Leadership: Family

In order for a family business to survive past the third generation, the extended family must resolve to put their personal interests aside and make decisions that are best for the business. The larger and more diverse the family grows, the more challenging it is to achieve that goal.

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Haws Corporation family governance builders

Keeping family members united as business partners involves a range of duties, even in harmonious clans. Important efforts include managing the logistics of family meetings, raising sensitive issues diplomatically, educating young family members and married-ins about the family’s history and legacy, spearheading the family’s philanthropic activities and developing systems for efficient family communication.

When a family business enjoys success, the work of the CEO and the board is often publicly acknowledged, but the family champions who serve in less formal roles are just as essential. In this special section, we celebrate those who work to bring their families together.

 

Bill Yoh
Day & Zimmermann, Philadelphia, Pa.

Over a 25-year career at his family’s century-old business, Bill has held a number of leadership roles, including managing a $350 million P&L, launching multiple enterprise-wide transformation initiatives, and representing the company locally, nationally and internationally. As a third-generation owner and leader of the family’s governance and succession efforts, he has a personal view of the complex dynamics behind large, multigenerational family businesses.

Day & Zimmermann (D&Z) offers services to the engineering, construction and maintenance, staffing and defense industries and is ranked by Forbes as the 181st largest private U.S. business.

“Bill has always had a passion for our business and how the family and the business support each other,” says Hal Yoh, D&Z’s chairman and CEO and a fellow G3 owner. “He networks with other business families and is good at applying their lessons to our situation.”

“Bill is great to work with on succession and governance,” says Mike Yoh, president of D&Z’s munitions business and a fellow G3 owner. “He understands the importance of developing strong relationships within and across generations. He understands the best ways to instill family values and the importance of family harmony to business success.”

Bill has written and published Our Way, an award-winning biography of his father, Spike Yoh, D&Z’s retired G2 chairman and CEO. The book chronicles the history and evolution of the Yoh family and the company.

“Working with Bill on the book showed me how committed he is to the longevity and continued success of Day & Zimmermann as a family business,” Spike says. “He understands the best ways to instill family values and the importance of family harmony to business success.”

Bill also serves as a keynote speaker and facilitator on topics including governance, family dynamics, giving back and the faith journey.

“D&Z has a great responsibility and opportunity supporting the livelihoods of 43,000 employees and their loved ones, as well as serving customers and communities all over,” Bill says. “In the more than two decades since we succeeded our father, I have been blessed to work with my brothers (and, more recently, with my nieces and nephews as well) to accelerate our success as a family business.

“We look for ways to make D&Z sticky to the family and the family sticky to D&Z, because what worked yesterday won’t work tomorrow.

“I am excited about our ongoing journey of difference-making and impact.”

Meghann Harker
Cargill, Wayzata, Minn.

Meghann is a fifth-generation married-in family member and mother of four. She manages the family governance for her generation of shareholders and began an educational program for the next generation of family members both for her branch and for the entire family. She continually seeks to expand her knowledge of family governance and life balance.

Cargill, a provider of food, agriculture, financial and industrial products and services, is one of the top 10 largest global family companies.

“I married into the Cargill family about 10 years ago. To say that was intimidating was an understatement,” Meghann says. “Over that time I have taken every opportunity offered by the company to learn about it. This has included trips to facilities, personal development courses and director training. On this journey I came to see a need for more space for conversations to be had. We are going through a generational transition and, needless to say, there is much to discuss.”

Meghann has focused her energies in two areas: “One, to create space and bring people together to have conversations and forge relationships; and two, a program bringing all the children of the family together to learn about the company, create shared experiences and build relationships.

“As nothing is ever truly finished in the family enterprise arena, I would say that all of my work is still very much in process, stumbling and faltering, yet persistently moving forward. My goal of perpetuating our family legacy for generations to come is a labor of love.

“The privilege to be a part of a company that has the power to do so much good in the world is a responsibility that I do not take lightly. To be good owners, we must have a clear vision and solid relationships, and be firmly rooted in our values.

“Creating the space for these topics to be discussed by the family is where I can make a lasting contribution, allowing the company to continue making a positive impact around the globe.”
 

Dayna Manning
Mary Kay Cosmetics, Addison, Texas

Dayna is a third-generation shareholder in Mary Kay Cosmetics, a company started by her grandmother, Mary Kay Ash, more than 50 years ago. Today, Mary Kay is known as a world leader in direct sales.

Although Dayna does not work at the corporate office of Mary Kay, she has always been passionate about the legacy her grandmother created. Mary Kay wanted to create opportunities for women to thrive, and that belief in the potential of all women has impacted hundreds of thousands of women worldwide.

Fifteen years ago, the descendants of Mary Kay began attending a one-day yearly business meeting. Although the meetings brought everyone together, they didn’t speak to the family bond and the legacy left by Mary Kay.

After attending a Family Business Transitions conference six years ago, Dayna realized that the family had an opportunity to expand the business meeting into a family bonding weekend that would also serve to teach the NextGens about the traditions and legacy of the company. Also at that time, Dayna and her sister Gena formed the Golden Rule Family Foundation, creating a vehicle for family members to mentor the younger generation on philanthropic giving.

Shortly after, with the help of a family business consultant and the family’s financial advisers, the Golden Rule Family Governance Council was born. Dayna volunteered to chair the council. She worked with the other council members to create documents and guidelines for the family as well as plan the annual Family Seminar, named in honor of the annual Mary Kay Seminar, which brings Mary Kay beauty consultants together for fun, fellowship, education and recognition.

Dayna’s experience as an event planner was especially helpful in turning a one-day meeting into a three-day family reunion complete with meetings and a service project as well as time for family bonding and fun.

“Over the last six years, I have seen the family come together to a point I would not have thought possible,” Dayna says. “Each year, we are having more family members attend and are seeing the younger generations step into leadership roles, which emphasized the importance of the work the council is doing.”

Steve Lytle
The Agnew Family Enterprise, Vancouver, Wash.

Steve is a fourth-generation investor in The Agnew Family Enterprise. He’s been an actively engaged participant for over 25 years in both informal and formal roles, including beneficiary, trustee, employee, CEO, member of the board of directors and chair of the family ownership council.

The Agnew Family Enterprise was founded when Samuel A. Agnew, Steve’s great-grandfather, acquired control of the Eastern Railway & Lumber Company in March 1920.

After Sam’s death in 1965, the next two generations began diversifying the family’s holdings into commercial real estate and beverage distribution. They eventually formed Columbia Distributing, which would become one of the largest licensed beverage wholesalers in the United States.

In 2012, the family owners sold the distribution business and formed today’s Agnew Family Enterprise. The enterprise today is made up of a single-family office with investments in natural resources (including Sam’s legacy timberlands), commercial real estate, private equity and marketable securities, and a family foundation that makes grants to non-profit organizations in communities in which family owners live and work.

Since 2004, Steve and his family have intentionally sought to create and renew their “100 Year Family Enterprise” by holding regularly scheduled meetings with an agenda focused on ownership communication, cohesion, clarity and competency. They ultimately produced a governance and decision-making system that features documented family and investor agreements, a family ownership council, a foundation board of directors and a family office board of directors that includes independent directors.

“Whether it’s been washing beer trucks, serving informally as a scribe as we created our family constitution, leading our operating company or working alongside passionate and competent family members and independent directors on our board of directors, serving our family enterprise has been among the greatest challenges and joys of my life,” Steve says.

“We’ve been blessed with amazing human and financial assets, and I’m fired up to see how our 17 (and counting?) ‘adulting’ G5 family members choose to use these assets to pursue our mission of multigenerational family member wellbeing.”

Carolyn Brown
Mannington Mills Inc., Salem, N.J.

Carolyn was appointed chairperson of the Campbell Family Council in 2013. Along with that position, she serves on the board of directors of Mannington Mills Inc. and is appointed to its audit committee and strategic planning committee.

Mannington Mills, founded in 1915, manufactures a diverse line of commercial and traditional flooring.

In her role as chair of the family council, Carolyn leads a small, elected team of family members who head up the council’s committees: governance, social activities, education, communication and philanthropy. The council, which meets quarterly, sets family policies (such as the family employment policy) and governance structures (such as the shareholder agreement), in addition to planning family meetings and educational programs.

The family council’s overarching goals are to educate future generations to be good business owners and stewards and to promote family business ownership for the future success of the company.

The council believes that it is critical to keep the wider family, beyond just the current shareholders, aware of and engaged in the business. Long-term, this is achieved through good communication vehicles and by providing inclusive family activities and programs.

“I’ve always been very interested in, and proud of, our family business,” Carolyn says. “As a child, my siblings and I would regularly visit our local plant, which was literally in our backyard. Now, at the board and council level, I can personally make an impact on its future as a family business.

“Remaining a family business for over 100 years is not automatic. It takes dedication on all fronts. I want to make sure that our fifth and sixth generations, as rising leaders, are prepared for business ownership and leadership.

“I’m proud that our family council efforts over these last six years of setting governance structure, communication and family cohesiveness have helped to impact that goal.”
 

Gary Ackerman
Gaudin Motor Company, Las Vegas, Nev.

Gary’s family business, founded by his grandfather George Gaudin, began on a lettuce farm in rural central California in 1922. Today it is a modern automotive retail business with several locations.

“Every single day I work at Gaudin Motor Company, I draw on the history and values of my ancestors,” Gary says. “I am fiercely proud that I am in our founder’s direct line, having spent almost my life at my father’s side, including as his successor at Gaudin.

“Even before leading Gaudin Motor Company, I thought it was crucial to communicate our family history. Our showroom walls are lined with the Gaudin family story, plus parallels with the Ford and Porsche stories. I felt it was my responsibility to preserve our story and the values it represents so these can be passed on to subsequent generations. The same values that made us successful in the past will do so in the future.”

Gary originally looked into working with a ghostwriter to produce a family history book. He ultimately decided to create a video history and hired Julie Miller of Life Story Media. “I wanted the Gaudin story told in our family’s own words, voices and images,” he says.

Gary compiled a list of family and team members to be interviewed on camera and reached out to family members who kept photos, articles and documents. Miller and her team made several trips to Las Vegas and Southern California to conduct the interviews and sift through the photos and archival material. Gary was interviewed three times. He sent the rough cut to his family for comment and worked with Life Story Media to make revisions.

“The response has been great,” Gary says. “I believe it has strengthened relationships among family and all who work at Gaudin.”

The video, “Driven by Integrity: The Gaudin Family Story,” emphasizes family traditions in and around the business and shows how the business, and the family’s approach to running it, has kept the family bound together for four generations. The video received a 2018 Telly Award in the categories of Branding and Biography.

The company uses different versions of the video in marketing as well as new member orientation and ongoing cultural training in its stores.

Miller says Gary “is not only a highly respected leader of this iconic company, he is also keenly aware of what his family taught him.”


Harriet ("Heidi") Girardoni
Cowles Company, Spokane, Wash.

Cowles (pronounced “coles”) is a family-owned holding company that operates a portfolio of legacy companies and invests in disruptive technology through its own venture capital fund. The operating companies are engaged in media, forestry, newsprint manufacturing, real estate and insurance sales.

Harriet, known to her family as Heidi, became involved in the family council about eight years ago. She started as the education committee co-chair and then became the chair.

“My roles and responsibilities include collaborating with the committee members and outside facilitators to create annual educational workshops with the overall goal of deepening the collective wisdom about our human capital,” Heidi says. Workshop topics have included emotional intelligence, entrepreneurship/resilience, fiscal diversity and philanthropy.

“I recognized that there would soon be an opportunity to engage the rising fifth generation with meaningful topics, and in cooperation with each other, and that our family reunions could soon take on a more important role in their personal development.”

“When our family adviser retired in 2017, she left us with an important task: to create a family constitution that would be our guide towards the future of our family enterprise and family governance. I am now a member of the newly formed constitution committee as well as the executive committee to the family council. We have been engaging the entire family assembly in a process of distilling our family and business values and creating a family mission and vision that recognizes the visions of our forebears, while actively charting a path forward.”

Anne Cowles, Heidi’s second cousin by marriage, says, “What makes her special is her calm, caring thoughtfulness in how she communicates, which our large group of G5 has embraced and look to her for advice and counsel.”

“Although I am not engaged with the family business, I see myself as a cultivator of our relational estate,” Heidi says. “We have both an opportunity and a responsibility to nurture our relationships as a broad family group within a fifth-generational family enterprise.

“We are diverse — geographically, financially, vocationally, politically — and I see that as a strength for the future. My personal vision for the family is to promote a family system that nurtures every one of us individually as well as in relationship, so that each person can fulfill their potential, contribute to the family enterprise and/or pursue their own dreams.”

Harry ("Paddy") McNeely III
The Meritex Company, St. Paul, Minn.

Paddy is the CEO and chairman of The Meritex Company, which operates a national real estate investment and management business in eight markets across the United States. The 103-year-old company largely employs non-family professionals who manage the business in concert with an independent fiduciary board.

The second, third and fourth generations of family members are active, engaged owners, working closely together as shareholders who are united around the goal of building a thriving multigenerational enterprise.

Paddy and his five siblings have developed highly structured communications tools built on the foundation of an annual governance and strategic calendar, which provides context for each quarterly board meeting. Between meetings, Paddy, as the only third-generation member employed in the company, communicates business updates to the shareholders and board.

Family shareholders hold annual meetings, which include a discussion with the independent board members and company management, led by Paddy, to inform owners how the business is performing and create unified support among these key constituencies.

In addition to these formal, longstanding practices, Paddy and his five siblings have held weekly conference calls for more than a decade. These calls are primarily devoted to common concerns, including governance and broadening participation in shareholder affairs among the fourth generation.

“Paddy has united all stakeholders in support of the business through a combination of providing timely top-notch data, promoting 100% transparency of information, and fostering open and ongoing conversations that include everyone’s voice and perspective,” says his sister Cara McNeely.

“Setting up an atmosphere in which every family member knows they have an equal voice at the table drives a collective and coherent vision that we all can then rally around as we work together to put into place the elements that are necessary to meet our next set of goals. Paddy has also pushed to educate the next generation about the business and the family values.”

“The McNeely family, with Paddy at the helm, have created a culture of inclusiveness where everyone in the family and the company is committed to working together for success, something referred to by everyone in the company as ‘The Meritex Way,’ ” says Mary Daugherty, an independent director on the Meritex board. “It permeates throughout the family and the company and is led by Paddy. Paddy is humble and attributes the culture to his family, but there is no way the culture could sustain itself without Paddy walking the walk every day.

“I am sure the family has internal disagreements, but I have never seen evidence of it,” Daugherty says. “They all understand the importance of working together with purpose and support Paddy in the business.”

“When you ask Paddy what his job is, he doesn’t say ‘CEO.’ He says, ‘I work for my siblings,’ with a smile,” says Jon Keimig, director of the University of St. Thomas Family Business Center, where Paddy serves as board chair.

“As the business leader, I am fortunate to work with very engaged and well-informed family shareholders, a deeply committed independent board and a team of exceedingly professional employees,” Paddy says. “Most importantly, all of us are dedicated to a deeply held common vision and growth strategy for the business.

“Given our outstanding foundation, I am excited about the great efforts of our family to perpetuate the business for our next generations, our employees and the customers we serve.”
 

Nancy Bruns
Dickinson Family Business Enterprise, Charleston, W.Va.

Nancy is a seventh-generation owner of the Dickinson Family Business Enterprise. She serves on the board of directors for the family’s companies, sits on the investment committee and heads the strategic planning committee. She will become board chair in June 2020. She has been actively involved in family governance as well as the businesses since 2010.

The family businesses started in 1817 in the Kanawha Valley of western Virginia (now the region around Charleston, W.Va.). William Dickinson was a salt producer. This business evolved over the decades to three companies: Southern Land Company, natural resource management; Hubbard Properties, the family’s investment holding company; and Quincy Coal Company, commercial real estate.

Recognizing that being a G7 was a rarity in family business, Nancy started discussions with the greater family to ensure that the current, active generations were good stewards for future generations.

There was also the challenge of family engagement with the businesses. Through her leadership, the investment committee was formed in 2010 and the family council was created in 2015. There is an active strategic planning committee as well as a charitable giving committee.

When Nancy started getting involved, a family board of three members made all decisions. Now there are more than 15 family members involved in different aspects of the family and business.

“Being part of G7 in a family business is a gift but comes with great responsibility,” Nancy says. “The challenges increase as the family grows exponentially.”

The goal of the board is “to plan for the businesses to be strong and well-positioned for future growth for the next 100 years,” Nancy says. “Family members need to do their part, too. Income will not keep up with the growth in family numbers, so we have to rely on our family bonds. We need to love each other enough to want to come together to manage assets together.

“It is important to do work on the business side as well as the family connection side. One cannot be successful without the other.”
 

Tura Synhorst
Coca-Cola Bottling Co. High Country, Rapid City, S.D.

Tura “works closely with her brothers to lead their company and has helped to grow it through some very difficult family health issues,” says Rebecca Zabel, business development manager of the Prairie Family Business Association. “In the past year she has coordinated an effort to memorialize their company story and created a video that tells their story, shares their values and emphasizes the hard work and dedication her family puts into the company.”

“Every family business has a story to tell,” Tura says. “However, our family had never taken the time to capture our story, either in writing or through a video until last year. In August 2018, I was honored to have the opportunity to lead a project to create a mini-documentary of our family’s story as one of 67 remaining independently owned Coca-Cola bottlers in the United States today. The project was made possible as an initiative of The Coca-Cola Company, which wanted to document various family bottlers’ legacies.

“I worked with a four-person production crew, filming from sunup to sundown over the course of five days, capturing family, employee and local community partner interviews along with footage of our gorgeous Black Hills market and sales center.

“This work created an extremely powerful tool for our business with many uses — to reinforce our company culture across existing and new territories, to onboard new employees, to engage government and other community partners and, last but certainly not least, to educate and perpetuate future generations.

“I was able to share our mini-documentary at the Prairie Family Business Association’s annual conference in Sioux Falls, S.D., in April 2019. The feedback from the families in attendance was overwhelmingly positive, and I hope that by sharing our story, it inspired other families to capture their story.

“I feel very blessed that we were able to film my father, our second generation, as part of this process. He suffered a tragic mountain bilking accident in 2014 and sustained life-threatening injuries as a result. For me, having my dad on film telling our story for all future generations to come is truly priceless.”

“Tura understands the importance of bringing family together and starting conversations early regarding transition, leadership and succession plans,” Zabel says.

“As part of the third generation, I am proud of our legacy, remain grounded in our roots and am passionate about stewarding the business into the future,” Tura says. “I believe that future generations will benefit immensely by watching our family business story come to life through our mini-documentary and that by working together, we will defy the odds and successfully transition our family business to the fourth generation and beyond.

“I believe that we can do this by instilling in future generations our faith, values, passion and commitment, along with teaching them to cherish and respect our heritage.”
 

Stacy Mello
A. Duda & Sons Inc., Oviedo, Fla.

Stacy began her career in 1996 as marketing manager in her family’s business and has risen to become senior director of ranch and resource management for DUDA, a diversified land company. Her career has included roles within business operations and corporate services. She has worked in areas of strategic planning, communication and governance; supported executive management and the chairman of the board; and managed family/shareholder relations. She currently leads two business division of the company.

As a fourth-generation family member, she is passionate about the family business and has served on the Duda Family Council since its inception in 2004. She has served as chair of the 11-member council since 2013. She fosters ways to connect members of the Duda family to one another and to the business they own together.

The council works on behalf of the 215-member Duda family (third through sixth generations) and more than 150 shareholders. Key council accomplishments in the last few years include surveying the family to identify their “collective voice” of expectations, increasing engagement at two annual meetings, hosting location tours, sponsoring small-group discussions, maintaining a common technology platform and launching “Duda University.”

“I was blessed to grow up on a DUDA location around our company’s people and products,” Stacy says. “Later, I lived with my grandparents, witnessing their devotion to God, church and others. Those foundational elements cultivated my passion for the business and the family.

“After working in the business for 23 years, I value the impact the company has on the lives of others — our employee family, communities and partners.

“With 15 years on our council, I love seeing two new generations continue our legacy and find new ways to grow together so we keep making an eternal difference (our family mission).”

Jill Jensen
Jensen Precast, Sparks, Nev.

Jill, a second-generation owner of Jensen Precast, sits on the board of directors of the company, which designs, engineers and manufactures precast concrete products. She chairs the board’s family council, oversees the company’s community engagement committee, and guides the firm’s employee communications initiatives.

“Our family is grateful for Jill’s leadership in keeping us focused and successful as a team during family council gatherings,” says her brother Eric Jensen, president of Jensen Precast. “She also drove efforts to engage our employees in supporting local community service organizations through a matching donations program. We believe in giving back to the community, and Jill has succeeded in making it a companywide effort.”

Jensen Precast celebrated its 50th anniversary in 2018, and Jill organized celebrations at the company’s manufacturing facilities across Arizona, California, Hawaii and Nevada. The efforts gave employees a sense of pride, and the Jensen family gained a heightened sense of togetherness as they looked back on five decades of growth.

“We’ve grown so much as a family and as a company,” Jill says. “Our 50th anniversary celebrations gave us a chance to reflect on the business my dad, Donald Jensen, built from scratch, as well as how I grew up along with my sister, Megan, and my brothers, Eric and Kurt, to become part of the Jensen Precast legacy.

“I’m so grateful for my family and for having the chance to contribute to our business in a meaningful way.”

Rajesh Shah
MS International Inc., Orange, Calif.

Raj is the co-president of MS International (MSI), an importer of countertops, flooring, wall tile and landscaping products. He “has helped not only the growth of MSI, but the Shah family overall,” says his father, Manu Shah, MSI’s founder and CEO.

Raj’s parents, Manu and Rika Shah, are immigrants with nine and eight siblings, respectively. “This means the overall family is large and spans over numerous states and countries,” Manu says. Raj has more than 70 cousins.

“It has been Raj’s goal to keep the family ties very close,” Manu says. The family holds family reunions every two years. More than 60 people have attended each of the gatherings, with ages ranging from under 1 to over 80.

At the most recent family reunion, Raj coordinated an event in which 20,000 meals and 500 backpacks were packed by 100 family members for the local Orange County community. The family has also built two kitchens in India that serve 50,000 meals per day to children. A charitable matching program enables all family members to receive a match for either money or time they donate to charitable causes.

Raj created a digital family tree that goes back 13 generations and includes more than 300 people. Every two years it is updated and signed by those who are living. “He is currently working on a family newsletter that will be published quarterly,” his father says.

“Raj has worked to help family members when they are in any type of distress,” Manu says. “Our family has provided education, finances, homes, jobs and loans to those in our family who are in need.

“He spends significant time with the younger members of the family on guidance as it relates to school, relationships, jobs, etc. Many family members also have had internships at MSI.”

“It’s hard to call this ‘work,’ as coordinating and developing the ties and relationships within my family is so rewarding,” Raj says of these efforts. “Many of my favorite childhood memories were when the extended family would get together.

“Our family has many traditions that go back hundreds of years. To this day we still follow many of them, even if the kids think we are crazy.

“Today I realize that for all the young and old in the family, there is so much to gain from each other. Within my family we have teachers, doctors, business leaders, cooks, lawyers, engineers, accountants — all with numerous passions and personalities. With this diversity, it would be negligent not to enhance the relationships and networks within the family.

“A family business enables us to share like values and extend them to future generations. A business run by family gives us the ability to be a steward of the future. We get to decide the short-, medium- and long-term goals that not only benefit the company but the family and community around us.

“There are few organizations that yield this much influence on the family unit, the economy, the community, the environment, etc., as family businesses do. Successful family business growth has proven to be the most effective way to grow a family, community, economy, nation and world.”

Amy Billings
J.E. Dunn Construction Group, Kansas City, Mo.

Amy is a fourth-generation owner of J.E. Dunn Construction Group and a primary driver behind the formation and success of the Dunn Family Council.

Using her untraditional entrepreneurial background, Amy understood the challenges a startup family council would face and consequently took over the heavy lifting associated with both generating ideas and seeing those ideas through to execution. In the process, she has formed tighter bonds with extended family and gained a deeper understanding of the interpersonal dynamics that accompany a family-based venture.

A standout initiative of Amy’s is the high school internship program, a summer session spanning four weeks that offers both hands-on work and interactive meetings with employees. Through this program, younger family members gain a basic understanding of the complexity behind J.E. Dunn and learn there is far more to a construction company than what is found on a job site.

While there is no pressure for family members to join the company, Amy believes that early exposure can make the possibility of working at J.E. Dunn more tangible for younger members and provide a timely opportunity for mentorship in their area of interest.

“The success of J.E. Dunn has created ample opportunity for giving back, whether it is to our employees, our community, or by being better stewards of the environment,” Amy says. “I am proud to be part of a business and a family that promotes a sustainable and viable future for both current and future generations.”

Debbie Morrocco
Mancini Companies, West Greenwich, R.I.

Debbie, a third-generation member of the Mancini Family Companies, is one of three primary shareholders. She chairs the ownership council and sits on the operating company boards. The family business consists of four business units: flooring, beverage distribution, real estate and investments. The beverage platform serves Rhode Island and Connecticut, and the flooring platform serves the region from Maine to Florida. Debbie has worked in both flooring and beverage distribution with a focus in human resources.

“About five years ago, my youngest child of four graduated college, and I started to transition back to work in a more meaningful role,” Debbie says. “Since then I have established the Mancini Family Office, the family council and the ownership council.

“In the early stages of the development of the family office, three generations of our family worked together to define our family values. As a family, we acknowledge and champion the diversity and talent of our family members and remain united and connected as a family by nurturing and strengthening each other.

“Some of the principles we live by are to reinforce family harmony, commitment and unity; to promote family and business continuity among generations; and to facilitate clarity, communication and transparency, continually working to improve ownership literacy.

“Our family office governance structure provides a framework for shareholder decision making as we transition from three primary shareholders working in the business to 12 shareholders, including active and inactive minority partners.
“We are finishing up our fifth year of holding regular family meetings, and each year we all learn something new from one generation or another.

“I am proud of our family legacy. The generations before us have built strong family relationships and have paved the way for us and future generations to lead from a position of strength.”

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 bwenger@familybusinessmagazine.com.

$10.00

Running a family business today can sometimes feel like running a marathon in which the course keeps changing. At first glance, it may look as if your goal is as straightforward as it’s ever been: Develop and sell the best product or service in your market.

But then as you round the first curve, you see a host of new competitors, changing customer demands, perhaps even an entirely different delivery system made possible by technology that wasn’t available when you started out. And suddenly, you recognize your family and business need a new identity.

The FFI/Goodman Longevity Study, a landmark family business study published in 2011, found that the main industry in which the respondents’ companies operated shifted an average of 2.1 times during the history of the family business. With an exponential rate of change, globalization, shorter business cycles, technological innovations, political chaos and complex family dynamics, it’s no surprise that family businesses must change to survive.

If you want to better position your family business to thrive in this fast-changing climate, developing a family enterprise mindset is key. It is an orientation that effectively puts the family, rather than the business, in the foreground as the creator of wealth.

A family enterprise mindset means developing the ability — or, more specifically, the agility — to continually direct your family’s talents, finances and relationships toward seizing the best new opportunities consistent with your family vision. This positions you to respond effectively to changing business conditions while maintaining the family as a consistent strategic advantage. In the process, it strengthens your family’s relationships or overall cohesion.

How to develop a family enterprise mindset
Developing the capacity required for a family enterprise mindset means changing how you think, how you feel and how you behave so that you:

• Evolve from seeing everything as a problem that you must solve to realizing that the system may require a strategic solution.

• Are aware of your emotions and able to label them and choose how to act (or not act) upon them.

• Step back from your own ego to see things more objectively.

• Have the agility to assess the mindset, style and perspective that will be most effective in any given circumstance.

Strengthening the prospects for a third-generation family enterprise

Several years ago, I helped three second-generation brothers collaborate on establishing a succession plan. They had previously sold their construction business and bought two businesses back from their buyer, had created two start-ups and still had a small business that had been in the family for years — with 85% of their wealth in investments.

In short, like a growing number of family enterprises, they had changed their core business to survive in a changing environment. As we began to work together, they recognized the value of consciously developing the family’s capacity to ensure its future prosperity and ability to respond to ongoing change.

As a result, they have:

• Changed their mission statement to reflect their role as a family enterprise.

• Begun work to develop the four ­agilities — self-awareness, empathy, framing and innovation — in the rising third generation.

• Created a chief learning officer position to guide this work —  a role they are considering passing on to a member of the rising generation.

All of this has strengthened the ­family’s future capacity to thrive in what will undoubtedly be an ongoing changing environment. — Greg McCann

There are many ways to develop a family’s overall capacity. One way is through Leadership Agility, a leadership model described by Stephen A. Josephs and William B. Joiner in their book Leadership Agility: Five Levels of Mastery for Anticipating and Initiating Change. Leadership Agility is an approach to vertical leadership, a new model of leadership development.

For generations, it was thought that the best way to develop as a business leader was to master the specifics of your business. The idea was that the more you knew about all aspects of your business, the better able you would be to solve problems and lead the business. This is known as the horizontal leadership development model.

Vertical leadership development, by contrast, emphasizes how a leader thinks. This model considers the whole person, including their emotional and social intelligence.

Leadership Agility helps family business leaders navigate exponential change by enabling them to gain the perspective that comes from stepping outside the system — whether the system is the business, the family or even one’s own ego.

To become an agile leader, you must develop four capacities:

1. Self-awareness. Emotional and social intelligence expert Daniel Goleman has described self-awareness as the ability to understand your own emotions and their impact on your performance. Developing greater self-awareness better enables you to see your strengths, weakness and blind spots — and to understand how others perceive you. This is critical to success, especially in a family enterprise.

2. Empathy. This involves developing a deeper capacity to sense other people’s emotions and imagine what someone else might be thinking or feeling based on the situation and how they view the world. It is foundational to effective communication, decision making and compromise, and it boosts effectiveness. While some gloss over this seemingly “soft” capacity, its importance cannot be overstated in a family enterprise, where relationships are more profound and complex than relationships with unrelated colleagues.

3. Framing. This is the ability to clearly define what the issue is. It often is enhanced by realizing your role in the process and empathy for what others, such as a parent, sibling or niece, care about and value.

One family I worked with wanted to frame the choice of a family council chairperson in terms of expertise. After some reflection, they reframed it in terms of their family dynamics, which proved more effective.

4. Innovation. Innovation creates value in two basic ways. Incremental innovation improves the existing system (such as making a hotel more efficient). Breakthrough innovation disrupts the system (such as creating Airbnb as an alternative to hotels). In a family enterprise, cultivating the capacity for innovation might involve lifelong learning or becoming more strategic and hands-on in charitable giving.

Family learning and development practice
The acccompanying family learning/development practice diagram shows the range of ways family members can be involved with the family enterprise.

Family members must be unconditionally accepted as essential members of the enterprise, albeit with clear and enforced boundaries among family, ownership and management roles.

To assume deeper roles, family members must develop as people and as leaders by cultivating the capacities of self-awareness, empathy, framing and innovation. Doing so is arguably more important in a family business than in other businesses, given the lifelong relationships at the core.

As a next step, family members must be educated in ownership and governance competencies, such as financial literacy or development as a potential future board member.

Finally, role-specific training may be necessary — if, for example, someone aspires to lead the family’s charitable foundation.

Of course, these processes often overlap, but considering them in turn helps clarify how each one contributes to the development of capacity building.

When self-awareness, empathy, framing and innovation are developed, all four skills ideally start to act in combination with one another. Consider what happened in one family that transformed its family employment policy into a family engagement policy.

• Family members demonstrated self-awareness by matching their talents, interests and goals with opportunities.

• They showed empathy by understanding other family members’ feelings and perspectives.

• They reframed the previous family employment policy and developed an innovative new policy.

The work of developing and combining these capacities generally leads to advancement along three progressive stages:

1. Expert. This is the level at which most leaders begin and is most effective in relatively stable organizations. In the expert stage, success is achieved by making incremental improvements in existing strategies, and the leader has clear authority and expertise. The expert is typically focused on tactics and the go-to person for problem solving.

2. Achiever. The achiever has a strategic focus, which is most effective in organizations where success requires periodic changes in strategy. The achiever works to gain buy-in from key stakeholders, excels at cross-functional problem solving and is motivated to develop the competencies needed for effective management and leadership.

3. Catalyst. The optimal mindset and skillset for family enterprises, the catalyst stage is most effective in rapidly changing organizational environments that require significant coordination across multiple boundaries. A catalyst provides visionary leadership while engaging diverse stakeholders in collaborative dialogue and creative problem solving. The focus is on developing empowered organizations and teams capable of sustained success, fostering both personal and professional growth. Catalysts understand the culture of the organization and family and work intentionally to expand the leadership capacity of others.

All family capacity building must be customized to fit the family’s needs. It’s most logical for the family council to lead this effort.

Vulnerability-based trust helps family members who work together deal with conflict, gain commitment, create accountability and focus on results.

I have seen family businesses that commit to developing leadership agility become more effective at meeting challenges, whether driven by external changes or coming from within the family. Most find their work together more meaningful as a result.             

Greg McCann (www.greg-mccann.com) works with family enterprises in the areas of leadership, succession, communication and conflict resolution, with a special emphasis on helping the next generation succeed in their careers and lives, through his boutique firm McCann and Associates.

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 bwenger@familybusinessmagazine.com.

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All businesses need solid CEO talent, but multigenerational family businesses need another type of leadership as well. Someone (or several someones) must step up to unite the family and inspire them to work together in support of the family enterprise.

Once a business family reaches the third generation, odds are the family stakeholder group has expanded exponentially, which means factions are likely to form. There are bloodline descendants and married-ins, those who work in the business and those who don’t, and those who live in and away from the company’s hometown. Family members’ political and religious beliefs can differ. And, of course, there are generational differences, which can be further complicated if there is a wide age range within a single generation.

Disinterest in the enterprise or disharmony within the family over an extended period will impede family members’ ability to continue in business together. Ways to keep the family from splintering include establishing communication channels; developing policies to establish ground rules; educating stakeholders about the business; and creating opportunities for the extended family to get to know each other, have fun together or jointly contribute to a worthy cause.

Nominate your family leader

Nominations for the Class of 2019 are open! Use our nomination form to tell us about your family champions.

Family CEOs can lead these types of efforts — and some excel in this area — but often the business leader is too busy running the company to devote much time to family governance. This provides a chance for other family members to demonstrate their leadership capabilities.

In a large and diverse family, there are numerous jobs to do, which opens the door for multiple leaders to emerge. The family leaders profiled on the following pages exemplify how many ways there are to make a difference. With so many roles to fill, people with a wide variety of talents and interests can all contribute to the success of the family enterprise.

These efforts are often undertaken behind the scenes. In this special feature, we celebrate the people who work to perpetuate the continuation of their family’s shared enterprise.

Mary Schmid Daugherty
Crescent Electric Supply Co., East Dubuque, Ill.

Mary, a third-generation owner of Crescent Electric Supply, sits on the board of directors of the company, which serves the electrical, construction, commercial, industrial, utility and datacomm markets. She chairs the board’s governance committee and is a member of its compensation committee.

“Mary helped establish the Schmid Family Council 13 years ago,” says her cousin Kathy Munson, the family council chair. “She was instrumental in convincing our skeptical second-generation family members, who were our business leaders and management, that forming a family council was imperative if we wanted to continue as a family-owned business well into the future. She was also our first family council chair, bringing her skills and experience in corporate governance and family business along with her.”

Mary is the Family Business Center Senior Fellow in Applied Finance at the University of St. Thomas in St. Paul, Minn. She teaches courses at the undergraduate, graduate and executive levels in corporate finance, investments and family business and has done research on family and corporate governance. Since 1993, she has worked with family businesses on consulting assignments in finance and corporate governance. She is a coauthor of Family Business, 4th ed., and recently completed an online fifth edition of the book.

Currently, Mary serves as a liaison to her family, their company and its board in a project to gather historical information in preparation for Crescent Electric Supply’s 100th anniversary celebration in 2019. In coordination with the Crescent marketing team, “She has spent untold hours gathering, culling, organizing and drafting narratives incorporating public and family archives into 12 multimedia vignettes,” Munson says. One vignette is shared per month in the run-up to the 100th anniversary gala in April 2019 “to promote the company and its sales efforts, build pride internally among company employees, and pull together our wide and growing family.” Mary has also produced vignettes focused on family history that are shared among the family only and “are a tremendous source of family pride,” Munson says.

Mary notes that the monthly features highlight lessons from the company’s founder, her grandfather Titus B. Schmid. “It is inspiring to learn all he did to build the business, and then to read [his] recollection of his sons entering the business and building upon his legacy,” she says.

“I am so proud that my family business is in its 100th year of operation this year,” Mary says. “It is almost impossible to express the many emotions I feel as we celebrate this amazing milestone.”

Karen Bichin
ABC Recycling Company, Burnaby, BC

Karen, a fourth-generation owner of ABC Recycling, is the company’s manager of community relations. “Karen is very involved on behalf of our family and company in the community, especially with charity partners,” says her cousin David Yochlowitz, the CEO. “She is a tremendous ambassador for us.”

ABC Recycling, Western Canada’s largest scrap-metal recycling company, is a member of Family Enterprise Xchange (FEX), Canada’s national organization for family enterprises. She is the chair of FEX’s Vancouver region advisory board and serves on the national committee for family enterprise peer support groups. She is a member of a family enterprise advisory synergy group that meets bimonthly to share knowledge and best practices.

Karen initiated her family’s involvement with the Canadian Association of Family Enterprises, a precursor to FEX, in 2004. “This led to us using a family facilitator to help set up a proper governance structure for our family,” Yochlowitz says. “This helped considerably with the transition of ownership and company leadership from our third generation to our fourth generation.”

Karen has taken the lead on projects including the compilation and publication of a family history book in 2007, the organization of the company’s 100th anniversary events in 2012 and the production of a family history video. “I champion our family leadership development initiatives and coordinate all of our family council meetings, shareholder meetings and family assemblies,” she says.

“Karen has helped to keep our family story alive, helped to define and challenge us in living our family company values and helped to maintain our culture,” Yochlowitz says.

“I am passionate about perpetuating the legacy my great-grandparents and grandparents built over the years,” Karen says. “Their legacy of hard work, honesty and giving back to the community are guiding principles for our business today.

“I am often referred to as the ‘values-keeper’ of our organization, a role that I take great pride in. I am excited about the work that I do, both in the business and on the business. My generation is working very hard to pave the way for the next generation of leaders in our family enterprise.”

Jason C. Robinson
Kreamer Feed Inc., Kreamer, Pa.

Jason, a third-generation family member, is Kreamer Feed’s president. The company produces and delivers specialized feeds for animal farms. It also owns and operates more than 1,200 acres on 12 certified organic farms in Central Pennsylvania and is involved in poultry and livestock marketing and farm production.

Jason previously worked for MBNA America Bank and its successor, Bank of America, in a variety of roles. He moved back to Pennsylvania in 2012 to become the primary caregiver for his ailing grandfather, the founder of the business. At the same time, he became a member of Kreamer Feed’s management team, responsible for administrative functions. He was promoted to president on Dec. 1, 2014.

“Jason understands the way family members need to conduct themselves,” says Tony Chivinski, a consultant who has worked with him. “He knows how to model that behavior and instruct other generations, if you will, about that process.”

Chivinski says Jason has helped to mediate family disagreements. “Jason stepped up to the plate and said, ‘If there’s a family member who has a need or a concern, we want to listen to it.’ ”

Jason meets regularly with younger family members who work in the business to explain best practices and explore topics such as “What does a great employee look like? What does a great shareholder look like? How do we conduct ourselves so that we continue to develop rapport and respect from our employees and they continue to want to work here?” Chivinski says.

“Jason is educating them, and it’s not just by telling them things,” Chivinski says. “He’s engaging them in conversations. He’s getting their perspective.”

With Jason’s encouragement, the family engaged advisers to help address estate planning and other issues. “I see Jason as the one who is constantly reminding everybody, ‘Family is important. We want to be able to get together as a family and enjoy ourselves. We don’t want conflicts or disagreements over the business to get in the way of that,’ ” Chivinski says.

“Like many children, I grew up idolizing my grandfather,” Jason says. “The business he founded and that my family grew impacted more people than I could have imagined growing up. Certainly, our teammates depend on us for their livelihoods, but our role is bigger than that. Our family business is part of the food chain and helps feed people. It is not successful based upon the P&L, it is successful based upon doing the right thing, respecting our teammates and performing our very best to help feed people. I cannot think of anyplace that I would rather be.”

Murray Flanagan
Flanagan Foodservice Inc., Kitchener, Ont.

Five years ago, Murray exited active employment in the main family business, where he had spent a 25-year career serving in a variety of roles. Murray maintains minority ownership in the business and participates as an adviser to the board of directors.

Flanagan Foodservice, in its second generation of family leadership, is Canada’s largest independent foodservice distributor. Murray worked alongside his three brothers to continue the trend of top-line growth year after year. He and two of his brothers transitioned out of their full-time roles at the same time; the eldest brother, Dan Flanagan, continues to serve as president and CEO of the family business.

Murray “remains keenly involved in the ownership group as well as our family, which includes four brothers and spouses, our mother, 10 children (Gen 3) and a few more significant others,” Dan says.

“Specifically, he has contributed in these ways: as the de facto leader of our real estate and holding companies; as the chair of our monthly shareholder meetings; as the champion of four successful family retreats as chair of the committee; as a champion for family businesses in general as a member of the national board of FEX [Family Enterprise Xchange, Canada’s national organization for family enterprises], an attendee of multiple Transitions conferences and participant in the inaugural Transitions Canada conference; and as a catalyst in encouraging broader connections and stronger relationships amongst all family members by hosting many family gatherings at his cottage and through other gatherings.”

“Having grown up in the family business, being at the intersection of family, business and ownership has been my normal for most of my life,” Murray says. “I was fortunate that my family had a foundation of values that allowed us to succeed [despite] the challenges that many face when sharing business responsibilities with siblings.

“For many years now, I have taken great pride in working with my family and other families in business together to slowly improve the statistics of success when faced with the complex dynamics when emotion and money can be opposing forces on a very regular basis.”

Brittany Timmons

Canal Insurance Company, Greenville, S.C.

 

Brittany is a fourth-generation member of the family that owns Canal Insurance, an insurance company that focuses on trucking and specialty transportation. The family also owns Central Realty Holdings, a real estate investment and development firm. She is chair of the family council and is the first member of her generation to serve in that role.

“My focus is on continuing to establish and follow good governance processes, creating opportunities for everyone to share their perspectives, and including the fifth generation at our retreats,” she says.

Brittany also serves as the board liaison to the boards of both family companies. She works with the board chairs and CEOs of the two companies to improve communications to shareholders.

Brittany became a member of the family assembly in 2010, when the fourth generation was invited to join. In 2013, she began chairing the education committee. “In this role, I coordinated a weekend, on-site simulation course where family members worked in teams to run an insurance company,” she says. She joined the family council in 2016.

As family council chair, Brittany managed a successful family trip to Park City, Utah. More than 60 family members from the third, fourth and fifth generations went on the trip.

Christie Mullen, Brittany’s aunt, worked under Brittany’s leadership as a member of the committee that planned the trip. “I was amazed at her gifts to help me do the best job I could for the group,” Mullen says. She also cites Brittany’s skills in managing funds to achieve a reduction in spending compared with previous family trips. “Great memories were made” during the trip, Mullen says.

“Brittany is an excellent example of a family champion,” says Joshua Nacht, a consultant with The Family Business Consulting Group who has worked with the family. “She works very hard to advance and develop her family ownership group. Brittany pays close attention to setting agendas [and] disseminating information, and responds quickly to people’s inquiries.

“I see Brittany running efficient and productive family meetings, and she strikes a great balance between letting discussions develop and keeping the family on task.”

Before moving back to Greenville, Brittany worked in Chicago at Accenture Strategy; previously, she worked in Washington, D.C., at UBS. She earned an MBA with concentrations in finance, economics and strategic management from the University of Chicago Booth School of Business.

“At Chicago Booth, I was a member of the Family Business Group, where I met classmates with stories of siblings or cousins who could not make their businesses work,” she says. “My family’s businesses are currently in the third generation of majority ownership, and I do not want it to end there.

“I use my prior experiences in strategy consulting and private wealth management to help the family council and assembly make decisions. Like all family businesses, we have hot topics, but we work together effectively to move forward and make progress — something we hope to teach the next generation!”

Stewart Morris Jr.
Stewart Title Guaranty Company, Morris Family Trust and Stewart Security Capital, Houston, Texas

Stewart is senior chairman of Stewart Title Guaranty Company, a 125-year old real estate title company. Stewart Title is part of Stewart Information Services Corp., where Stewart is vice chairman. The enterprise, founded in 1893, became a public company in the 1970s.

Stewart Information Services shareholders have approved the company’s acquisition by Jacksonville, Fla.-based Fidelity National Financial Inc. The deal is expected to close by the second quarter of 2019.

“In recent years, we have formed several more private family businesses thanks to the efforts of several family members such as my father, Stewart Morris Sr., and two sisters, Lisa Simon and Carlotta Coffman,” Stewart says.
Stewart is a trustee of the Morris Family Trust, formed in 1992, which invests predominantly in real estate. He serves as managing partner of MFT Interests, the family company that manages the assets of the Morris Family Trust.

In addition, he is president of Stewart Security Capital, a private investment company formed in 2012 with investments in real estate, market securities, banking and rail. A percentage of its profits are invested back into the community.

Stewart started Stewart Security Capital for his children to run, Simon notes. The chairman is his daughter Faith. His other daughter, Grace, is the vice president of image and corporate secretary, and his son Stewart III serves as vice president of finance and investments while studying at Baylor University.

“Family businesses can be a foundation for education, vocational success, prosperity and family working relationships,” Stewart says. “America is built on families and family businesses, where faith, principles, character, skill, communication, teamwork and work ethic are nurtured. I have enjoyed greatly working with my family all my life, starting at age 10 in the family business, Stewart Title.”

“Stewart epitomizes a family leader,” says Simon.

Stewart started a family council. “He has tirelessly worked on implementing processes and procedure for MFT Interests as well as orchestrated and hosted our annual family gathering at Thanksgiving,” says Simon. “He is a master at organization.”

“Thanksgiving and reunions of the greater family have been enjoyable and a time to catch up with everyone,” Stewart says. “We welcome in new members of the family, talk about recent activity, share experiences and help in times of need, as well as take photos for everyone to share. We have videoed interviews with the older generation, sharing their early stories in life and experiences that we will save for posterity.

“We have a family history room at our home where we keep reference material on family history, but we need to do a lot more to grow the family tree and relate information about characters from our family past. In the history room we keep such things as letters written by family in the early 1900s, awards, books, pictures and more. It is a challenge to determine how to best use all these things, but at least we have it in a safe place!”

Joanna Morrill
Leupold & Stevens Inc., Beaverton, Ore.

Joanna, a fifth-generation member of the Marcus Leupold Family, runs the family office at Leupold & Stevens, a 111-year-old company that makes precision optical instruments including rifle scopes, spotting scopes, binoculars, rangefinders, trail cameras and mounting systems for firearms as well as accessories. She is also a foundation member and a member of the events planning committee.

She began working at the company three years ago, supporting the human resources department. Two years ago, when the family office was started, she became the first person to manage it. The Leupold & Stevens family office supports communication and alignment among the shareholder group.

Her cousin Alexandra Burton, foundation treasurer and member of the events planning committee, says Joanna “has done an amazing job of taking on a brand-new concept and role. With the help of our family values committee, Joanna has built this position from the ground up and turned it into something that has become very beneficial for our shareholders.”

Burton notes, “The family office role puts Joanna in a position where she deals with both the good and the bad from all family groups. Being one of the most caring people I know, my cousin always makes a strong effort to hear all opinions and makes sure every voice is heard. Joanna handles all situations in a very professional manner, which we all know can sometimes be difficult when dealing with family.”

Joanna supports the family council by coordinating council meetings and working on special projects. She performs tasks within the family foundation. She also plans shareholder events such as the family assembly retreat and other educational forums.

“Joanna is a huge advocate for getting shareholders and other family members involved in both company and family activities,” Burton says. “She makes it a point to share important company news and dates of events, which she encourages the family to attend.

“Joanna has also created a family newsletter that highlights a wide variety of family news, such as graduation announcements, congratulations on new jobs, family members’ trips or fun activities they took part in, and the list goes on.

“She has been a great liaison between the company and the family, but also within the different groups as well. Our family is relatively large and spread out across the Pacific Northwest, with a few living outside the area, so this effort has been a fun way to keep the family connected.”

Joanna earned an M.A. degree in conflict management from Portland State University and wrote her thesis on conflict management within family businesses.

“Throughout my studies, I learned that successful family businesses have mechanisms in place to address conflict, plan for the future and [serve as] forums for open communication,” Joanna says. “Working with family in a business setting is challenging, and many family firms do not survive. Because of this, I am passionate about bridging educational gaps and facilitating ways for family members to work together as a team.

“With three family branches and close to 70 shareholders, this is not easy, but the work done now will help us pass the baton to future generations.”

Joseph C. Richert
Special Tree Rehabilitation System, Romulus, Mich.

“Joe represents the second generation of the Richert family enterprise; however, in many ways he is part of the founding generation,” says his son, Joseph Richert II. “Joe became president and CEO of Special Tree Rehabilitation System, the Richerts’ flagship business, early on and since has grown the company into a model system for post-acute neurological rehabilitation.

“Over the years, Joe has also expanded the family business into several different areas, including residential and commercial real estate development, automotive-mobility reengineering, and patient and product development for different supports for special-needs and geriatric populations.”

Joe was instrumental in forming the Richert Family Council, his son says. “He has established ongoing continuing education opportunities by bringing in different speakers to educate on issues like board development and family conflict resolution.”

Joe has also led social efforts, such as founders’ birthday celebrations and family trips, Joe II says. Under Joe’s leadership, the family is developing a NextGen entrepreneurial investment and education program and a family server/data portal that will give family members access to governance documents, family photos, social calendars, news updates and more.

“I am passionate about family business because, first and foremost, my family values and relationships are most important to me,” Joe says. “I often get the most excitement from the entrepreneurialism I help our family members engage in.

“My greatest sense of pride comes from the creative synergy we achieve with our family council meetings. There the different members get to strategize and discuss the direction of our businesses but also plan the execution of what needs to be done. I also am a lifelong student and love to facilitate different opportunities for leadership development and personal growth for our family.”

Joann Detwiler Bull
New Enterprise Stone & Lime Co. Inc., New Enterprise, Pa.

Joann is a third-generation member of the family that owns New Enterprise Stone & Lime, a construction materials supplier and heavy/highway construction contractor in Pennsylvania and Western New York.

“I have not been employed in the company, yet always supported those family members who were, and realized as a daughter, sister, aunt, mother, wife and shareholder, I can help build the connections to the business so that we remain family-held and -influenced for generations to come,” Joann says.

“Joann saw her family drifting apart as it related to the business and overall communication and interaction among family members — something that had been gradually deteriorating over time,” says her husband, Robert Bull. “She decided to do something about it.”

“Holding a degree in sociology and an affinity for the power of creativity to connect people in new ways of thinking and acting, I realized my family had arrived at a transition period for needed change,” Joann says. “Our family who were not involved in the business were not connected directly to our past, not knowledgeable about the business today and not expressing interest in aligning around the future of our business. We needed new energy!

“I began with an oral history that highlighted and preserved the 90-plus years of New Enterprise Stone & Lime Co. in the community as a substantial employer and steward. In developing the oral history, I realized that the importance of our business and our family in the community should not be casually valued.”

Joann asked several family members to join a task force. “Assisted by a consultant, through interviews, surveys and meetings, we determined that the family would benefit from the voice of the family to the board, management and owners,” she says.

“We formed a family council and developed a family constitution that was ratified in June 2018. At this year’s family assembly, we progressed on many fronts, including next-generation education on family business performance and activities. As a result, family committees were formed as we dive deeper into our potential to become an even more resilient, cohesive and purposeful business-owning family.”

“Needless to say, the overall atmosphere of the family has improved tremendously, which has melded nicely with the rebound the business has enjoyed as well,” Joann’s husband says. “Her never-say-die attitude has transformed the family as they head into the fifth generation.”

“I am honored that my family has had the confidence in me to be a family leader, and I know that the steps we are taking today will help realize our vision for the future,” Joann says.

Capri Frank
Miller Foods Inc. and Oma’s Pride, Avon, Conn.

Miller Foods, founded by Capri’s grandparents, Earl and Margaret Miller, produces poultry products and distributes gourmet food items. Oma’s Pride, founded in 2001, is a pet food company that produces all-natural food, treats, supplements and chews for dogs and cats.

Capri’s mother, Sandi Trudeau, took over the company after her parents died. She ran the company along with her sister, Carolyn Miller-Stevens.

Capri “successfully navigated the transition of the second generation while bringing in the fourth generation,” says Robin Ann Bienemann, entrepreneur-in-residence at the University of Connecticut. “Capri has been integral in leading this fourth-generation family business into the future.”

“We were at a tipping point, and I recognized that, with multiple generations working in the family business, we were highly challenged by the generational differences,” Capri says. “My mother worked for more than 60 years in our business and was at a point that she was no longer able to meet the demands of the day-to-day operations.

“I recognized my mother needed to know that her interests in the company would be protected if she were to step down from her position as president. Through many heartfelt conversations, we orchestrated a plan and arranged for a successful stock purchase and transfer. That is just one piece to the puzzle. The next step was making sure there was a smooth transition.

“I am fortunate to have the support from my aunt, uncle and cousin,” Capri says. “My cousin and I have formed a strong bond and work side by side in operations and sales. With encouragement, my son joined our company in our ecommerce division. His expertise in sales and marketing and his passion for our family business has helped to drive an ecommerce expansion of our pet food. He is the first family member to successfully lead a division of our company while living and working remotely. It is with mutual love and respect that we continue to keep the core values at the heart of what we do every day.”

In addition to her leadership of her family business, ­Bienemann says, “Capri is a voice in Connecticut and her industry, [speaking about] how crucial family businesses are to the economy.” Capri has helped the University of Connecticut build an executive education program to support family businesses, Bienemann notes. Capri teaches a course in the program and was part of a family business summer internship pilot program.

“She’s involved academically, she’s involved in the community and she’s involved in bringing her family business to the next level,” Bienemann says.

“I believe I bring a level of energy to our company as our new president and hope to inspire the next generation to continue to innovate and evolve,” Capri says. “I consider myself the bridge between the second and fourth generations and am very passionate about our future and the legacy of our family business.”  

Vermeer Corporation family camp organizers

Mindi Vanden Bosch is the ownership council chair and Allison Van Wyngarden is the chair of the ownership council education committee for the Vermeer family. Vermeer Corporation, based in Pella, Iowa, is a global manufacturer of industrial and agricultural equipment and is in its third generation of family management.

“Together, they orchestrate our three-day family camp, with extensive programming for all shareholders, and especially three age groups of G4s,” says their cousin Jonathan Vermeer, a shareholder director of the company. “The G4 agenda has been fantastic and comprehensive. They work closely together to make it all happen. They also take into account surveys afterwards.”

Allison Van Wyngarden

Allison, a third-generation family member, oversees the education and programming aspects of family camp. She is a shareholder director of the Vermeer Corporation, a member of the ownership council and chair of the ownership council education committee.

Over the years, Allison has served on the family council executive committee, the Vermeer Charitable Foundation board, the family council education committee, the GRPL (growth, risk, profitability, liquidity) task force and the family employment task force. She continues to develop and support NextGen program efforts as the shareholder base continues to grow.

Allison worked at Vermeer from 2007 to 2011 in the areas of industrial distribution development and continuous improvement.

“I have felt great pride in Vermeer my whole life,” Allison says. “My parents and grandparents taught me gratitude for my opportunities, responsibility, hard work, inquisitive thinking and learning from people and cultures all over the world.
“I am excited about what my generation brings to Vermeer leadership and governance. At Vermeer, we are ‘Equipped to Do More.’ I am passionate about equipping our shareholders through education to do more for themselves, Vermeer and the community.

“Seeing the growth of the younger-generation shareholders is inspiring to me, and it’s a privilege to be part of their development.”

Mindi Vanden Bosch

Mindi oversees the schedule, budget and implementation of family camp. On the family side of the business, she serves as chair of the ownership council and treasurer of the Vermeer Charitable Foundation. She has helped advance family employment, engagement, education and long-term strategy through project work, task forces and advocacy roles.

Mindi is one of three third-generation family members who work in the business started by her grandfather, company founder Gary Vermeer. She joined Vermeer in 2008 and held managerial roles in marketing, finance, human resources and continuous improvement. In her current role as channel advancement manager, she focuses on dealer development.

“Growing up, Vermeer was everything,” Mindi says. “Vacations revolved around connecting to dealers, and after-school hours were spent filing papers.

“Generational success starts early,” she says. “Education and engagement, at all ages, helps keep family businesses vibrant and healthy. True growth comes when a business’s culture mirrors the family’s culture. Together, they can support each other and grow in ways other organizations can’t.”

IDEAL Industries' G4 family leaders
At IDEAL Industries Inc., a 102-year-old Sycamore, Ill.-based company that produces tools and supplies for the electrical and telecommunications industries, multiple members of the fourth generation have distinguished themselves as family leaders.

“The IDEAL family values of inclusivity and relationship are alive and in action in the family and have contributed to the emergence of leaders in the fourth generation,” says Meghan Juday, a G4 member who serves as non-executive vice chair on the IDEAL Industries board of directors. “The family truly honors family members’ individual talents, strengths and passions and encourages them to engage in the life of the family where their areas of interest, passion and purpose intersect.

“In other words, the family values what individuals bring to the table, rather than defining it for them. Because we value all contributions, it has paved the way for fourth-generation family members to lead from a position of strength, cohesion and good stewardship of the family business and of their own individual and unique skills and talents.”

Meghan Juday

Meghan has been a member of IDEAL Industries’ board since 2004 and became non-executive vice chair in May 2018. Since 2003, she has been instrumental in helping the family successfully navigate family business ownership. Meghan, who formerly served as chair of the IDEAL family council, implemented innovative family governance practices and helped change the mindset of the family toward stewardship to ensure that the family is acting as the best possible partner with the board and management. She developed a transparent decision-making environment to help build engagement and trust across all 50 family members.

She implemented a G5 program to ensure that every interaction the G5s have with IDEAL is “exciting, fun and educational,” she says.

She also initiated two development programs that allow all family members “merit-based access to leadership roles” and help family members become qualified to serve as family leaders, voting trustees or directors.

“Meghan is someone who always steps up to do the hard work when it is necessary, while always staying true to the family’s core values of inclusiveness, stewardship, transparency, engagement, empowerment and relationship,” says Mary Nicoletti, a non-family member who is currently IDEAL’s family council chair. “She is forward-thinking and strategic and has worked to build up the family’s capabilities by investing time into mentoring other family members and non-family members.”

Meghan was a member of the inaugural class of the Loyola University Chicago’s Family Business Stewardship Institute and helped develop curricula for Loyola’s Family Business Stewardship Institute and Governance Institute. She served as director and as a senior consultant at the Institute for Family Business and Entrepreneurship at St. Joseph’s University in Philadelphia and worked with families as principal of a consulting firm, Family Business Strategy Group. Previously, she worked as a business analyst and project manager.

“I’m proud of our family that we are still family-owned after 102 years,” Meghan says. “Recently, we made significant progress to remain so for future generations by protecting 98% of the IDEAL stock in perpetual trusts. We also implemented a family-funded education program and a business-funded family director development program.

“Our family works hard to build relationships, address conflict and grow our capabilities as the business grows. I believe that the family will continue to evolve and act as the best possible partner with the board and management.”

“Meghan is an inspirational person, and her passion for family business is contagious,” Nicoletti says.

Ben Juday

Ben Juday, Meghan’s brother, has been an active participant in family governance for the last 20 years and has worked closely with other family members in their ongoing transition from third- to fourth-generation leadership.

Ben was nominated to be a junior board member at IDEAL Industries in 2017 and now serves in that capacity. He also serves on the board of IDEAL’s internship program with Northern Illinois University, which provides real-world experience for college students through a project-based internship at IDEAL. In addition, he is a member of the advisory board of the Loyola Family Business Center in Chicago.

Ben has a real estate business and founded Analog Outfitters, which makes musical amplifiers and other equipment. He brings 16 years of personal business experience and a thorough understanding of the best practices of family business governance to the family.

Ben has served on the IDEAL family council for a number of years, but his greatest contribution to the family is in an unofficial capacity: that of family ombudsman. He has the ability to see all sides of a problem and has been instrumental in bringing the family together during times of conflict.

“Ben’s always putting his love for his family and the family’s core value of relationship into action by quietly and consistently reaching out to other family members with calls, visits, etc., especially those who may feel disengaged or disenfranchised,” Nicoletti says. “He makes extra effort to understand individuals’ perspectives by keeping an open mind and not getting defensive.

“Because of this, Ben has been able to build trust and relationships that have increased engagement and cohesion in the family. He has done all of this humbly with no motive other than a desire to see the family getting along and operating with love and gratitude.”

“IDEAL Industries has been a part of my life since as far back as I can remember,” Ben says. “I grew up going to company picnics, hearing about new products at the dinner table and going to work with my dad on weekends when there was no babysitter available. As such, IDEAL is a cherished and ingrained part of my identity.

“I am committed to doing my part to make sure that the values that IDEAL was founded upon remain relevant and intact. I am committed to being a good steward of the wonderful gift of ownership that I have been given and in doing my part to see IDEAL well into its second century of family ownership.”

Jenna Juday

Jenna, Ben’s wife, married into the IDEAL Industries family in 2003 and has been active in the family council for 14 years. She helped establish and now serves as chair of the family’s development and education committee and is co-manager of the development and education fund.

“This year, Jenna headed up an innovative program for the fifth generation of the family at the annual family assembly meeting that included breakout sessions for the older fifth-generation members with executives from the company and a mini-IDEAL national championship competition for the younger fifth-generation members,” Nicoletti says. “She also worked with the development and education committee to find innovative ways to move the programming from play to education to prepare the younger G5s for their role as future family assembly members. This year’s programming involved a philanthropy activity and team building to grow the G5s in their social emotional skills and practice working together.

“Jenna is also responsible for supporting family members with their individualized growth and development plans and works with family members to ensure that they have the resources and support they need to achieve their professional goals.”

Jenna is part of the family leadership development program, designed to aid in development of highly qualified family directors. She has served on numerous task forces addressing governance, family relationships, mission/vision/values and more.

She is a graduate of Loyola’s Family Business Stewardship Institute. Her personal career is as a neuroscience nurse in a hospital in Urbana, Ill.

“Marrying into a family business has opened my mind and life to knowledge and experiences I would never have had otherwise,” Jenna says. “My work in family governance has pushed my personal growth and sparked a passion for creating opportunities for others to have that same exposure.

“I am grateful for the space to learn about business in general and at IDEAL. Understanding what it means for a company to ‘live its values’ has impacted my family’s life and the way we engage the larger world. The work is hard, but the benefits are immense if we do our jobs well.”

Jamie Tucker

Jamie, a second cousin to Meghan and Ben Juday, is a member of the family council and also serves as the family assembly chair. In addition, he is a member of the G5 committee and the development and education committee and is co-manager of the family’s development and education fund.

Jamie assists in the coordination of the annual family meeting and of family camp, the annual family retreat. He is currently working to become qualified as a voting trustee for the IDEAL Family Voting Trust and to serve on the board of directors.

Jamie is also a member of the board of the Family Business Network-North America and is chair of its NxG committee.
Outside the family business realm, Jamie is creating a startup to make products that combat invasive aquatic species through chemistry.

“He is a person who always shows up, even when the going gets tough,” Nicoletti says. “Jamie always contributes, while asking for nothing in return, and always makes decisions with integrity and with the family’s core values in mind.”

Jamie has also served as an unofficial family ombudsman working to bring family members together, Nicoletti says. “His presence on the family council and as part of the family governance leadership team has brought a lot of value to the family,” she says.

“My passion for family business stems from my strong belief in compassion and respect for all stakeholders,” Jamie says. “Through an enhanced sense of ethics and values, family-owned businesses have the ability to consider more than profits when making business decisions. Because of this, we are able to demonstrate a new paradigm in which our communities, stakeholders and the natural world can be held in the same esteem as financial gains.

“Family-owned businesses can be a changemaker in making our world a better place to live for all, and I hope to be able to assist toward that end.”

Chris Lamb

Chris, who is Meghan and Ben Juday’s first cousin, is one of only a few family members who work at IDEAL. She has worked for the family business for 22 years in a variety of roles: customer service, sales, buyer/planning and, currently, vendor managed inventory analyst. She is also president of the company’s foundation and works directly with human resources in planning and executing employee events.

Chris was instrumental in taking IDEAL’s history book, produced in 2016 to commemorate the company’s 100th anniversary, from concept to publication. “Without Chris and all of her research and legwork, this book could not have happened,” Nicoletti says.

“The book project brought me closer to the family,” Chris says. “I felt like I developed a closer connection to past generations, their lives and the IDEAL story itself. It was also extremely satisfying knowing that you were working on something that would have an impact on generations to come, family and employees.”

Chris started working on employee events during the company’s centennial year. She helped orchestrate “The Year End Event,” the biggest and last event of the special year.

“The Year End Event was about the closing of a significant year, and we wanted it to be about the employees,” Chris says. “We wanted to make sure that they truly felt appreciated for all they had done to get our company to that 100-year mark. We succeeded — comments were made by many that it was the best event ever.”

Since then, Chris has been part of the planning committee for all events: the company picnic, town halls, the service award banquet and Relief Week, which raises money for a local or national charity. Last year, more than $10,000 was raised during Relief Week.

“Each [event] is planned with one of the goals being to make sure employees enjoy them and are appreciated,” Chris says. “It’s about giving back for all they do. We as a family wouldn’t have what we have if it weren’t for all the hard work the employees do.”

 

 

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"Something my father did that was brilliant was that he included all of us in this process. He really handed it over to the four siblings and said, 'I want you to figure this out; it's going to be yours.' "

Susan Curtin, describing how her father, Dave Power, deployed the wealth from the 2005 sale of J.D. Power & Associates to McGraw-Hill and encouraged the formation of family governance structures (May/June 2014). 
 

"With a growing number of shareholders, you have an increasing diversity of views. The family council is the mechanism that gives them one voice. Without that, it would be kind of like the Wild West."

Jim Clark, chairman, Leupold & Stevens (March/April 2014). 
 

"We welcome talented family members into the business, but we don't have enough top positions for all of them. We're preparing the third generation to be great owners, not managers, and finding other ways to include them in the business."

John Tracy, CEO, Dot Foods. The Tracy family includes 12 second-generation siblings and about 75 extended family members (November/December 2013). 
 

"I found out very quickly that we did not have to reinvent the wheel in terms of family business. Almost all the problems that we faced were faced before by other family companies, and we could gain perspective from their experience."

Harry Mariani, president emeritus, Banfi Vintners, on an insight gained from working with family business advisers on leadership transition issues (January/February 2014). 
 

"You are all aware that there are pitfalls inherent in having a family business. Sometimes a power struggle between persons or factions splits the family. Sometimes it is the loss of a common purpose that causes trouble. Disinterest or inattention will surely result in a slow demise. Not infrequently greed shows its ugly face. You have built-in structures to avoid those dangers, but you would do well to be ever vigilant for warning signs. I would rather that you dismantle the business than squabble over it or that your goodwill toward each other be endangered."

Caroline Keller Winter, in a "legacy letter" to her grandchildren, stewards of Keller Enterprises (November/December 2013). 
 

"It's important to have the family involved in the company. When you start considering it simply as an asset, the structure falls apart and the power of being a family business falls apart. You need to be proud of the business. . . You need to tie the family to the business on something besides the numbers."

Hal Yoh, chairman and CEO, Day & Zimmermann (May/June 2013). 
 

"Growing to 75 stores from one was a monumental feat. In some ways, it was harder to do than growing the way we have now. You run into more barriers going from a small family business to a medium-sized one. There are different regulatory issues, different accounting and finance issues, personnel issues. It's a whole different scale. There were fewer people wearing more hats at that stage of the game."

Stan Sheetz, president/CEO, Sheetz Inc. The company now has well over 400 stores in six states (July/August 2013). 
 

"[K]eeping the family engaged, educated and entrepreneurial gets harder as the family grows and disperses. Without engagement, the entrepreneurial energy of the next generation dissipates or is redirected into non-family business opportunities. Or, in many cases, a lack of engagement leads to the sale of the family business. The role of the family, often through its governance system, is to harness that energy and direct it inward­—to the family business."

Sylvia Shepard, fifth-generation owner, Menasha Corporation (March/April 2013). 
 

"Our first step toward change was to help the family understand what impact, both positive and negative, they could have on the business. Up until this point, the family had always thought that if they 'stayed out of the way and didn't create public conflict,' they would be doing their part. The truth is that if the family isn't actively pursuing growth, sound governance and partnership with the business, then the business will have difficulty achieving its growth objectives."

Meghan Juday, chair, IDEAL family council and director, IDEAL Industries (January/February 2013). 
 

"When I was a kid my dad picked me up after school, and we worked in the fields together. No one had to tell me what kind of person he was or what was important to him; I could see it. I hope my generation can do as good a job of passing on values to our kids as our parents did to us."

Grant Lundberg, CEO, Lundberg Family Farms (Summer 2010). 
 

"Each generation has lived, and treated the company, very conservatively. We've always reinvested in the business and kept money in it. The rewards are that in tough times we were able to weather the storm and stand up strong. We're in a great financial position to do these things without borrowing money and loading up on debt."

Gregg Richard, president, P.C. Richard & Son (Autumn 2010). 
 

"If you communicate, it keeps people out of trouble. If you don't, people assume things."

Mike McVaugh, president, Laboratory Testing Inc. (July/August 2014).

"Moving from an informal to a formal generational transfer is a huge change for us. We're in the process of a massive exchange of information, knowledge and experience between the generations. It's already sparked the younger generation's interest in the business and helped them see how they fit in. Family engagement with the board, management and colleagues has protected Wiley's independence and guaranteed its stability. We want future generations to carry on the tradition."

Peter Booth Wiley, chairman, John Wiley & Sons (July/August 2012). 
 

"There's no resting on what happened yesterday."

Josh Johnson, president, Fidelitone Logistics. The company, founded as a maker of phonograph needles, now operates in supply-chain management and third-party logistics (Autumn 2010). 
 

"A business should make money, not just try to minimize its losses."

Christian F. Martin IV, chairman and CEO, Martin Guitar Co., who rescued the company by refocusing on its core product after his father's misguided diversification schemes (Summer 1999). 
 

"To some people, ownership equals leadership. I'm not part of that group. Leadership is something you have to earn."

Howdy Holmes, president and CEO, Chelsea Milling Co. (Winter 2008)
 

"Our parents didn't pressure us to join the business, and we aren't pressuring our kids. The way we're raised, we know that if we join in the business, we're expected to grow the business so that it can afford us. We choose to work here because we love it. You have to have that passion in a family business because it's 24/7, and your family depends on you."

Carolyn Wente, fourth-generation winegrower and CEO, Wente Vineyards (Spring 2008). 
 

"We have to get on the same page, especially with the family members who are not as involved in the business. We need to make sure they understand why we reinvested in this or why we think this was a good idea or not. That is why family meetings are recommended."

Bill Cecil Jr., president and CEO, Biltmore Companies (Summer 2006). 
 

"The family cannot think about expanding until the components are in place to trust someone else. It was the willingness to trust someone else with the keys at the third store that led to accepting the fact that the best leadership is not always a family member. You need to be able to trust someone else with your livelihood and then provide the support necessary for those individuals to succeed."

Hank Meijer, co-CEO, Meijer Inc. (Summer 2007). 
 

"We are very lucky. We are very sure of each other and we trust each other very, very much. I think that's a key in a family business: trust, more than love. Love is very important, but love doesn't mean trust."

María Luisa Ferré Rangel, CEO, Grupo Ferré Rangel (Winter 2010). 
 

"You make sure what you say is what you do. You tell [other family members] what you want to achieve and how you will do it. . . Having to be so clear and transparent forces you to really think things through. My brothers are there to make me do things more thoughtfully. I have to make sure that things are successful so the skeptics believe in me."

Andrew Ly, CEO, Sugar Bowl Bakery (Winter 2006). 
 

"There are people who are emotional about business, but I'm not at all. A corporate entity is not something I attach to. I know that I'm in the minority for not wanting to see that my kids take the business, but that's not the key."

Edwin T. Johnson, who pioneered the 401(k) plan in 1981 and sold his firm, The Johnson Companies, in 1990 (Summer 2001). Johnson died in 2012. 
 

"I would love it if one or more of my children joined the business, but I don't want them to feel it's an obligation. It would have to be something they would really want to do, and they would have to be able to make a contribution."

Stuart Marwell, CEO, Curtis Instruments (January/February 2013). 
 

"Much has been written about succession planning. That facet of the family enterprise is important. However, it should be complemented with an equal dose of reality: The family business may not always be around. It is a tough world out there and children of family businesses should be prepared to fight in it with vigor. They should remember it is the older generation who usually holds the voting stock and will make the sell decision. Afterwards, the children will have to pick up the pieces and go on with their lives. The key to doing that successfully is possessing marketable skills."

William G. Mennen IV, a fifth-generation descendant of the founder of The Mennen Company, which was sold in 1992 (Summer 1993). 
 

"My father and grandfather had always talked about two things you keep track of: One is the score, and the other one is how you play the game."

Charlie Luck, CEO, Luck Companies (May/June 2012). 
 

"My father made many significant contributions in his last 20 years, but by continuing as CEO until he was 83, he compressed the career development of everyone underneath."

Marilyn Carlson Nelson, who retired as board chair of Carlson in May 2013 (September/October 2013). 
 

"[M]ake sure you know yourself and what your goals are before you start the planning process—be honest about what you want out of it. Figure out what your priorities are in life, what it is you want to accomplish, and what opportunities you want to make available to people in the company and family members. Decide what you're willing to live with in terms of objectivity toward, and protection of, offspring, so that nepotism won't drag the business down. Most family businesses don't survive because they forget they're in business to satisfy their clients' expectations."

The late Henry "Skip" Nottberg III, former president and CEO of U.S. Engineering Company (Spring 1997). Nottberg died at age 47 of melanoma on Feb. 3, 1997, before our article was published. His son Tyler Nottberg is now the company's president and CEO. 
 

"Someone who inherits a business with a lot of old inefficiencies has a terrific opportunity, because just doing some obvious things, like plugging leaks, will improve your bottom line."

Tama Starr, president, Artkraft Strauss (December 1990). 
 

"It took some time to adjust to working for my father. I had to remind myself that at work, my father was my boss and not my dad. . . The more I demonstrated that I knew what I was doing, the less my father got involved in my work. . . During this time, there was never any certainty that my father would pass the business down. I concentrated on fulfilling my own goals for the company."

Julie Copeland, president and CEO, Arbill Industries Inc. (Autumn 2006). 
 

"I am interested in the family being able to govern itself, to handle its own disciplines, to be able to share the values and the vision of the company and also to be aligned with these as our mission."

James Warjone, former CEO, Port Blakely Companies (Autumn 2007). 
 

"I just looked at the numbers and concluded the money wasn't there. I told the board that we'd be kidding ourselves and other people if we didn't make this cut."

Dan Gerber, poet and former director of Gerber Products Co., describing his recommendation that the company's quarterly dividend be cut (October 1990). Gerber Products merged with Sandoz Laboratories in 1994 and was sold to Nestlé in 2007.

Copyright 2014 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 bwenger@familybusinessmagazine.com. 

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In our quarter-century of service to multigenerational businesses, we've observed one key fact about the families who own them: No two are alike. Each family has its own unique history, values, cast of characters, way of doing business and points of contention.

Yet although details of the problems and solutions will inevitably differ, several approaches to the challenges of mixing business and family have proved to be successful in a variety of family circumstances. Over the years, many professionals who study and advise entrepreneurial families have recommended these approaches. Most of them involve a lot of time and effort to implement. But if you're willing to make the investment, you may find they work for you.

1. Communicate openly and often. The best way to keep extended family members connected to the business is to keep them informed about important developments, including major company decisions, competitive challenges and important milestones. Invite family shareholders to attend celebratory company events, and introduce them as representatives of the family. Create a family intranet or newsletter and encourage all family members to contribute photos and news. Plan an annual gathering for the whole family, including social events as well as updates on the business and an educational component.

2. Start planning early. Procrastination leads to family strife and business confusion. Create a prenuptial agreement policy before anyone in the next generation gets engaged, and don't wait until your kids are in their 40s to think about your succession plan. The earlier you start thinking about the future of the company, the smoother the transition process will be. It's never too soon to begin mentoring the next generation in sound business stewardship and financial management practices. Even if none of your kids ends up as the business leader, you will have set them on solid footing for future roles as business owners or entrepreneurs.

3. Clarify and codify the family values. There are several advantages to taking the time to do this work as a family. First, coming together to develop a set of values that everyone can agree on (and commit to) is an opportunity for family members to get to know each other on a deeper level. Second, identifying what you stand for as a family is a powerful exercise. Third, having a list of values to consult can help employees and managers of the business make decisions as they go about their jobs.

4. Tell your family's story. Whether your family business is celebrating its 25th anniversary, its 150th or its third, there is value in retelling its history when family members get together. The founder's entrepreneurial spirit, persistence through adversity and strongly held beliefs offer important lessons for descendants. What decisions did previous generations make at key points in the company's history—and why? Make sure your employees and customers know your company's history and recognize that the family takes pride in its business.

5. Respect individuals' talents, preferences and sensitivities. It's OK if none of your children wants to work in the family business—and it doesn't mean the business will have to be sold. If your kids' passions lie elsewhere, they will not be happy and fulfilled working for the family company, and they might not be successful at it, either. On the other hand, next-generation members who are pursuing their dreams full-time outside the business can be very effective business owners and careful stewards of the family legacy. Consider keeping the business under family ownership with non-family professionals managing it.

6. Welcome independent, third-party opinions. Adding independent members to your board—experienced executives who have no connection to your family or your business—provides a strategic advantage that can mean the difference between success and failure in today's extremely competitive marketplace. Independent directors bring objectivity and perspective and ensure that the fiduciary duty to shareholders is paramount, which in turn builds cohesion among the family ownership group. Another source of objective advice is the family business consultant. If your family is mired in unproductive conflict, these professionals can help you get "unstuck." They can also help you create structures and processes designed to manage family disagreements and strengthen the business.

7. Take time for process and policymaking. It's no easy feat to drag multiple family members away from their busy work and home lives to debate the wording of a proposed plan or policy. But having these documents in place can help prevent or manage conflicts down the road. What's more, families who have worked together to create plans, policies and procedures say the process itself builds alignment and strengthens connections within the family.

8. Think beyond taxes; take a long-term view when setting up structures and policies. Too many family business owners design their estate plans with a single focus: to minimize the tax burden. They don't consider how the ownership structure or trust they create will affect the family or the business in the future. Ask your advisers to help you think through the long-term implications of any plans you are considering.

9. Create a family constitution and a shareholders' agreement. A family constitution documents the family's mission and values, defines strategic goals for the business, and identifies how the family will make decisions and resolve disputes. A shareholders' agreement defines buy/sell procedures, makes provisions for share valuations and identifies which types of share transfers are permitted and which are forbidden. (For example, restrictions on stock transfer can be imposed to keep ownership in the family.) A shareholders' agreement is a legally binding document; a family constitution is not, although signing a constitution implies a moral commitment to abide by its terms. These documents in tandem codify the family's relationship to the business and are important dispute-resolution tools.

10. Provide liquidity opportunities for shareholders. In later-generation family companies, disputes can arise when family owners who do not work in the business need liquidity but have no way to cash in their shares. All too often, these disputes escalate into lawsuits. Creating ways to unlock capital for these shareholders, such as a stock redemption program, will help keep your ownership group engaged and harmonious.

11. Listen to what the next generation has to say. Your next-generation members' perspectives on technology, current business-school theory and social networking can add value to your business. These young men and women can bring energy and innovation to family governance and business planning. Set aside your memories of changing their diapers and seek out their opinions.

12. Hire the best people for the job—and compensate them appropriately. The best person for the job—even the CEO's job—may be a non-family member. Installing relatives in jobs they're not qualified for erodes shareholder value and employees' respect. Many families have developed employment policies requiring several years of work outside the family business before a family member is eligible to join the company. This not only enhances the family member's experience and credibility, but also brings a valuable outside perspective into the business. Family employment policies also often include a clause stating that relatives can work in the business only if they are qualified to fill a legitimate open position. Compensation for all employees—family and non-family—should be fair market value. If your shareholders' agreement states that non-family executives cannot receive equity, consider implementing a phantom stock program to ensure alignment of top managers' interests with those of the family owners.

13. Respect the boundaries between ownership and management. Business owners establish the company's vision, mission and values and set goals for the return on investment they need, the amount of debt they will accept and the level of risk they will tolerate. Owners should not get involved in the day-to-day running of the business. Role confusion often occurs in family companies because family members can be owners, managers or both; many disputes arise because family members fail to recognize when they're crossing boundaries. Creating a family council can help family members to separate family from business issues and clarify the distinction between the business and ownership realms. The family council is the forum for addressing concerns and making decisions that involve the family and its relationship to the business.

14. Educate your family members. In order to be responsible stewards of the enterprise, family members need training in areas such as wealth management, conflict resolution strategies and basic business concepts. They also should know essential information about the family company—how it makes money, who its competitors are, etc.—and how to read and interpret financial reports. Training in family business best practices will help family members understand their roles and prepare them to tackle the challenges that lie ahead. Educated shareholders will function more effectively as an ownership group.

15. Have candid family discussions about wealth. It's never too early to begin discussing financial responsibility with your kids. Many parents have found it helpful to have kids split their allowance in three parts: some to save, some to spend and some to donate to charity. A good way to start a dialogue about wealth and values is to ask family members to define their concept of "having enough." Young adults should learn about investment risk and how inherited wealth can erode from spending and inflation.

16. Develop family members for participation in a variety of roles. There are many ways for a family member to contribute without working full-time for the company. Family enterprises need creative, enthusiastic and committed family directors, family council members, family foundation board members, family education program developers and family communications managers. Rather than pulling relatives into these high-impact roles through an informal call for volunteers, create a training program to ensure they are well versed in best practices and have honed their communication skills.

17. Welcome in-laws into the family. "Married-ins" bring new skills and experiences to your family. Let them know that you appreciate them. Include them in family meetings, and ask their opinions whenever appropriate. Recognize the importance of their support; they can help in rallying the family, but they can also fan the flames of sibling rivalry. Make sure they don't feel shunted aside while your family talks business, and understand their desire to join their own families rather than yours for holiday celebrations. Welcoming in-laws as full-fledged family members can uncover new sources of talent and valuable new perspectives.

18. Be on the lookout for changes in technology and in the marketplace, and encourage innovation. New products are being introduced and adopted more quickly than ever before. To cite just one example, decades passed between the invention of the telephone and its adoption by 50% of households, but cellphones achieved 50% penetration within just five years. Even the way that consumers pay for goods and services has changed (think PayPal), as well as the way items are brought into the home or office (coming soon: Amazon delivery drones). Throughout history, uncounted family businesses have failed because of successors' reluctance to tamper with the founder's product. Nowadays, your reassessment must extend beyond product offerings to the business model itself.

19. Focus on the family enterprise rather than the legacy business. As the field of family business research and advising has matured, there is growing recognition that there are many routes to family enterprise success. Some families sustain their original business for hundreds of years. Others sell the legacy company and use the proceeds to start a new operating business or family investment vehicle. And many families acquire and dispose of a variety of holdings over the generations. If signs point in the direction of selling the original business, don't be stopped by the "failure" fallacy.

20. Plan for retirement—and make sure you actually retire. There is a time to step back and make room for those who have higher energy and better knowledge of what's needed to compete in the future. Recognize that this time will come, and prepare for it. How will your retirement be funded? Devise a plan that does not drain capital from the business. And remember that a financial plan isn't all you need; you also must plan for rewarding ways to spend your time when you're no longer tethered to the office.

21. Schedule regular reviews of documents and structures. Your family governance documents may have become outdated if your family has changed because of life cycle events such as birth, marriage, adoption, divorce, disability or retirement. Business changes such as a leadership transition might also mean that some language should be tweaked. It's a good idea to reassess your governance documents—or, at least, some key parts of them—every three to five years. You should also review the composition of your board, family council and committees and consider whether it's time to refresh them with an influx of new blood.

22. Don't avoid conflict. Family members may hesitate to air their issues for fear of damaging relationships. But avoiding conflict while negative feelings simmer under the surface can do more harm in the long run. Families who have learned to manage conflict properly find that getting issues out in the open can bring constructive change. Many family business conflicts arise out of life cycle changes and thus are predictable. Family business advisers who have helped other families conquer these challenges can help facilitate discussions of sticky issues.

23. Encourage a "clan" rather than a "branch" mentality. In the third generation and beyond, it's important to encourage unity among the broader family—the clan—through gatherings of the entire family and communications systems that enable extended family members to get to know each other. A family that works on its connections will think of itself as a single, united "clan" rather than a collection of individual "branches." A "branch" mentality can lead to "us vs. them" thinking that can escalate into family feuds. An extreme example is the feud between Arthur T. Demoulas and his cousin, Arthur S. Demoulas, which crippled the New England-based Market Basket supermarket chain as the two branches vied for control of the company.

24. Work to prevent an entitlement attitude. Do your family members view the family wealth as a privilege and a legacy that they are responsible for preserving and passing on to their children, or do they think they are owed the chance to exploit it for their own personal benefit? Do they feel a duty to contribute to philanthropic causes? An entitlement attitude leads to ostentatious overspending and, in many tragic cases, to substance abuse. A stewardship attitude motivates family members to build and sustain the family wealth and serve the community.

25. Accept the inevitability of death. This advice seems obvious, especially when a family business is at stake, yet some business owners never get around to making a will. Consider Dhirubhai Ambani, who built Reliance Industries into India's largest conglomerate that was worth tens of billions of dollars when he died—intestate—in 2002. His sons Mukesh and Anil feuded for years afterward over the division of their father's empire. If you want to ensure your business runs smoothly after you're gone, a will isn't all you need. Advisers also recommend an emergency management transition plan that states who would take the reins if the business leader were to die before a family successor is ready to step up. They also suggest "fire drills" to test how the succession plan would be implemented. Giving the plan a test drive can uncover glitches and enable the plan's author to fine-tune details before it's too late.

Copyright 2014 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 bwenger@familybusinessmagazine.com.

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Family Business and Positive Psychology, by Scott E. Friedman • American Bar Association, 2013 • 197 pp., $119.95

 

Author Scott Friedman is the managing partner at the Buffalo, N.Y., law firm of Lippes Mathias Wexler Friedman LLP, and his new book is published by the American Bar Association. Despite these legal connections, Friedman devotes a lot of space in Family Business and Positive Psychology to pointing out deficiencies in traditional family business planning, which often emphasizes the creation of legal documents.

"[F]amilies in business together spend an inordinate amount of time and money with their professional advisers defining and documenting their dispute resolution mechanism of choice," Friedman writes. "While such planning no doubt serves important purposes, families in business together would be better served by bringing into sharper focus methods of how to disagree constructively and preempt conflict."

Friedman contends that an approach based on research in positive psychology—the study of happiness—can counteract what he calls "failure factors" that erode trust in the family. "Strategies, structures, and safeguards can give every family member and stakeholder a sense that decisions made in their business are fair, principled, and smart," the author asserts. "When familial trust has been organizationally and structurally established, other 'traditional' planning strategies, such as estate plans, retirement plans, and succession plans, can be executed more smoothly and effectively; until then, however, traditional planning in a 'low trust' environment is likely to result in procrastination and disappointment."

Friedman has been studying positive psychology and its potential applications to family business consulting for years. In the Summer 2010 issue of Family Business, he co-authored an article on the subject with Dan Baker, Ph.D., a psychologist and organizational consultant best known for his book What Happy People Know.

In Family Business and Positive Psychology, Friedman cites studies in neurology and evolutionary biology, pointing out that "fight responses" (such as angry or argumentative behavior) and "flight responses" (like social withdrawal or substance abuse) are instinctive reactions to stress rooted in fear, a vestige of humans' hunter-gatherer ancestors. By consciously choosing to move past "ancestral brain" responses and lead with the "modern brain," business families can see the possibilities that lie ahead and build family cohesion through forgiveness, according to the author.

Friedman suggests that family business owners create a culture emphasizing encouragement, appreciation, altruism, civility and compassion, among other attributes. He provides a diagram to illustrate the "appreciative inquiry" planning model developed by Daniel L. Cooperrider, a professor at Case Western Reserve University's Weatherhead School of Management, which challenges organization members in a positive way by emphasizing "a continuous cycle of improvement."

Friedman has developed what he describes as a formula for effective decision making: the P/E ratio, or the ratio of principle-based decisions to expedient decisions. A family's goal, according to Friedman, should be to operate only in the numerator, so that all decisions are made in accordance with the family's core values. This serves to increase trust within a family over time, Friedman contends.

Another strategy Friedman recommends for increasing trust and harmony is to implement governance strategies. This advice mirrors that given by most family business consultants: Form an independent board and a family council, and create family documents, such as a code of conduct and family constitution, that spell out policies in writing.

Planning for eventual transition of the family business and family wealth to the next generation, Friedman recommends, should include consideration of ways to prevent "affluenza" as well as how the senior generation will spend their retirement years. Creating an ethical will—a document or video that details values to be passed down to descendants—can help the next generation understand the decisions behind the wealth transfer, Friedman notes.

The author includes examples of real-world business families he believes are putting positive psychology principles into action. While several of these examples are helpful, one is an odd choice: Friedman offers a quote from Jimmy Haslam, CEO of Pilot Flying J, describing Haslam's father's advice to "be humble and ask a lot of questions." In 2013, Pilot Flying J was raided by federal agents investigating fraud the company allegedly committed against its customers. Ten former Pilot Flying J sales officials were awaiting sentencing on fraud charges as of April 2014.

The book includes an appendix entitled "The Family Business Scorecard," which helps business families assess the areas they need to work on to create a positive culture. More superfluous is a chart that ends each chapter plotting Friedman's "success factors" (the converse of his "failure factors") along an x axis that indicates time and a y axis that indicates low to high trust.

The scientific and psychological studies Friedman cites are interesting, and his governance recommendations are sound. His book is a call for more family business advisers to "expand their planning paradigm and skill set, directly or in collaboration with other professionals, so that they can help their clients engage in a more holistic planning process." Friedman makes a solid case for the application of positive psychology in family business governance and transition planning.

 

 


 

 

Copyright 2014 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 bwenger@familybusinessmagazine.com.

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A fourth-generation family business grappled with the definition of family ownership for many years. They struggled with whether to limit ownership to blood relatives and what to do with former spouses after a divorce. They wanted to appropriately restrict ownership to protect their enterprise, yet they also wanted to promote a spirit of inclusiveness.

Family business systems grapple with issues like this frequently. The most successful families adopt a certain way of thinking about these situations that brings success over the long term. These enduring families have developed thought processes that enable them to manage the concurrency of fundamentally opposite interests.

The capacity to accept inherent dichotomies as opportunities instead of problems to be solved is a vital skill for long-term success. In our experience, the families that move beyond “either/or” thinking into a “both/and” thought process are better able to successfully manage and navigate in an increasingly complex world.

To meet all competing needs, the family in the example above adopted an encompassing definition of family, crafted a buy-back and buy-in process for family members and developed a structured family internship and family employment policy. This both/and approach resulted in a sense of family inclusiveness and created pathways for the family to relate in a professional, structured way that protected the business.

Wearing two hats

In our work as scholars, researchers and family business owners ourselves, we see a consistent theme among the longest-lasting, most successful family business systems: They are able to develop the capacity to manage the concurrent demands placed on them by the unique situations they face. It may not be enough to wear the “business hat” sometimes, and then take it off to wear the “family hat.” This approach is reflective of either/or thinking, and is unnecessarily limiting. We need to develop the ability to wear both hats at the same time.

The seeming paradox of family business can be a great advantage when we shift the way we think about our problems and embrace the capacity for “both” (see Family Business as Paradox, by Amy Schuman, Stacy Stutz and John L. Ward, Palgrave Macmillan, 2010). The more that family business stakeholders develop their thought processes and ability to manage concurrency, the greater their chances of success in a range of situations.

After a sobering appointment with his cardiologist, a father stayed awake many nights thinking about how to hand the business over to his son. As the head of operations the son was top-notch but had a brisk way of making decisions that was markedly different from his father’s lengthy and slower approach. “I love him, but he’s not ready,” the father thought. “He has no idea about how I make decisions.” The father knew he wanted to exit the business but was concerned about how a rapid transition of leadership to his son would affect the management team. He wanted to change the way his son thought.

What do you do in this situation? Is this a problem to be solved, or a polarity to be managed? Problem solving is an essential technical skill that we use all the time. But problem solving has its limitations. Ronald A. Heifetz and Marty Linsky (Leadership on the Line, Harvard Business School Press, 2002) distinguished between technical skills, such as “fixing” and solving problems, and adaptive skills, such as looking at underlying causes for the problems and adopting innovative thought patterns. Our socio-cultural upbringing tends to develop and reward our problem-solving skills, so we have a tendency to overemphasize this approach. Family businesses unintentionally limit themselves when they use technical skills and either/or thinking to solve adaptive challenges.

Over time the father saw that he couldn’t “fix” his son and that his own style had flaws and inconsistencies. The father and son discussed the strengths and weaknesses of their respective decision-making skills among themselves and with their management team. The risks and benefits of each one’s decision-making style, along with their commitment to the family and to the firm, were thus known to all. This discussion sparked a non-family manager to contribute more and to counterbalance the son’s style. Eventually the team adopted a co-COO style of management. This adaptive approach allowed the father to pull back from daily operations and facilitate a creative way to capture the benefits of multiple approaches to decision making.

Opportunities rather than problems

Family businesses run into these issues all the time: How do I demonstrate unconditional love for my family members and institute a merit-based system? How can I manage the short-term and the long-term needs of both my family and my business? How can we integrate the need to make quick decisions with the discipline of making slow, reasoned choices? Certainly, we could approach each of these conundrums as a problem to be solved. But a problem-solving approach might limit us to a narrow range of options. What if we approached these situations as opportunities to be managed in perpetual concurrency?

As Schuman and coauthors noted in Family Business as Paradox, risk/stability, individual/team, harvest/invest tend to be viewed by family business owners as choices. But often, choosing one or the other prevents family firms from succeeding to their fullest potential. Both poles must be developed consistently over time in order for the family and the business to truly thrive.

Models and tools such as the Polarity Map, developed by Barry Johnson (Polarity Management, HRD, 1996), can be very helpful in developing the capacity to leverage polarities for our advantage. When we work to actively manage polarities, we can benefit from the upsides of each option; we must intentionally develop the capacity to think in this way.

Our mental models of how to approach situations are built through our language and thought patterns. “Am I focused on the success of the business, or the harmony of my family?” This question creates a false choice, and is unintentionally limiting. When we develop the capacity to manage polarities in concurrency, we can ask, “How can I ensure I have business success and family harmony?”

“Do we rely on how we have always done things, or do we try something new?” This limiting question can be restated as: “How can we utilize our experience of what has worked in the past and incorporate some fresh new ideas?”

The most successful, happy families we have encountered embrace polarities and have developed ways of thinking to ensure that competing needs are met. The ability to manage concurrency is a skill that must be cultivated and valued.

The challenges that family businesses face are not single events; they are ongoing, evolving and often unsolvable. If we approach them as problems that require a solution, we waste our valuable time and energy. The most successful family businesses have developed the vital capacity to manage polarities in concurrency as an ongoing resource.

What about yours?

Joshua Nacht is a third-generation family owner and board member of Bird Technologies in Cleveland and a second-generation owner of Riverwalk Associates in Edwards, Colo. He is pursuing a Ph.D. in organizational systems with a focus on family enterprise at Saybrook University. Peter Begalla is an adjunct professor and program manager of Stetson University’s Family Enterprise Center.

 

 

 


 

 

 

Copyright 2013 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permssion from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.

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Family Business Magazine and Stetson University recently held our sixth Transitions conference. While all of these events have been enormously successful, this one in Tampa hit it out of the ballpark with 240 attendees. More than 70% of the attendees were new to the Transitions conference, and most ran businesses that were in the third generation or older. Revenues ranged from $1 million to more than $1.5 billion. However, the pertinent issues were the same for everyone regardless of size!

Before each conference, attendees complete a survey. Although details are private, I can share a few insights into the challenges these families face.

In answer to the question, “What keeps you up at night?” we received perceptive comments reflecting a variety of concerns. One issue was stewardship. Are we investing in the correct areas to sustain the family business for the next 50 years? Another subject raised involved the key role innovation plays in the business to meet the needs of a changing marketplace. Can my family keep pace?

Other worries involved finances. How do we give the senior generation liquidity and still keep our business family-owned? How do we raise the necessary capital to grow the business? There was anxiety around educating the next generation and the non-family board on the importance of a family business. Some CEOs expressed apprehension about hiring the next wave of non-family management as current non-family managers prepare to retire.

Stephanie Brun de Pontet, Ph.D., of the Family Business Consulting Group says what keeps her clients up is “how their adult children will manage the responsibilities of ownership.” She explains, “The fear is two-fold. On the one hand, they want them to be prepared and responsible—they want to ensure their adult children continue to work hard and not see their future ownership as a ticket to ‘easy street.’ But at the same time, they worry that the responsibilities of ownership will somehow be too much of a burden. The worry then becomes, what do we communicate to our kids, and at what age?”

This critical issue strikes a chord with many family business owners. At what age do they want the younger generation receiving ownership income, and will that destroy their work ethic? De Pontet points out that the senior generation wants the next in line to feel excited about the family business, but also hope they will follow their own path and not feel obligated to join.

By the end of the conference, I could honestly say that many of the attendees will sleep better at night having discussed these critical and universal issues with other family business owners. And what keeps me up at night? My husband … he snores!

 

 

 


 

 

 

Copyright 2013 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permssion from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.

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Our family has found that an annual weekend-long gathering, which we call our Family Summit, is the best way to keep family members connected and engaged with our family business. Sounds like a simple endeavor, right? Well, it’s not. Sounds like a lot of love and fun, right? Well, not exactly. Sounds like a party? It better not be.

Our family summit—a coming together on so many levels—is the year-round focus of our H.G. Hill Family Council. I am happy to share some information on the structure of our summit.

An annual family summit should be equal parts family, fun, business, philanthropy and education. It should include something for everyone, and it demands interaction among family members of all ages. A family summit is the best opportunity to communicate what the family needs as it relates to the business and what the business needs as it relates to the family.

All lineal descendants of our founder, Mr. H.G. Hill Sr., are automatically invited to attend the family summit. As it so happens, all lineal descendants of Mr. Hill are company shareholders. If the summit is being held in Nashville, our home base, the non-family directors are encouraged to attend any and all of the events and programs. Non-family shareholders (a handful of whom we never really see) are not included. Boyfriends, girlfriends and significant others are not invited, although legally married spouses are included. Spouses have contributed to many a successful summit over the years.

An unexpected argument broke out one year between the family council and a fourth-generation cousin. The cousin wanted to bring the foreign exchange student who had come to live with his family for the summer. If I remember correctly, everybody, not just the family council, got in on the discussion! This was a scenario the family council never saw coming. The incident occurred during the early days of explaining and scrutinizing this new line item created in the company budget for a “Family Council Summit.”

Summit programming

It has taken the H.G. Hill Family Council seven years (seven summits) to settle into summit programming that seems to work. Even so, we are still refining the activities. We kick off the summit on a Friday evening with an all-family social hour and welcome dinner. Since the youngest members of the family are in attendance, Friday evening is a good time to engage them. Last year, the family announced a large gift made to the Vanderbilt Children’s Hospital in the name of the fifth-generation lineal descendants of H.G. Hill. Adolescent cancer survivors and patients from the hospital were invited to tell their story. They stayed after their talk to eat dinner and swim with the kids in our family.

The Saturday morning sessions include adult family only and are led by various professionals who are hired as presenters. The H.G. Hill Family Council is committed to working with consultants. Of course, we have worked with family business advisers. But we also have engaged strategic planners, financial advisers, attorneys and even psychologists. We’ve explored “how-to” topics such as communicating better, reading a financial statement and professionalizing the business. Family business advisers have moderated discussions on estate planning, succession and family employment. Teambuilding activities, Nashville history and family business case studies are always very well received.

Saturday includes a “working lunch” that features a family history moment or clips from the family archives. My favorite lunch event was a “charette.” By definition, a charette is “an intense effort to solve any design problem within a limited time.” It is often divided into three portions: listen, envision and draw fast! We were asked to design the H.G. Hill Co. of the future. It was so fun! I saw a futuristic picture of our real estate portfolio that had grown to include a PGA golf course and resort, a riverboat casino in downtown Nashville and shopping centers in Florida!

The summit’s Saturday sessions also include a keynote speaker from another family business. This is probably the most popular part of the program. Why? It is always reassuring to know that there are other families and companies “out there” struggling with and celebrating the same things.

Jim Ethier, chairman of Bush Brothers & Company, was our inaugural keynote speaker when we introduced this part of our program over four years ago. Our family enjoyed his talk because he was a fellow Tennessean, he was familiar with our company and he spoke from the heart. Over the years, I’ve noticed that the best advisers, speakers and professionals are those who really research our company, socialize with the family and genuinely share in our summit with us.

Summit attendees spend Saturday afternoons at leisure, with resort activities available or field trips pre-arranged. Saturday night dinner is an adults-only, more formal affair that usually involves a Q&A dessert session with the keynote speaker. Sunday mornings are spent in summit “wrap-up” mode. This is also a great time to hear from the CEO and CFO about current projects and company business via a short report and Q&A.

After several years of summits we all agree that this is a “well-balanced” meal. That is to say, there’s enough “meat” on the plate, greens (financial topics) and sweets to make it worth the time and effort to come to the table!

Timing and location

When should the summit be held? That is a complicated question and one that our family council struggles to answer every year. From its inception, our summit has been planned for the second weekend of August. When this date was established seven years ago, it was the only weekend that seemed to suit each family member’s schedule.

There is a strong benefit to holding the summit on the same weekend every year. It serves us well because it is a solid red X on the calendar; everyone knows when the family summit occurs each year. However, lately the timing has been called into question because a wave of fifth-generation kids go off to school in August. Especially if their parents go along to help them move in, this will result in a lot of missing family members. But, considering the sheer size of this growing family (57 family members at press time), I think we must learn to agree that there is simply never going to be a good time to suit everyone’s schedule. Even so, we need as many family members as possible to attend. We are a fun family! When a few go missing, it’s just not the same fun.

H.G. Hill Family Summits are held in Nashville (“in town”) and “out of town” in alternating years. This is important for budgeting purposes and variety. Our family is unique because 95% of us (across three generations) live in Nashville. Not only that, we all live within a two-mile radius of each other! We tend to go to the same schools and belong to the same clubs, churches, sports leagues, etc. We are everywhere! Because we are woven into the very fabric of Nashville, we have a variety of venues available for our in-town summits. We usually try to include private family homes as well as favorite family philanthropies; local places of interest; and sites of past, present or future company projects.

Out-of-town retreats offer a more attractive escape to a well-known resort and a departure from the Nashville bubble. We have retreated to a Ritz-Carlton, to Barnsley Gardens in north Georgia and the Chattanoogan in downtown Chattanooga. It is decidedly easier if we keep the location within a four-hour drive and at an all-inclusive resort. As with setting the date, choosing the location is a lot more complicated than it would seem. There are always a few family members who grumble about the “missing mini-bar” in their room or the overly extravagant pig roast.

A travel allowance is a topic we are starting to explore. It is imperative for the family council to understand and accept that this family is beginning to fly the coop. We need to cater to those who live in other places and keep them connected. I believe that our “out-of-town” summits must continue to be held in attractive locations—so attractive that family members would be crazy to deny themselves and their kids the chance to be there! Because there are now 28 unmarried members of the fifth generation, we must recognize that some of them may not be able to travel to an out-of-town resort without financial aid.

Still evolving

The H.G. Hill Family Council Summit is the best opportunity we’ve got to keep the family communicating, and to keep everyone connected to and interested in the family business. It is the perfect way for every member of every generation to be involved and to be heard. Call it what you will: “shareholder relations,” “boondoggle,” “think tank” or “whine with wine.” It is no small production, and it takes a colossal amount of planning. There are a lot of family members—and a lot of personalities—who must be considered in the planning process.

The summit continues to evolve. We always follow up with an online survey so we can use family feedback to better design the next summit. The fact that our family continues to attend the annual summit after seven years is itself a huge accomplishment. Hopefully, we will improve the summits every year, and hopefully everyone will want to come back!

Ashley Caldwell Levi is president of the H.G. Hill Family Council and a fourth-generation owner of the H.G. Hill Company. Since 1895, the H.G. Hill Company has built a legacy of service and stewardship in Middle Tennessee as owner of one of the largest privately held real estate portfolios in the Southeast.

 

 

 


 

 

 

Copyright 2013 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permssion from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.

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Have lifecycle events in your family, such as marriage, birth or divorce, created business ownership issues? Are some family members experiencing a need for higher income from their investment in the business? Is there a need for increased liquidity because of an estate settlement? Have there been outside takeover bids or owner lawsuits? Is a change in management or board membership imminent? Are young adults graduating and pressing for a position with the company?

If you answered “yes” to any of these questions, it is time to revisit your family constitution, your company bylaws and other legal documents, as well as the policies and procedures that provide governance for the family, the business and the owners. It is time to take these documents off the shelf, dust them off and open them up! Unless you are one of the more diligent families who dutifully review all or part of these documents every year, now is the time for another look.

But first, a quick reminder of why these documents are important. Many members of the family business community are familiar with the “three-circle” model of the family business system, in which three interlocking circles represent family, business and ownership. Most of the time, we dutifully dwell in one circle or another. The intersections are where we can get into trouble.

These governance documents not only provide definition (who are we?), direction (where are we going?) and discipline (how do we proceed?) within each circle, but also outline the rules of engagement at the intersections. Good governance guides smooth interactions between the circles, much as traffic laws coordinate the smooth flow of vehicles through controlled intersections. By giving coordinated guidance and direction, governance works to build greater cohesion among the business, family and ownership circles.

Review of your governance documents must involve the whole business family. If you have a representative governing body, they should lead the review, but bring everyone to the table. This topic can be part of the annual meeting or, perhaps, a one-day family workshop. Input from legal counsel is also important to ensure harmony between family governance and legal documents such as bylaws and employment contracts. One way to go through the review is to consider three questions: (1) What do you have? (2) What do you need? and (3) What do you need to tweak?


What do you have?

Remember: Good governance provides definition, direction and discipline. Suggested governance documents are listed in the sidebar on the next page. Some of these documents may be included in your family charter; others may be contained in policies and procedures statements within company documents, ownership manuals or family handbooks. To start this review process, outline what is in your family constitution.

The family charter is the document where alignment with the business begins. It should be broad enough to not need much work. However, it is important because it is the source from which policies and procedures flow.

For most of us, the family charter probably starts with a mission statement, a list of family values and a vision statement. What do these statements contain? Do they truly define who your family is? Does the family’s values statement align with the company’s values? Do your policies and procedures reflect your values?

You may have separate vision statements that reflect the vision for the family itself and the family’s vision for the company. Do these vision statements guide your strategic plans? Vision statements should remain relevant and align with the business vision. With a strong family identity, the family’s influence will flow into the business. Does your family influence the business, or does the business influence the family? Remember, a true family business is one in which the business is deeply influenced by the family, not the other way around.

Now turn to your definition of the family. This definition should be carefully attended to because for most of us, who is “family” also defines who can “own.” Do your ownership bylaws and transfer policies align with your definition of family? Is one more inclusive than the other? For some families, only descendants can attend the business meeting, while married-ins, step-children, and adoptees attend the education and family meeting; other families include everyone at all of the meetings. In still other families, the definition of family guides a company policy on who gets his or her way paid to the annual meeting.

Your charter might also contain family council provisions for officers, committee structures and meeting protocols. Are these provisions still relevant? Too much change in this area might indicate a need to move some items into the policies and procedures manual rather than the family charter. Additional protocols among the policies and procedures might address the intersection areas of the family business system: owners’ rights and responsibilities, dividend and redemption policies, the family employment policy and a family director policy.

What protocols do you have? Look at the list in the sidebar and check off the governance documents that you have in written form.


What do you need?

The list of suggested documents in the sidebar is just that: a suggestion. Before considering the items you have not checked off, take another look at the documents, policies and procedures, guidelines and bylaws you have. Are they formal (written) or informal (unwritten)? Beware of informal unwritten policies and procedures. Rather than being left to the whims of the an individual’s interpretation, these unwritten rules are better off written down. Research shows that when expectations are clearly understood by all stakeholders, appropriate behaviors ensue. Let the family members, owners and business employees clearly know all policies and procedures necessary for good coordination within each circle and across the intersections. These unwritten protocols should top the “What do you need?” list.

When assessing the suggested documents that you don’t already have, consider these questions: What pertinent issues are not currently addressed? What documents may be needed in the future that do not exist now?

The actual writing of these documents is the business of the family, perhaps via a task force task or a family council project. Where the documents intersect with the business and/or the ownership, an ad hoc committee made up of representatives from the pertinent circles could be assigned the initial writing. This should not be an onerous task, but when intersecting with company bylaws or ownership manuals, care should be taken to keep the legal details in order. Above all, make the task fun—and definitely celebrate when the new protocols are adopted.


What do you need to tweak?

All systems grow and change, as do the environments in which they exist. The family business system is complex, with each circle having its own lifecycle. With these lifecycle dynamics, ever growing and changing, it is no wonder that governance documents must be updated to be relevant. Think about the significant changes that have occurred in your business, in your family and among your owners. Then look at the list of documents you have. Changes in your business and family can point you to particular bylaws, policies and procedures, and other governance documents that might need updating.

Of course, rather than wait for a significant event to happen, the better course would be to schedule a document review as part of your strategic plans for the board of directors, management team, family council, and shareholders’ group. Perhaps you could schedule a review of the whole constitution every five years. Or, to make the task a little less onerous, review one or two parts or policies every year.

The need to review our governance documents came to mind recently because succession is taking place in several different areas in our company. I started thinking about how these events could affect some of our business family policies. It occurred to me that for those of us who have some form of family governance, it is a good time to revisit our family constitutions, charters, policy and procedures documents—whatever we may call those governance papers that lend definition, direction and discipline to our business family.

Some of my questions revolved around our vision and values statements. How do we use our values —both the company’s values and the family’s values? How are we doing in fulfilling our visions and strategic plans? Are our council procedures still relevant? The policies and procedures that govern our family’s intersections and overlaps with the business and the ownership seem to be working seamlessly, but perhaps we should revisit them for a check-up before one is needed.

Happy reviewing, one and all!

Charlotte Lamp, Ph.D., a family owner of Port Blakely Companies, is the principal of Rockwood Consulting LLC.

 

 


 

 

 

 

Suggested governance documents

 

Definition (Who are we?):

• Family Values Statement

• Family Mission Statement

• Definition of Family


Direction (Where are we going?):

• Family Vision Statement

• Family Vision for the Company

• Strategic Plan or Road Map

• Family Employment Policy

• Family Director Policy

• Redemption Policy

• Dividend Policy

• Transfer Policy

• Philanthropy Policy


Discipline (How do we proceed?):

• Owners’ Rights and Responsibilities

• Family Council Committee Structure

• Communication Protocols

• Annual Meeting Attendance Policy

• Prenuptial Agreements

• Estate Planning Guidelines


Other:

• Other documents that have come to mind that might be useful in adding definition, direction and discipline to the work of being a solid business family.

• Check for harmony between family governance documents and legal business documents.

 

 

 



Copyright 2013 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permssion from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.

 

 

 

 

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