes slow to execute. The Ritter Family Council, created almost 125 years after Ernest Ritter started his business, has served a number of functions. When it was formed, the family was converting ERC’s board of directors from an almost exclusively “family branch” board to a majority of independent directors. The family council offered a place and a voice for highly engaged family members who cared deeply about the business.

When the first non-family CEO was elected, the family wrestled with their identity, and the family council took on the responsibility for social and educational engagement. As it became apparent that the geographically dispersed fifth generation needed to be introduced to the business, the family council and management planned summits to build familiarity and unity for a group of somewhat disconnected cousins.

Since its inception over 10 years ago, the family council has achieved success in improving communication, leading structured family meetings and creating an engaged group of cousins who are educated and enthusiastic about our businesses. However, the family council struggled to deliver a clear message to the board of directors regarding owners’ expectations for the business. While the council excelled at the “business of the family” and management excelled at the “business of the business,” we lacked a very critical connection. As we confronted growth of the family, generational transition and changes in our industries, it was becoming increasingly difficult to maintain the status quo.

In 2011, the family council formed a task force to address this gap. This first iteration of an owners committee surveyed the family to create an owners’ plan, which would codify the family’s high-level vision and values for the enterprise. However, because of a lack of family consensus on topics including risk tolerance, return expectations and portfolio diversification, the plan failed to offer direction on any of these critical areas. Consequently, the requested response from the board of directors was limited.

With continued need for clearer shareholder financial expectations to drive enterprise strategy, the board pushed for more detail. In 2015-16, the family council again formed an owners committee to capture shareholder expectations. The committee again surveyed shareholders. This time, however, the questions were specific. Owners were asked about particular scenarios, such as reducing land holdings in order to invest in businesses with greater returns (but potentially more risk). The committee held webinars to answer questions and provide details prior to soliciting responses from each shareholder. Results again revealed significant diversity of personal financial needs and views on the future of the business.

While the results of the survey provided new insight on the family landscape, the absence of consensus stymied efforts to create a clarifying plan of action. Looking back on what was now five years of trying to solidify shareholder expectations, some were beginning to see the futility of seeking consensus among three generations with different financial needs and emotional expectations. Meanwhile, several related developments were under way.

First, family council members, board members and other family leaders were busy attending family business conferences, networking with other families and learning from family business experts and academics. Our mindset shifted as we explored new conceptualizations of varied family ownership landscapes. Ritter family members involved in family governance began to consider encouraging a continuum of engagement — inviting family members to assume roles that incorporated personal talents and accounted for time constraints and other life limitations.

Second, we began tacitly acknowledging that being a responsible business-owning family can require significant family time, even if the family is no longer working in operations, and that some form of compensation for that work is appropriate. In our case, direct compensation was instituted for those family members who contributed the most time and effort, and we began setting clearer, written expectations for leadership.

Third, the family and management were working toward portfolio diversification. We formed a task force made up of family members, independent and retired directors and non-family management focused on direct private investment in order to articulate goals for this new business. Although we relied heavily on management, this process served as a practice round for family leaders in articulating goals for growth, risk, profitability and liquidity, as well as other expectations for the business (see John L. Ward, and Craig E. Aronoff, Family Business Ownership: How to Be an Effective Shareholder, Family Enterprise Publishers, 2002, p. 28).

In 2018 the board of directors began to consider a big change for the long-held Ritter Communications company. In order to continue our successful growth trajectory, the board authorized management to seek out an infusion of growth capital from a minority equity partner. During the process, we received unsolicited interest in a majority or 100% sale opportunity at a notable premium. We needed a clear answer as to how such a transaction would be received by the family.

After years of mostly hypothetical discussion, we now had before us the most concrete and significant ownership question: Should we sell a business? Fortunately, the past decade of family education, relationship building, engagement and governance development would pay off: We finally had the capacity as a family to mount a timely and effective response.

Over several months, our family directors, family council leadership and non-family executives met over the phone and gathered in person to evaluate our options. From past family summits, we knew the family widely supported the fundamental goal of staying in business together as well as diversifying our businesses. Informed by these directives, our learnings at conferences and trainings, and our growing understanding of the family’s needs gleaned from past surveys and summits, the group established three broad ownership goals. Achieiving these goals would require bringing a majority partner into Ritter Communications to ensure the mutual success of both that business and our business-owning family enterprise.

In our largest family communication campaign to date, family leadership and management circulated the draft ownership goals to all family members and explained why we believed selling a majority of the communications business was in the best interest of both the family and the business. We followed this with individual calls by family board members to every shareholder. Based on those conversations, we distributed seven one-page “frequently asked questions” documents to all owners.

The transfer of control of a long-held, core business sparked mixed feelings from the family. There was broad support for the transaction, but also uncertainty, and we second-guessed ourselves along the way. Today we’re confident that the transaction will support the business and our employees’ future growth and will position us to remain a successful business-owning family for generations to come.

A key lesson learned from this experience was that active leadership by family members — even when the family does not work in the business — is required for success. In our case, this was provided primarily by family board members and family council leaders. Taking initiative and ownership over processes and outcomes is not unfamiliar to our family members — many of whom have had successful careers in other industries — but providing this level of leadership within the family was a new dynamic for many of us.

The sale process clarified that there would be an ongoing need for increased commitment. We considered assigning more responsibility to family board members or asking the family council to reinvigorate their work in this area. Our own experience and the advice of experts convinced us that a separate group would be best suited to tackle future ownership questions (see John A. Davis, Enduring Advantage: Collected Essays on Family Enterprise Success, Cambridge Institute for Family Enterprise, 2018, pp. 64-5).

Third time’s the charm: A stable owners committee emerges
The work required to address the question of selling our legacy communications business wiped away any remaining doubt that a new governance group was needed. Our newly formed, third-iteration owners committee is charged with leading family conversations around significant business decisions, articulating goals and policies around ownership topics (including dividends, risk tolerance and growth expectations) to discuss with the ERC board, and coordinating with the board and management to facilitate timely and appropriate business decisions aligned with owners’ goals.

Misunderstandings had to be overcome in establishing this new governance group. The most prevalent concern was that an “owners committee” would be duplicative of our existing “family council.” We were hesitant to create more bureaucracy and reduce efficiency. For some smaller families, a single family governance group might accomplish all that is necessary, but for us a separate group was appropriate. The interest level and skillsets for our owners committee are sufficiently different from those of the family council.

The second prevalent concern was that this group could subvert the authority of shareholders or the board. To address this, we set the composition of the committee to include a majority of family board members (a group elected by the shareholders) and made explicit in our charter that our work in no way supersedes the rights of shareholders and does not replace the authority and responsibility of the board of directors. The committee works closely with both groups to align goals. Giving the family council some oversight of the owners committee through periodic updates and reviews also helped create natural checks and balances.

A key difference in our current owners committee from previous iterations is the expectation for proactive leadership from the group. With five (approaching six) generations of adult shareholders, we cannot expect survey results to present clear guidance. We need a group of highly engaged and active owners to think critically about the family’s diverse needs and interests, the legacies of our family and our businesses and the needs of our communities and our world, and then to articulate an informed, fair and thoughtful set of guiding principles for our business enterprise. The results will not be perfect consensus, but will be needed, actionable directions for the board. Continual feedback from the family will help us to refine the guidelines over time.

The retrospective view
With each trial came important feedback for the Ritter Family Council. We saw how critically the business needs the voice of the owners, especially if family members do not work in the business. We explored the levels of education required for owners to provide an informed voice. Last, but not least, we expanded our understanding of the diverse spectrum of engagement levels and styles that is perfectly acceptable while acknowledging that the formal voice of the family is best articulated by a group of highly engaged family leaders.

We owe a huge debt of gratitude to the indispensable support and leadership of non-family board members and senior executives throughout our trials and errors, as well as to the larger community of business-owning families and family business experts. No family should struggle with family governance in a vacuum — there is a wealth of resources and many people available to help.

We gained new insights from our family governance evolution. We highlight several below and hope others will benefit from our case study in addressing ownership issues through family governance development.  

Second cousins Katy Wilder Schaaf and Erik B. Kesting are fifth-generation members of the Ritter family. Schaaf is chair of the Ritter Family Council. Kesting is a member of the E. Ritter & Company board of directors and chair of the Ritter Ownership Committee.

Lessons Learned

Here is some advice on developing a governance system that works best for your family business, based on the Ritter family’s experience.

Take responsibility. This isn’t about meddling in management of the business, it’s about taking responsibility as owners for your own needs and goals and articulating those in a useful way to the board. Active owners in family governance leadership positions must drive facilitation of the process.  

Get specific. In a diverse family group, specific questions and scenarios elicit the most specific and information-filled responses (even if they don’t directly answer the initial question). Survey your family members, asking them to state their specific personal financial goals and hopes for the business.

Involve your independent counterparts. Work groups that include both non-family management and family members are sometimes indicated — even when you’re working on a family culture issue. Find senior executives who are as committed as you are to perpetuating the family-held nature of the business and engage them anytime your family governance evolves.

Build trust in family leaders who represent the whole family. In a large family, don’t expect consensus. Most owners will need to make some compromises in their personal financial expectations or goals in order to remain owners. The trade-off is in emotional returns and community impact and the amazing relationships and opportunities that come with owning a family business. Help family members build wealth outside the family business. Other sources of capital can give family members the flexibility to weather modest changes in dividends or liquidity to meet the broader, long-term needs of the family enterprise.

Expect and acknowledge commitment. Maintaining cohesion in a business-owning family (in our case, with dozens of owners) requires time commitment and leadership. Invest in your family leaders and compensate them for their efforts.

Be patient and persistent. It took our family three tries and 10 years to establish what we now believe is a highly effective and resilient governance system. Family education, relationship building, leadership development and communication all work in parallel to create a robust family enterprise.

Copyright 2020 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact

Sustainable governance at J.M. Huber Corporation

Decisions at the J.M. Huber Corporation are made with the long view in mind: How should the business evolve so it can succeed for another 136 years? How can a family with hundreds of members sustain its ownership of a $2.3 billion manufacturing company with operations in 20 countries? And how can the company use the natural resources required to make its products in a sustainable way?

“One of the things that our family does really well is that we never stop evaluating our processes,” says Molly Heaney, 39, a fifth-generation family member who is a voting member of the Huber corporate board, serves on the family’s education and development committee and formerly served on the family council board. “There’s no complacency. Families are dynamic and need to change.”

Founder Joseph Maria Huber started the business after immigrating to New York from Germany in 1883. As the company grew from a single plant making pigment for ink in Brooklyn, N.Y., to an Edison, N.J.-based manufacturing company with 4,200 employees worldwide, the family also expanded. The current 242-member family encompasses the third through sixth generations.

Today, the Huber Corporation is a portfolio company that owns CP Kelco, which produces nature-based ingredients such as pectin and xanthan gum for consumer and industrial applications; Huber Engineered Materials, which makes specialty ingredients for industrial, agricultural and consumer applications; Huber Engineered Woods, which manufactures high-performance roof, wall and flooring products; and Huber Resources Corp., which offers sustainable, value-added forest management.

The company is owned almost entirely by family members, with no one individual or branch controlling a majority of the company. Only two family members currently work at the company, and the top executives are non-family members. The size of the family — along with the complex nature of the business — adds to the challenge of keeping the family engaged.

“It has never been a family business that’s easy to explain,” says Guy Cecala, 66, a fourth-generation Huber by marriage who has been active in family governance. “We don’t make widgets.”

The growth of the family and the business has led to highly developed governance systems on the corporate side and the family side. All along, the company’s decisions have been guided by the Huber Principles: environmental, health and safety sustainability; ethical behavior; respect for people; and excellence.

“The one constant and guidepost has been the Principles,” says Martha Huber, 64, a fourth-generation family member by marriage who is co-chair of the family nominating and evaluation committee and a former Huber corporate board member. The Principles were formally unveiled in 1987, though their roots go back to the company’s founding. “They really are fundamental, both for the Huber family and for the people at the company. It’s how we judge our success.”

A strong governance system
With members of the fifth generation taking on leadership positions in both corporate and family governance — and the sixth generation growing — the Huber family will reach “the distant cousin enterprise stage” within a few decades, notes Perry Premdas, an independent director on the Huber corporate board who is in charge of shareholder relations. Premdas is a retired CFO of a global chemical company.

Today’s corporate and family governance systems have their roots in the 1980s, when the son of the chairman at the time told him that the rising generation didn’t know much about the business they would inherit one day. The third-generation members who were then running the company took the matter seriously. They began work on a family education curriculum, including a director training program, and in 1986, fourth-generation family members Peter Francis, 67, and Martha Huber were among the first non-voting family directors. The family also began working with outside advisers, including John Ward of Northwestern University’s Kellogg School of Management.

During the 1990s, three fourth-generation members became voting directors on the Huber board: Francis, who had completed an MBA from Stanford University’s Graduate School of Business and had purchased a company in Seattle; Martha Huber, who had also recently earned an MBA; and Peter S. Brock. The board also added independent directors.

Francis joined the board’s governance committee and then became the committee chair. Right after he took on the role of chair, he had to create a process for selecting the next CEO. Huber’s sitting CEO, the first non-family member to hold the position, had announced his intention to retire within five years.

By that time, Francis was living in Seattle and running his business in addition to his work on the Huber board. But the trajectory of his career changed in late 1991 when, during the CEO search, the executive chairman of the board — Francis’ uncle — died suddenly. Another uncle, who had previously served as chairman, president and CEO, stepped back into the role of chairman and encouraged Francis to compete for the CEO post.

“I had an interesting decision to make: Would I pull up stakes and leave my company and home in Seattle and compete for a job for which there was no certainty of getting selected?” Francis says. “I had a real interest in manufacturing, and Huber was a much bigger company, so I could have a bigger impact.”

So for two years he commuted from the West Coast to the East every week, working for the soon-to-retire CEO as vice chairman of the board.

In April 1993, Francis became chairman of the board — and immediately confronted a crisis. A global electronics business that made up a large portion of Huber’s revenue had experienced significant losses. One of the outside directors asked Francis to focus on fixing the problem.

Working with a member of the finance team — while still a candidate for the CEO position — he identified that the critical issue was one of control rather than a market problem. He cut costs and shut some facilities to return the operation to profitability.

“That gave some confidence to board members that I knew what I was doing tactically,” Francis says. “I was younger than the other candidates, and my experience was different and somewhat unorthodox.”

One step in the CEO selection process was for each candidate to write a description of where they would take the company. Francis put a lot of work into his vision, even hiring a consulting firm to do some analytical work for him.

“The company had never sold any whole businesses,” Francis says. “I felt we needed to make changes. I said so and gave the reasons why — and ultimately the board made me CEO.” He became president and CEO on Jan. 1, 1994, in addition to his role as chair.

During his 15-year tenure as CEO, Francis led a transformation of the company. Huber sold 30 assets and acquired 120. The board shifted from having some independent directors to a having a majority of directors from outside the family.

Francis “really was a change agent,” says Martha Huber.

Francis also led Huber to adopt the portfolio management company structure. The three largest of the portfolio companies now have their own boards, which focus on business strategy. The Huber board, which evolved along with the company, now focuses on the portfolio strategy and how the company allocates resources among the businesses.

“The company had diversified from ink into some of the natural resources associated with production of ink, many of which were capital-intensive, commodity businesses,” Martha Huber says. “There was a real effort to look at how to position ourselves for continued long-term success.”

In addition to being majority-independent, the Huber board now has three voting family directors and two non-voting family directors. Each of the three portfolio company boards has slots for one voting and one non-voting family director.

“We value the independent voice and perspective of our board, and we have a phenomenal group of independent directors,” Heaney says. “But if you’re a family business, it’s important to have a family voice.”

Heaney calls the non-voting director positions “an unbelievable opportunity” for family members to learn about the business. It’s also a good way to see which family members could become good voting directors.

Before Francis left his role in 2009, he gave the board five years’ notice of his retirement. He also gave up the chairman title 18 months before retiring, so he could work with the new non-executive chairman before he left. Mike Marberry, a non-family member who had been president of Huber Engineered Materials, was appointed president and CEO.

“Leaders have a tendency to stay too long, and I wasn’t going to do that,” Francis says. “Organizations need change.”

Planning for the future
As the Huber family grew, they found they needed a stronger family governance structure, a realization common to later-generation business families. Family directors, who previously had represented each branch, now were selected based on their passion for governance. The transitions the company was undergoing also made it more important to have a formal process for communicating with the family and getting family input.

“Why does a five-generation family business decide it needs to overhaul its family governance system?” Cecala says. “One reason was the sheer number of family members. A lot of them felt disconnected from the company.”

Family governance gradually evolved into its current structure.

The Huber Family Council, composed of all family members ages 16 and older, elects the family council board and two other committees: the nominating and evaluation committee, which identifies and evaluates family members who want a role in corporate or family governance; and the education and development committee. The family also has other committees and establishes task forces as needed.

The result is a multitude of opportunities for family members to get involved.

For example, Heaney started hearing about family governance — “such a unique concept that as a child and teen I didn’t really understand what it meant” — when her mother got involved in committee work. She joined her first family committee at her mother’s suggestion, when she was in her mid-20s.

She joined the family council board in 2010 after having served on what was then called the family leadership and development committee.

Heaney also was a non-voting member on the corporate board and two of the portfolio company boards. In 2016, she was elected as a voting member of the corporate board. She is also the family communications adviser.

The family has created multiple ways for family members to engage, giving members of the younger generations a feeling of connection. One is the annual meeting, a family gathering that typically draws 80 to 100 people.

Evan Seely, 33, a fifth-generation family member who is co-chair of the family council board, grew up attending the meetings.

“I remember a meeting in Houston when the company was making products that went into the oil process,” Seely says. “We did a project with fish tanks, pebbles, Hershey’s chocolate and ketchup that taught us about the layers of the earth and where you can find oil.”

Since the mid-1990s, executives have traveled to visit with family members outside of the annual meeting. In January 2018, 85 family members provided input during the six-session “Director Road Show,” which included stops in New England, Denver and Los Angeles.

In 2014, the company established a family ambassador program. Family members attend milestone celebrations at company facilities and briefly address the employees, reinforcing the Huber Principles.

“It cements the bonds both ways: Employees get to know the owners, and the owners, particularly the younger ones, gain an affiliation with the business,” Premdas says. Last year 20 ambassadors attended 16 events.

In addition to the non-voting board member positions, the family offers internships to family members. The two full-time employees who are Huber family members began their tenure as interns.

The family also recently created the Owners’ Room, an in-person meeting that addresses topics from a shareholder’s perspective. Unlike the Huber Family Council, where each family member gets one vote, Owners’ Room votes are allocated by share.

The family council board also spearheads a number of ways for the family to communicate. One is the “NextGen Connection” newsletter, a 16-year-old quarterly publication featuring news from family members and the company.

The family and business have been honored for their governance, leadership and work at creating a sustainable business.

The National Association of Corporate Directors’ New Jersey Chapter named Huber’s board its Private Company Board of the Year for 2019. Also this year, Kennesaw State University’s Cox Family Enterprise Center honored the company in the sustainable business category at the Georgia Family Business of the Year Awards. In 2018, Huber received the 2018 Kellogg Family Enterprise Leadership Award. In 2013, it received the IMD-Lombard Odier Global Family Business Award, and in 2011, Huber was named one of the World’s Most Ethical Companies by the Ethisphere Institute.

In addition to sustaining the business and their connection to it, the family has focused on environmental sustainability.

“The shareholders want to make sure our employees are taken care of and that the company is not shortchanging any environmental or safety requirements or procedures,” Cecala says. “Just because you’re digging in the ground or having some sort of manufacturing operations doesn’t mean you can’t treat your employees well and be stewards of the environment. That’s what Huber has strived for and succeeded at.”

The changes started by the third generation and developed by the fourth generation are now being continued by the fifth.

“I felt — and still feel now — so much respect and appreciation for how the third generation responded to what was a very big change for them,” Martha Huber says. “They were really gracious and thoughtful about how they did it. They were living examples of the Huber Principles.”                                                                 

Margaret Steen is a frequent contributor to Family Business Magazine. She last wrote about MacLean-Fogg Company.

Copyright 2019 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact

30 Family Business Truths

Each business family has its own culture, strengths, idiosyncrasies, points of contention and shared history. That’s why each family must do its own work to develop policies and processes — a structure built on the foundation of someone else’s family values probably won’t work for your family.

Even so, there are certain essential principles that generally apply to multigenerational business families who aspire to be conscientious stewards of their entrepreneurial legacy.

Understanding these principles can help clarify several aspects of family business governance — why it’s needed and what practices tend to work well.

1. It’s easier to handle sticky situations in a high-trust culture. High trust — both within the family and between family stakeholders and non-family executives — increases the likelihood that business decisions will be made in the best interests of all shareholders. While some families are naturally trusting, others must work to build trust.

2. Family governance is hard work — but you need to do it. Few people look forward to discussing tough topics, but those issues must be put on the table at family meetings. If they aren’t, there’s little chance that they will be resolved. Many families have found professional facilitators to be helpful in starting these conversations and keeping them on track. Ultimately, however, it’s the family members who must work together to achieve a resolution. If the family doesn’t participate collectively, the results of the process are likely to be ignored.

3. “Best practices” may not be the best options for your family. Some structures or processes implemented by other families may not work well for yours. You might be able to modify a strategy to make it work within the context of your family culture. But sometimes your family might need to invent its own solution from scratch.

4. The process of working through issues is as important as the result. Merely sitting down together to discuss potential solutions is significant progress in itself. The shared experience of working together builds trust. Even if an issue is settled in a way that’s not to everyone’s liking, people will feel better about the result if they feel their voices were heard and the decision-making process was fair.

5. A good place to start is by focusing on what family members have in common. Many families begin their governance journey by creating a list of shared family values and family mission and vision statements. This exercise emphasizes unity and reinforces positive feelings about family membership. When disagreements bubble up in the future or questions arise about the right thing to do, reviewing the family values often provides clarity. Some families begin every family meeting by reviewing their family values.

6. Investing in governance and family member development pays long-term dividends. There are costs associated with governance. Expenses can include consultants’ fees, family members’ travel reimbursement, facilities rental for family gatherings, admission to educational programs and compensation for board members. Wise families consider their governance budget as an essential investment in their business — especially after weighing it against the cost of not doing this work.

7. Several family business challenges can be predicted. It’s best to get out in front of them. Family business disagreements generally are sparked by growth or change in the family or the business (for example, the increased number of stakeholders in later generations or the need to invest profits to expand or diversify the family firm). Proactive families anticipate such changes and create strategies to manage the associated challenges before they arise.

8. A consultant can help you resolve your issues — but make sure you hire the right one. Check references to determine how many family business clients at your generational stage the consultant has helped, and how familiar the person is with family business systems, governance structures and documents. It’s also important to assess whether the consultant understands your family values and is able to create an atmosphere where all family members feel comfortable speaking about difficult issues. Can the consultant relate well to all members of the family, regardless of age, gender, marital status, etc.? Is the consulting firm trying to sell you a product — and, if so, is it a product that can actually help you?

9. The third generation is generally a pivotal one in the evolution of a business family. In Generation 3, most family trees have sprouted branches. The households may be geographically dispersed, likely with different numbers of children and different income levels. They may not share the same political or religious beliefs. Since the family no longer sits at the same dinner table, those outside the family firm don’t get news about it on a nightly basis. At this stage, conscious effort may be required to unite family members in support of the family business — or even just to make sure the cousins, who are or will be business partners, get to know each other.

10. Unwritten rules and unenforced policies put pressure on the family. Many families first realize they need governance when their rising-generation members begin to come of age and express interest in entering the business. Creating a family employment policy will manage expectations about qualifications for joining the family firm and clarify that family members are not guaranteed jobs in the company. This tends to spark the family’s realization that other documented agreements are needed, as well.

11. Family governance documents should not just sit on a shelf. A family constitution (usually encompassing values and mission statements, policies and procedures, charters for family governance bodies, and job descriptions for key governance positions) should be considered a living document. In order to fulfill its purpose in guiding the family, the constitution should be referred to frequently. Although a family constitution is not legally binding, the goal is for family members to consider themselves morally bound to its provisions. The constitution and other key family documents, such as the shareholder agreement, should be reviewed periodically to see if they require alteration because of changes in family circumstances. During this review period, the family should also determine whether additional policies are needed.

12. Communication and transparency are essential in multigenerational business families. Putting a priority on “investor relations” builds trust between the family shareholders and the business leaders. Shareholders who are denied access to information about financial results or key business developments tend to be less committed than informed owners. There should, however, be an understanding that certain information must remain confidential. It’s also important for family members to feel free to express their concerns. Lines of communication should be established so that family members go through a liaison, such as the family council chair, rather than contacting management directly. Larger families also need a way to communicate family news, like a news­letter or family internet portal. That keeps family members connected and united.

13. Family members must be educated about the family’s business legacy. Educated family members become committed stewards of the family enterprise. Family education programs can be created by the family council or developed with the help of a consultant. The most comprehensive programs include curricula for children of all ages, young adults, and married-ins or significant others. Topics include a history of the family in business, the family values, philanthropy, financial basics such as how to read a balance sheet, and information related to the family business and its industry. Educational programming has another benefit, too — it brings cousins together in a business context.

14. There are many ways for family members to contribute and lead. Family business leadership opportunities aren’t limited to the C suite. Roles beyond the business could include family council members, meeting planners, newsletter writers, family education curriculum developers and organizers of philanthropic activities. Those who excel in such roles might be interested in a development path that could culminate in taking on a key position such as family council chair or family business board ­member.

15. The “benevolent dictator” model doesn’t work well in large families. In the founder and second generations, the founding patriarch or matriarch makes all the decisions. When family business ownership is spread among multiple households, family members generally begin to clamor for a more inclusive approach to decision making. Also at this stage, more work is required to keep family members educated and informed about the business. At this point, families often form a family council to coordinate tasks and give more people an opportunity to participate. In the fourth generation and beyond (depending on the size of the family), it might be expedient to create an additional governance body, often called an owners council, to deal exclusively with issues pertaining to shareholders of the business.

16. Income disparity among households is a reality in multigenerational families. At some point in the life cycle of a family firm — often at the outset, but sometimes not until the third generation — business leaders will realize that welcoming every family member into the business and paying them all the same salary isn’t practical. Families need to understand the difference between what is “fair” and what is “equal” and engage in frank discussions on this topic, if necessary. Establishing a dividend policy can provide needed liquidity for shareholders while preventing excessive strain on the business.

17. “Professionalizing the family business” doesn’t mean separating the family from the business. While it may be wise to hire non-­family executives to manage the business and independent directors to provide strategic oversight, the family must not remove itself entirely from the business. Family members must be developed as engaged, responsible owners and stewards of the business who serve as partners with the board and management. If the family does not step up to assume its role, the business will suffer.

18. The best way to find out what family members are thinking is to ask them. Consider surveying the family to identify areas of concern or get their views on recent programs or activities. Invite dissenters to comment before final decisions are made; better yet, welcome them into the group that makes the decision. Include next-generation family members on the com­mittee developing NextGen ­educational programs and social activities.

19. The need for formal succession planning should be obvious, but many family businesses neglect it. A succession plan should be documented — including a timeframe for developing the future leader and an emergency plan in case disaster strikes before the successor is ready. It’s important for the plan to be communicated in advance to the family and other key stakeholders. Multiple studies have found a significant percentage of family firms falling short in this area. Succession is a multi-stage process, so ample lead time must be built into the plan. An effective independent board will hold the CEO accountable for succession planning and make sure the process is on track.

20. The leadership needs of the business in the future will be different from its leadership needs today. In the next generation, the business will likely have grown. Technological advancements and changes in the competitive marketplace will have sparked new customer expectations. The family will also have expanded, with a different set of family dynamics. The next CEO must have the right skills and the right leadership style to guide the business in this future landscape. Succession planning should involve an assessment of future needs, not a search for someone whose strengths mirror those of the current leader.

21. The family must reach agreement on risk tolerance. Family business owners tend to have a conservative attitude toward debt, but borrowing can help a business capitalize on opportunities. The family must work together to determine how much risk they’re willing to assume and how they feel about taking on a partner (for example, a private equity investor or a family office investing directly in the company).

22. Solid family and business governance are essential prerequisites to hiring a non-family CEO. Talented executives seek assurance that they’ll be given the freedom and support they need to do the job. Family firms with an independent board, a high-functioning family council and strong family policies are more attractive to top candidates than family companies without this infrastructure in place. The family should be able to speak with one voice when communicating to the non-family executive, and boundaries must be respected.

23. Long-term continuity of a family enterprise often requires divestitures and creation of new businesses. Most families who have been in business together for 100 years or more have sold or closed underperforming business units and started new businesses. Research has found that the key to family enterprise sustainability is the family, not the business. The hallmarks of long-term viability are the ability to innovate, to adapt to changing markets and to make tough decisions in the best interest of the enterprise. Many family enterprises have been sustained long after the closure or sale of the legacy business.

24. An independent board with the right members is a tremendous asset to a family business. Independent members of a company’s board of directors or board of advisers bring an objective, third-party perspective and proven business experience to a family firm. They can take the heat off the CEO in family compensation decisions, assure the family that management is being held accountable and provide crucial feedback on strategy. The most effective independent board members are truly independent — not the CEO’s cronies or people who provide professional services to the company. They should have the right skills to provide strategic oversight and help the family business reach the next level of growth. And, importantly, they must understand and fit in with the family culture.

25. “Pruning the family tree” is a wise strategic move in some cases. Family shareholders who want to redeem their shares and exit the business should feel free to do so. Family governance will not function smoothly if a faction of the family doesn’t want to participate. An exit may result in fewer family disagreements and a smoother path to business growth. Having a buy-sell agreement that establishes a mechanism for the sale and purchase of shares will reduce the likelihood of conflict over the valuation.

26. Family dynamics play just as much of a role in philanthropy as they do in the family business. People often say it’s more fun to give money away than it is to earn it, but in reality, it can be just as challenging. Philosophical differences in a diverse multigenerational family can lead to heated discussions over which causes to support. Family members who aspire to jobs in the family foundation or seats on the foundation board must be qualified for those roles; problems will arise if the family views its foundation as a place to employ underperformers.

27. Family meetings must include opportunities for fun and bonding. If your family gatherings focus entirely on business and education, interest in attending will decline. Fun activities — a family softball or soccer game, group tours, trips to the lake — will enable cousins to get to know each other and create the “glue” that keeps the family together. Many families hold family assembly meetings (gatherings of the whole family) in fun locations. Some also build in time for the extended family to participate in a charitable activity together.

28. Some problems may need to be left for the next generation to resolve. Some controlling senior-generation members insist so strongly on maintaining the status quo (or continuing their family feud) that contentious issues must be tabled until the next generation takes the reins. Many families have had breakthroughs when a NextGen steps up with a strategy to escape from the dysfunctional dynamic.

29. Sharing your stories with other family business owners can be revelatory. Owners of private family companies are understandably reluctant to discuss family issues in public. While that strategy may keep their name out of the newspapers, it also leads to a feeling of isolation. It’s very likely that another family has confronted an issue similar to yours and found a resolution that might also work for you, perhaps with modifications. There are many opportunities for family business owners to get together in a confidential setting. Taking a risk may have a high payoff.

30. It’s possible to have a family business without any family members working in the business. If the next generation isn’t interested in spending their careers in the family firm but feel strongly connected to the business and are willing to put in the work to create solid family and business governance, the business could continue as a family-owned, professionally run enterprise.      

Copyright 2019 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact                        

Wittwer Hospitality/Boulevard Home

Lester and Vanola Wittwer opened the Wittwer Motel in Las Vegas in 1948. After several years, the couple moved their family back to Southwestern Utah, the area where they were both raised. In 1955, they opened the Wittwer Motor Lodge in St. George, Utah, where the family business is based today. The Wittwer Motor Lodge, now the Best Western Travel Inn, is still in the family’s portfolio.

Lester and Vanola’s four sons, Royden, Tony, Mel and Sheldon, joined the business and helped it grow. Wittwer Hospitality continues to develop hotels under its own ownership and provides management services to other hotel owners. All told, there are nine hotels, with others under development.

In 1974, the enterprise expanded by adding a furniture store company, Boulevard Home. Boulevard Home has three store locations, a clearance center and consignment and flooring stores. The family enterprise also has a property management side.

In honor of its 30th anniversary, Family Business honored 30 outstanding family businesses:

A. Duda & Sons Inc.

The Agnew Family Enterprise

The Biltmore Company

Bush Brothers & Company

The Clemens Family Corporation

Crescent Electric Supply Co. 

Day & Zimmermann

Dot Foods Inc.

The Duchossois Group

E. Ritter & Company

Elkay Manufacturing Company 

Flanagan Foodservice Inc.

Herschend Enterprises

Hussey Seating Company

IDEAL Industries Inc.

Kiolbassa Provision Company

Laird Norton Company

Lloyd Companies

Lundberg Family Farms

Lyles Family Enterprise

MacLean-Fogg Company

Mannington Mills Inc.

Menasha Corporation

Midmark Corporation

Port Blakely

Sheetz Inc.

Vermeer Corporation

Vertex Inc.

W.S. Darley & Co.


Each of the second-generation brothers had six children. The G2 siblings had equal ownership and equal salaries. The 24 cousins in G3 have mostly equal ownership, although that is beginning to change. Nine of the cousins work in the family business.

The Wittwers have been taking steps to address the challenges that arise when a big family owns a small business. As of today, there are 75 G4s. No one in the fourth generation has ownership yet.

The need to update the family employment policy was a major impetus for the establishment of the Wittwer Family Council in 2005. Family members were asking questions about hiring decisions and salaries, and the younger G3s were concerned that they might not have an opportunity to work for the family business. At the same time, family members in leadership wanted to ensure they would have a qualified pool of family applicants; they also feared family members might expect positions they were not qualified to hold.

The family council borrowed copies of other family companies’ employment policies and determined the key points to be covered in the Wittwer policy. A family council member was assigned to draft the policy. The policy was added to the family constitution with board approval.

The family also created a policy governing compensation for family members who work in the business. Compensation is now based on job duties, fair market value and job performance.

The family employment and compensation policies have resulted in a substantial decrease in family employment concerns. Family members are seeking quality education and outside work experience, and those who return to the family business after gaining this experience are better qualified for their positions.

The Wittwer family constitution includes core values/guiding principles, family council bylaws and policies to cover a wide range of family and business situations.

The board consists of seven members: five family members and two independent members. Family directors are chosen through an application-and-interview process; non-family directors are chosen by a Nomination and Selection Committee.

In 2004, the family started paying annual dividends to family shareholders. The checks are distributed at the annual family assembly meeting, providing an incentive for family members to attend the meeting. Family members appreciate not only the checks but also the associated transparency. They are more interested in the company’s performance and recognize the benefits of business ownership. Because attendance at family assembly meetings has increased, the meetings are more meaningful.

The family introduced a stock buyback program in 2010. An amount to be offered is determined annually, with a discount applied. A policy was implemented to divide the amount fairly if more than one person wants to sell back shares. Stock buybacks have helped individual family members expand their own businesses, pay off student loans, reduce debt and buy homes.

A Compensation and Continuity Committee was created to oversee dividends, the family companies’ incentive plans and other complex, high-level issues. The incentive plan encompasses profit sharing and cash incentives and is open to family as well as non-family team members. A phantom stock plan, instituted in 2012, is open to family and non-family team leaders and executives. Partly because of the incentive plans, skilled family executives are choosing to remain in the family business or to return to it.

Recently added committees include Business Growth, Investment and Borrowing. An advisory board, consisting of the four second-generation brothers, has also been established. All of the G2s are retired from day-to-day operations, and only one still serves on the board of directors. The advisory board has provided the opportunity for the company’s founders to be involved and have a voice while enjoying retirement.

Programs and policies are in place to better develop family members of all ages. An education program is presented at the annual family assembly, with curricula for three age cohorts: 8-11, 12-18 and 19 and older. All have learned more about the company’s history, the family values, the company’s current operations and business basics. The older youth have opportunities for summer internships, mentorships and donations and have stock market investing competitions.             

W.S. Darley & Co.

The company, founded in 1908, manufactures fire engines, pumps and related equipment for first responders and distributes tactical equipment to the Department of Defense. W.S. Darley is headquartered in Itasca, Ill., with manufacturing, engineering and R&D operations in Chippewa Falls, Wis., Janesville, Iowa and Grand Rapids, Mich.

The company is co-owned by three branches of the Darley family. Paul Darley serves as president, CEO and chairman. There are 13 family owners in the third generation, seven of whom work at W.S. Darley, plus seven of the 32 fourth-generation members. The family employment policy requires them to work elsewhere before joining the family business.

Paul’s father, Bill Darley, joined the family business in 1950. He became president in 1962 and held that title until 1997. He retired as CEO in January 2010 and stayed on as chairman until 2015.

Bill, who passed away in 2018, had sole authority when he ran the business under a voting trust. In the second generation, there were only four family shareholders and no pressing need to grow the company, which generated enough profit to support the four owners. Bill realized that situation would change when the business transitioned to a cousin consortium in the third generation.

In honor of its 30th anniversary, Family Business honored 30 outstanding family businesses:

A. Duda & Sons Inc.

The Agnew Family Enterprise

The Biltmore Company

Bush Brothers & Company

The Clemens Family Corporation

Crescent Electric Supply Co. 

Day & Zimmermann

Dot Foods Inc.

The Duchossois Group

E. Ritter & Company

Elkay Manufacturing Company 

Flanagan Foodservice Inc.

Herschend Enterprises

Hussey Seating Company

IDEAL Industries Inc.

Kiolbassa Provision Company

Laird Norton Company

Lloyd Companies

Lundberg Family Farms

Lyles Family Enterprise

MacLean-Fogg Company

Mannington Mills Inc.

Menasha Corporation

Midmark Corporation

Port Blakely

Sheetz Inc.

Vermeer Corporation

Vertex Inc.

Wittwer Hospitality/Boulevard Home


Around 1980, Bill established a division structure in the company. That enabled family members coming into the business to have an area of their own to grow. The third generation grew and diversified the company. Division leaders make decisions independently, with major decisions made by consensus.

After Bill had emergency heart bypass surgery in 1989, he prioritized succession planning. In 1994, he formed an executive team consisting of three third-generation members and requested reports from each of them on how they would run the business. In 1997, after realizing he could not choose a successor, he left it up to the executive team to make the choice.

The team considered several options, including a co-presidency, rotating the president’s job among the three of them and choosing a president from outside the family. In the end they decided one president would be the best option for the company and selected Paul, the youngest of Bill’s five sons. The family empowered Paul and put their trust in him based largely on his communication, organizational and leadership skills.

The Darley family has had a family council since 1991. A family constitution, developed by the council early on, emphasizes that family members are a team, regardless of their individual positions in the company. The constitution outlines how the company would handle a serious family disagreement. The family revisits the constitution in annual meetings and makes revisions when warranted. Core values have been documented.

A family participation plan outlines the qualifications required to work in the family company and requires that family members be paid at market rate for their positions.

The family council emphasizes transparency and works on team-building among different generations and family branches.

Shareholders receive communications via email, webcasts and other means on matters such as dividends, strategic planning, new hires and forecasts. Family members have a chance to voice their opinions behind closed doors but present a united front to the board of directors.

The company began to professionalize its board in the early 2000s and has seen sales and profits increase ever since. The company bylaws require the board to include more family than non-family directors. Today the nine-member board has four family directors who work in the business (including Paul) plus one family director who represents shareholders who are inactive in the business and four independent directors.

The board has become increasingly involved in succession planning and in the hiring and onboarding of family members. The fourth-generation members working in the business present a report to the board at each board meeting.

W.S. Darley also has a seven-member defense advisory board, which meets once a year for two full days. The company views the defense advisory board as a training ground for potential independent directors.

Vertex Inc.

Vertex is the leading indirect tax software and services provider to U.S. and global businesses of all sizes. Vertex provides cloud-based and on-premise solutions that can be tailored to specific industries and business requirements for every major line of indirect tax, including sales and consumer use, value added and payroll.

Headquartered in King of Prussia, Pa., and with offices worldwide, Vertex is a privately held company co-owned by three second-generation siblings and employs over 1,000 professionals.

Ray Westphal founded Vertex in 1978. His wife, Antoinette, who passed away from breast cancer in 2004, was the first employee. In its early years, the company sold paper copies of sales tax directories and manuals, including information on the country’s many tax jurisdictions, rates and rules.

In honor of its 30th anniversary, Family Business honored 30 outstanding family businesses:

A. Duda & Sons Inc.

The Agnew Family Enterprise

The Biltmore Company

Bush Brothers & Company

The Clemens Family Corporation

Crescent Electric Supply Co. 

Day & Zimmermann

Dot Foods Inc.

The Duchossois Group

E. Ritter & Company

Elkay Manufacturing Company 

Flanagan Foodservice Inc.

Herschend Enterprises

Hussey Seating Company

IDEAL Industries Inc.

Kiolbassa Provision Company

Laird Norton Company

Lloyd Companies

Lundberg Family Farms

Lyles Family Enterprise

MacLean-Fogg Company

Mannington Mills Inc.

Menasha Corporation

Midmark Corporation

Port Blakely

Sheetz Inc.

Vermeer Corporation

W.S. Darley & Co.

Wittwer Hospitality/Boulevard Home


The three sibling co-owners — Jeff Westphal, Stevie Westphal Thompson and Amanda Westphal Radcliffe — purchased their father’s interest in the company in 2000, when all were in their 30s. At the time of the purchase, their father was principally devoted to spending time with their mother, who helped to found breast­can­­, a non-profit that is still one of four supported by the Vertex Corporate Philanthropy Program.

The ownership may have shifted down a generation, but the commitment to build upon the strong values on which the company was founded and the desire to grow it exponentially remain. Ray and Antoinette continue to be the inspiration for the company’s ongoing spirit of devotion to its values, vision and mission.

Before 2000, the board consisted of Ray and Antoinette Westphal, their three children and the corporate attorney. After assuming ownership, the second-generation partners recruited independent directors with public, large-cap experience to their private, mid-cap company, offering market-value-based compensation. The Westphal siblings agree the independent board was vital to their successful transition to co-ownership of the company.

All three siblings have worked at Vertex in various roles, including sales, marketing, finance and customer service. Jeff, who joined the company in 1988, became president in 1996 and then CEO in 2000. During his tenure, Jeff oversaw tenfold growth of the company, creating new divisions and service offerings while expanding the business globally. He led the initiative to add cloud-based tax processing solutions for smaller corporations and helped lay the foundation for the company’s tax data management offering.

Having helped to establish Vertex as an industry leader, and realizing that 20 years at the helm was fast approaching, Jeff recognized that it was time for new leadership with the right skills and strengths to take the company to the next level and offer sustainable long-term industry domination as a fully globalized corporation.

While Stevie continued to guide the board in the role of chair, Amanda led the succession planning process, working closely with the original independent directors. A global executive search and consulting firm was selected to advise the board along a carefully staged five-year process to cultivate, select and support not only a successor, but also a thorough company leadership elevation and mentorship program.

David DeStefano, who joined Vertex as vice president of finance in 1999 and later became chief financial officer and executive vice president, was announced as Jeff’s successor in late 2015. After a year of gradual transition, he assumed full responsibility in the fall of 2016.

While the Westphals aren’t involved with the daily operations of the company, Vertex continues to be family-owned and professionally run. DeStefano’s commitment to the people-centered culture and emphasis on the core values of respect and fun were key factors in his selection, along with his strong financial acumen, leadership ability and competitive drive for performance.

Today, the Westphal siblings concentrate on corporate and family business governance, devoting much time to both. They serve together on the board along with four independent directors. The five non-family board members, including DeStefano, can outvote the three family directors on board decisions.

The siblings say the best thing they did for their partnership, company and family was to develop an independent board. The board meets five times a year and maintains public company fiduciary standards. It includes very active audit, compensation, and nominating and governance committees, chaired by independent directors. The directors played a key role in mentoring DeStefano, as well as over a dozen other senior executives at the company. And, most importantly, the independent board ensures that deliberations are objectively focused on the business.

In 2008, the three sibling families formed a family council, whimsically named KAFCA (Kick-Ass Family Council Assembly). KAFCA participation is voluntary and includes all willing family members. There are two assemblies per year, with other meetings conducted among various subcommittees, including a private call each month for third-generation members who share in ownership now through trusts. In addition to company and industry education, skill development and various family business governance projects, a formal family employment policy has been developed, and some members of the third generation are considering the possibility of applying to the firm for employment.

At 57, 56 and 51, the Westphal siblings continue to position the company for long-term industry leadership, while patiently supporting the development of the next generation as competent future stewards of the business. The partners are proud to sustain a company that serves their customers with mission-critical enabling technology and provides Vertex colleagues with an extraordinary workplace that supports communities, causes and families in fulfilling ways.