Relationships: Father/Son

Ben Stillerman, 28, is descended from three generations of merchants and shopkeepers. But while he knew his own future wouldn't involve working in his family's chain of home goods stores in South Africa, the family business inspired the young filmmaker's first documentary,Taking Stock.

Benoni Discount Stores was founded as a grocery store in 1947 by Stillerman's paternal grandfather, David. Over the years, the business morphed into a full range of home goods for kitchen, bed and bath, and expanded to three stores: the original headquarters in Benoni, a second location in a town called Springs and a third in the center of Johannesburg. None sells food any longer.

David Stillerman worked in the business until the week before his death in 2006 at age 88; his wife, Friedel, also worked there until her death in 1993. Stillerman's father, Clive, 60, is a self-described shopkeeper/philosopher who calls the stores his "empire of dirt," after a line in Johnny Cash's song "Hurt."

Ben Stillerman never worked for the stores in a professional capacity, though like any teenager in a family business, he worked there part-time through school and helped take inventory.

"At age 15, I went to career counseling with my mom and dad," Stillerman recalls. "Before my butt cheeks hit the chair, I had apparently announced that I wasn't going into the business." His sister, Jessica, 26, is studying economics in London; they have a half-brother, Jack, 5, from Clive's second marriage. His father's sister and her husband, Adele and Zwi Angel, work in the business as co-managers of the downtown Johannesburg store.

"My father is conflicted," Stillerman says. "He doesn't want his kids in [the business]; he wants us to do something bigger. He didn't study what he was passionate about. He went into the business right away after graduating university. The business is something he likes but doesn't love."

In fact, Ben Stillerman thinks his father has grown to hate the business.

The film, now in final production with a release date of early 2016, explores all the questions, relationships and emotions universal among family businesses, as well as themes—guilt, survival and apartheid—unique to a prosperous Jewish merchant family in South Africa.

Stillerman conducted a Kickstarter campaign to raise funds to make the documentary. Through Kickstarter, he raised about 25% of the cost of filming the project; private funds and donors also contributed. Many family members and friends donated their money, contacts and expertise, Stillerman adds. He is still trying to raise money to distribute the film.

Family Business: What inspired you to make a film about your family's business?

Ben Stillerman: Two things. One, because a documentary is a commitment that lasts at least two years, it needed to be something I would not lose interest in, and I knew this wouldn't get stale for me because it's so close to home. And two, it's my first move on my own after studying. It would be a very different film if I'd done it in 15 years and looked back, and I think it's very important for a documentary to be current and contemporary.

I wanted to explore the relationship between family members and family business. Can you separate them? Should you separate them? The film explores class guilt, family dynamics and the Jewish community in South Africa, which is a very important part of the story.

My grandfather left Poland in the 1930s at age 18. My grandmother left Germany just after Kristallnacht in 1939. Neither went to the camps, but both lost a lot of extended family [in the Holocaust]. It had a huge impact on them, my grandfather especially.

You hear stories of how refugees have quirks like keeping hundreds of cans of food all the time. My grandfather kept a huge amount of stock [inventory]. He used to say that cars, holidays, fancy clothes and fancy things were bad investments, but stock sells itself. He had huge boxes of stock, but now it's taken on an oppressive weight for my father. Will he be able to sell it? Can he get smaller and retire? It's a real burden.

FB: Your grandparents came from a place that was violently anti-Jewish to another that officially sanctioned oppression of blacks. How did that affect both life and business?

BS: The position of an average Jewish family through apartheid was to keep your head down. We'd just escaped the Holocaust, now we saw this happening. Yet the second generation—my father's generation—did extremely well. They went into banking, mining and resources, and the corporate world. They were the product of a long history of fear; they came with it, it didn't happen just when they arrived.

FB: South Africa has a reputation of being very dangerous. How do you run a retail business in that environment?

BS: Security is very important. Every day an armored car comes and big guys with guns take the money to the bank. That's the most dangerous job in South Africa.

I have very vivid memories of calls at 4 a.m. from the security company, saying there was a break-in. But during the day the store has to be open; you can't buzz people in like a jewelry store. There were a few incidents where guys came in with guns and demanded all the money in the registers; at night they come in through the roof or smash the glass. And there still is lots of shrinkage and theft.

FB: How did apartheid affect the business?

BS: We weren't segregated. It's a no-frills discount store, open to anyone who can afford the stuff. It was odd, but our aisles were shared by black and white both during apartheid. That might have insulated us from antagonism, and people knew they would get a good, fair price, which helped post-apartheid.

FB: What about now?

BS: We're now 20 years out of apartheid. Now we're separated more by economics than race. South Africa has the highest Gini coefficient in the world. That factors in on so many levels: crime, psychology and so forth. But it is changing. There is hope in the air. After 300 years of oppression and 50 years of legal oppression, the fact that there was a successful transition says a lot about the future.

FB: Your father used to love the business, but now you believe he hates it. Why?

BS: You do something for 40 years, the passion goes out of it, and it just becomes toil. My father just turned 60 and he's been doing this since he was 22. It's been financially rewarding but emotionally taxing and caused lots of stress. It's why he divorced from my mother.

In the beginning, it's exciting to be master of your universe, or at least of a retail empire in South Africa. Now he just feels trapped by all the stock and not sure there's a way out. And my father carries massive, massive guilt over having wealth where so many people are so poor.

FB: Your father thinks the business will die with him. What do you think?

BS: Dad's 60, but I don't see him retiring any time soon. I don't know what he'd do if he weren't in the shop. He still does his own books and cash-outs. My grandfather worked until the week before he died at age 88. Maybe by then my brother Jack will be ready.

For me, the most exciting thing would be to find an out-of-family manager to hand it off to. I found an ending in the film that he found peace in what we are all doing, but what would be a good end resolution is to find a good young black employee my father can mentor and perhaps someday transition ownership.

FB: Is there anyone in mind?

BS: There's no employee at the moment. Over the years, managers have come and gone, black and white. Management in retail often leads to antagonism with the owner unless you're invested in the business.

FB: Is there any option for a family member to take over?

BS: There are some younger cousins who've spent time working and have expressed interest in it. But the idea is that you do a job so your kids can do a better job, and their kids do an even better job. Maybe it's a Jewish thing. Or an immigrant thing.

FB: Your film addresses complicated relationships with relatives, employees, customers and friends.

BS: My father and grandfather dealt with all people pretty much like employees. Both shouted at their employees, and they did a lot of that to family as well. It goes back to the premise of the film: Can you separate family from family business?

My mother [Elaine Rubens] talks in the film. She worked in the shop when they were first married. My father was shouting at her and a customer said, "I can't imagine working for that man." My mother said, "I don't work for him, I married him." She got out of the business soon after.

But you can't really separate family from business. My father and grandfather didn't really have any relationship beyond business. At Friday night dinner, my grandfather had the figures for the week and my father had the ads. They'd be in a shouting match and we'd all be having another conversation.

FB: Did the film change any feelings about your father, the business, or family business in general? How does he feel about your film project?

BS: Yes, for sure it helped us form a closer relationship. We were quite close [already], else he couldn't have lived with six people [in the film crew] shadowing him for a month. But at first we argued a lot on the phone; he didn't understand what the film was about.

The business is a very inherent part of who I am, even if I'm not in it. It's a tremendous force in my life and my sister's life. When we talk, we'll ask, "How's business? Can we call Dad now? No, it's cash-out time."

FB: It seems as if the film will deal with extremely personal issues surrounding family relationships and the family's feelings toward the business. Is your father OK with this? Has he seen the footage?

BS: He's OK with it, although he hasn't seen any real footage yet, and there are definitely some moments which I think will be difficult for him. Ultimately, though, the film is not an attack on him, and I'm confident he will see it for that.

To learn more about Taking Stock, see www.takingstockfilm.com or www.facebook.com/takingstockmovie. A trailer for Taking Stock can be seen at https://vimeo.com/125735551. Stillerman also has created a series of five short videos titled Shopkeeper Philosophy, featuring his father, Clive, dispensing bits of business and life advice. They can be found at https://vimeo.com/channels/shopkeeperphilHedda T. Schupak is an editor and analyst specializing in fine jewelry and luxury retailing. 
 


Copyright 2015 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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As a young man in his 20s, Keith Tillage was an entrepreneur in search of a business. Not content with a rising career in corporate America, he wanted to build his own company. He just didn’t know what kind of company.

Keith, a software consultant for PricewaterhouseCoopers in the mid-1990s, spent a lot of time flying around the country. On one fateful trip, he read an article in the in-flight magazine about a woman in Tennessee who had rebuilt her commercial construction company with the help of a Small Business Administration program. Two things jumped out at him: the SBA program was specifically for minorities, and the commercial construction market was sizable.

Keith knew he had found the business idea he had been looking for. Although his expertise was in technology, his father, a retired football coach, had turned his cabinet-making hobby into a residential construction business. Keith proposed that his father convert his business to commercial construction and that they go into business together.

In 2000, Keith and his father, Ken Tillage, co-founded Tillage Construction LLC, a minority-owned, full-service construction company headquartered in Baton Rouge, La. With a boost from the SBA program, Keith identified a niche market in Louisiana: federal government contracts with set-asides for minorities. The USDA has been Tillage’s biggest client, but the company has also worked on projects for the U.S. Navy, the Air Force, the Department of Homeland Security, the National Park Service and Baton Rouge Community College. Between 2009 and 2012, Tillage had a growth rate of 424%.

Tillage’s rapid growth and reputation for completing jobs on time and on budget have earned the company several prestigious awards and national recognition. This past January, Keith joined a select group of small-business owners invited to the White House to discuss the economy with President Obama and Vice President Biden.

“It’s been an amazing journey,” says Keith 44. “Getting started was harder than I imagined, and sometimes I wondered whether I was crazy to have left a secure, high-paying job. But my father assured me that I could do it, and that gave me confidence to keep going. My father and I built this business brick by brick, and that feels really good.”

Success despite a rocky start

The Tillages began by buying an office building in an underdeveloped business district in Baton Rouge and renovating it themselves. Forgoing salaries and funding expenses from their savings, they scraped by until 2002, when they got a contract valued at $1 million. But instead of helping to launch their business, the deal almost destroyed their fledgling company when the developer refused to pay for services rendered.

The Tillages fought back and eventually won a small settlement. Looking back, Keith says he and his father couldn’t have paid for a better introduction to running a commercial construction business. “We came out of it beaten up but not dead,” he says, “and a lot smarter. It forced us to understand every nuance of construction law and to put mechanisms in place to make sure we were never in that position again.”

Regaining their footing, the Tillages were careful to take on projects they knew the company could handle and deliver on time. As Keith became more familiar with the local market, he spotted an opportunity for a minority-owned construction company to pursue federal jobs in Baton Rouge. The federal government requires that 30% of contracts on federal jobs be awarded to women- or minority-owned businesses. At the time, there wasn’t much competition for those contracts. Keith enrolled in the SBA 8 (a) Business Development Program for minorities, which taught him how to develop strategic plans that targeted specific government jobs. Tillage’s first contract was a $70,000 local job for the USDA.

Just as they were successfully finishing the job in 2005, Hurricane Katrina struck. When the recovery work started up, Tillage received calls from several construction companies looking for a minority partner to qualify for government contracts. Keith refused, preferring to take on jobs that would advance his company. Casting about for his next move, he called a federal contracting officer he knew. The officer mentioned that he was working in Stoneville, Miss., that day. Keith told him that he was in the area and asked if he could drop by. In fact, Keith hadn’t planned to go there but thought it wouldn’t hurt to make the three-and-a-half-hour drive to talk to the officer in person.

The conversation lasted 15 minutes, but the spur-of-the-moment, seven-hour roundtrip yielded an unexpected bonanza. On his way out, Keith stopped in the bathroom. A man dressed in a suit was looking in the mirror and fixing his tie. Keith said, “I don’t know where you’re going, but you sure look good.” With that, the two struck up a conversation. Keith told him about his company and that he had driven to Stoneville looking for work. The man shook his hand and said, “Young man, I think things will work out for you.”

On the drive back to Baton Rouge, Keith got a call on his cell phone from the man he had met, who turned out to be the federal contracting director for the entire Southeast region. He asked whether Tillage could handle a $500,000 local project. “Going from working on a $70,000 project to a $500,000 one was a huge leap,” says Keith, “but I said we absolutely could do it. What clinched the deal was that we were bonded. Our profit sheet wasn’t so strong then, but I had made a point of developing a personal relationship with our bonding agent, something critical for small businesses and minorities.”

“Tillage Construction’s story could be a template for companies coming through the Small Business Administration minority program,” says Suzette Bather, director of the New York City Minority Business Development Agency. Bather has assisted Tillage in developing its growth strategy. “Keith has an exceptional ability to grasp new information and leverage the resources provided to him,” says Bather. “He’s quick to recognize opportunities but always talks things over with his father before acting. Keith and Ken make a very strong team because their personalities and talents complement each other so well.”

Working together

Ken, 71, was in his late 50s when Keith proposed that they go into business together. At the time, he was running a one-man residential construction business. “My days of growing a business were behind me,” says Ken. “My idea was not to work harder, but to work less. With Keith coming in, he could do the research, bid on contracts and do most of the work of building the business.”

While the new business was more complex and required his learning about the government bidding process, the basics were familiar enough for Ken to transition easily from residential to commercial construction. He is responsible for supervising sites and managing local jobs, but his most important function is acting as a sounding board for Keith. The two meet once or twice a week to review everything that’s happening and to discuss any problems. “I’m all about action and getting things done,” says Keith. “My father is a calm personality, very smart, a thinker. He’s a great grounding force for me.”

Keith and Ken are equal partners in the business, and both have the title of owner. The two have an easy working relationship based on mutual respect. On occasions when they disagree, Keith says they work out their differences from a business perspective and without dissension. “Lots of conflicts in family businesses come from the older generation wanting to keep doing things their way and not being open to the ideas of the younger generation,” Keith says. “It helped that I didn’t enter a successful business that my father had established. The beautiful part of our journey is that we built the business together, and I wouldn’t have wanted it any other way.”

Keith was an only child, and his father began training him to be an independent problem solver as a young boy. Keith recalls being upset because his car had broken down when he was a teenager. He called his father, and his father asked, “So, what have you done about it?”

“That was my father’s way of saying that he expected me to look for solutions on my own,” says Keith. “If afterwards I still couldn’t resolve the problem, then I could come to him. I am using the same approach in raising my six-year-old son, Cameron, and he already grasps the concept of trying to work things out for himself.”

Keith credits the SBA minorities program for its role in the launch of Tillage Construction, but he is also proud of what he and his father have accomplished. Contrary to what many people think, companies that qualify for minority set-asides do not automatically get the jobs. “You can’t sit back and wait for the phone to ring,” says Keith. “You’ve got to work aggressively to make it happen. Who you know is important, and so is who knows you. We have done a good job of sitting down with people in the business to give them a feel for who we are and what we do.”

Last year Tillage opened a regional office in Dallas, increasing its full-time staff to 26. Keith and Ken have built a strong team of employees they rely on to handle the day-to-day work of the company, freeing Keith to think strategically about where Tillage goes next. “I used to make lists of things to do,” says Keith. “Now I make lists of things not to do. My job is to go out and catch the fish, and my father and our staff facilitate things so that I can keep fishing.”

Strategic thinking

When Keith opened the Dallas office, people asked why he would do that when Tillage was doing so well in Baton Rouge. Now he is working on developing contacts with big firms headquartered in New York to be part of deals at a higher level, and people are still asking him why a Louisiana company is talking to people in New York. “We were the first minority company in Louisiana to jump into federal contracts,” says Keith. “Now others have moved in, so we have to start diversifying. What I understand about businesses is that if you’re not adapting you’re a dinosaur, and we all know what happened to them.”

As a beneficiary of the SBA program for minorities, Keith understands the difficulties minority-owned businesses face in qualifying for federal contracts. He has headed up a diversity initiative to encourage the expansion of local minority-owned businesses in the construction field and mentors small businesses whenever he has the time. “It’s difficult to work on government contracts with small businesses because they don’t know all of the processes required, and it takes time to teach them,” says Keith. “There’s a big difference between being able to do the work and knowing how to run a business.” Keith tries to hire minority subcontractors, but only if they are the best companies he can find.

Suzette Bather, who has followed Tillage’s progress since its inception, sees a bright future for the company. “Although operating in Baton Rouge, Keith understood early on the importance of building partnerships with companies outside of his immediate region,” she says. “Now he is building the company’s capacity to take on larger projects. Keith has the initiative and the agility to take Tillage to a higher level. I no longer consider Tillage a small, regional business. I see it as a national company.”

Tillage Construction is organized as an LLC and has no official board. From the start, however, it has enlisted people in the construction business or with knowledge of business development to join its unofficial advisory board.

Keith and Ken have not done any formal succession planning. Rather, they are building the business with the long-term options of keeping it as a family business or possibly selling it. Ken’s dream was to have a family business and hire talented family members to work together. Some family members have worked in the business at various times, but so far only Ken’s nephew, Michael Tillage, 37, who works in the human resources department, has met the company’s high standards. Keith is only in his mid-40s and his children are very young. “If they choose to work in the business,” he says, “that would be great; if not, the business will be a means for them to do whatever they want in their lives.”

Father and son have always had a close relationship, but the experience of building the business together has increased their appreciation for each other’s talents and made their achievements all the more meaningful. “This is my time to work, and I love what I do,” says Keith. “My father is enjoying the spoils of our success without having to work too hard at this stage of his life, and I love that, too. I couldn’t be in a better situation.”

Ken, too is elated by the business’s success. “We’ve accomplished more than I ever imagined, but there are still places we want to go,” says Ken. “I’d love for us to become the biggest construction company in America.” Hearing his father’s comment, Keith laughs. “Are we going to be the biggest in the country? Probably not. But are we going to keep shooting for it? Absolutely.”

Deanne Stone is a business writer based in Berkeley, Calif.

 

 

 

 


 

 

 

 

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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When 28-year-old Price Harding III yearned for a new career in 1989, his parents' Atlanta employment agency seemed as good an opportunity as any. Bell Oaks Co.—founded 19 years earlier by Price Harding Jr. (known as Preston) and his wife, Shirley—specialized in placing candidates in junior-level management training positions. Since Price's three siblings had all followed other careers and his parents had given no thought to succession, they welcomed Price into the business.

For the first few years, he was his father's willing student. “I took instruction from him and did it his way to a ‘t,'” Price recalls. “I would have been a fool not to. I knew nothing about the industry, and he was an expert.” As the graduate of a Bible college, Price found that the same qualities that would have made him a good preacher—his easy manner and compelling speaking style—now contributed to his success as a salesman.

But while Price was doing well working on commission, Bell Oaks was losing money. The company, which had a staff of 14 in 1989, was reduced to four in 1992—Price, his parents and one non-family employee. It needed a bold leader to save it, but at age 60 Preston Harding lacked the stomach to take big risks.

“This is the kind of business that needs an energetic leader to make things happen,” says Preston. “Price had all the right qualities. He was young, ambitious and willing to make tough decisions. And I had a lot of confidence in him.”

In 1992, Preston offered Price a deal: He would gift Price half the business, and Price would work to make the other half worth enough money to buy his father out. Price could run the business as he chose, and Preston would help out by managing the books.

At first Price wasn't sure that he wanted the responsibility of saving a sinking business. But his entrepreneurial instincts won out. At the end of that day, father and son traded places: Price moved into the president's office, and his father moved into Price's smaller office.

Not many founders could relinquish authority to their sons with such ease—or in such highly symbolic fashion. In theory, most parents want their children to carry on the family business. But in practice, watching a son or daughter's star rise as the parents' powers wane can be wrenching. Do parents really want their children to out-perform them? “They had better,” says family business consultant Dr. Patricia Frishkoff of Eugene, Ore., “or the business won't survive.”

A decade ago, the three family businesses discussed here had all run into trouble. The economy had weakened, competition was stiffening and the old ways of doing business weren't working. One option was to sell. Another was to give the younger generation a chance to run the business. In these cases, luckily, the successor sons not only revived the businesses but also far exceeded their fathers' achievements. Had the businesses been thriving, the fathers might have resisted relinquishing control. Yet Preston Harding, Fred Heumannn, and John White Sr. each found ways to step aside with their pride intact. And their sons managed to pursue fresh visions without demeaning their fathers' legacies.

Transforming Bell Oaks

Preston Harding insists that he was just being practical when he turned Bell Oaks over to his son Price. “I do a job because it needs to be done and because it fulfills me,” he says. “I'm not bothered if someone else gets the credit. I have a lot of self-esteem but not much ego. Besides, I wanted to retire at 65 and, if Price did well, my wife and I wouldn't have any financial worries.”

At the time, Bell Oaks was grossing about $300,000 a year in revenues. As the economy picked up, Price recognized an opportunity to capitalize on the growing corporate demand for high-quality employees. In 1992, he converted Bell Oaks from an employment agency that collected fees from job-seekers into an executive search firm that collected fees from corporations.

Price had to generate business quickly, and to do that he needed a sales staff. Pulling together everything he had learned about the business, he developed a training script to help his employees get off to a good start. That training program proved so successful that it's now widely used by executive search firms around the country.

Price credits this training script as key to the company's impressive placement record. In the past eight years, Bell Oaks has filled more than 10,000 positions for 900 client companies, and its fees for top-level corporate positions can run as high as $100,000. By 1997, when Inc. magazine named Bell Oaks one of the fastest-growing privately held companies in the U.S., Price had bought out his father's remaining 50% share of the company. Now 42—about the same age that his father was when he started Bell Oaks—Price oversees a 40-person staff in offices in Atlanta and Boston. Last year Bell Oaks' sales reached $3.6 million, 12 times the level when he took over ten years ago. Now Price talks of building Bell Oaks into one of America's top 40 executive search firms within the next few years.

In effect, Price has transformed the family business and made it his own. But he contends that “Our partnership worked because my father knew that if I were to manage the business in a way that had meaning for me, he would have to give me full authority to make decisions.”

Preston Harding, now 72, says he wanted to be beaten at his game. “I enjoyed the business while I was there,” he says, “but once I left, I never looked back. If Price wanted to change the business or even the name, it was OK with me. He's done a great job. Price was the best hire I ever made.”

Up from ‘small potatoes'

Like Price Harding, Roger Heumann of New York City turned hard times into a family business opportunity. Even as a child, Roger liked to talk with his father, Fred, about Olympia Sports, the hat and glove manufacturing business that Fred had founded in New York after emigrating there from his native Switzerland in 1939. But Fred Heumann discouraged Roger and his brother from working at Olympia Sports, which Fred considered “small potatoes.” He thought his sons could do better forging their own careers. Fred's older son went into computers, and Roger became a financial manager in a large corporation. But he really wanted to work at Olympia Sports. In 1985, at age 31, Roger got his chance.

The business had stagnated since its heyday during World War II, when the government needed hats for the military. After the war, Olympia Sports went back to making hats and gloves for department stores under its own label. But by the mid-1980s demand for hats was down, competition from abroad was up, and sales were stuck around $1.5 million a year. Fred, then 75, talked about retiring and selling the company. Instead, Roger persuaded his father to hire him as a salaried employee and as his eventual successor.

At the time, Fred had broken his hip, and his wife was seriously ill. Distracted by health problems, he gave Roger a free hand in running the business. He gave him the business, too. Under a shareholders' agreement, he gradually gifted Roger the company stock in annual distributions.

“My father and the manager were just coasting,” Roger recalls. “They were happy to keep the customers they had. I wanted to grow the business.” Fred, by contrast, assumed Olympia's best days were past. But because Fred was 44 years older than Roger, both men were spared some of the customary father/son successor dynamics. Had Fred been younger and in good health when Roger entered the business, the son's willingness to gamble on new ideas might have collided with the father's need to play it safe.

Looking at Olympia with fresh eyes, Roger wondered why it couldn't manufacture sports gloves under other labels as well as its own. He pitched that idea to large corporations. Winning those contracts opened another door for Olympia: putting companies' logos on gloves.

Although Roger ran the company, he continued to defer to Fred, discussing all major business decisions with the founder. Fred didn't interfere with Roger's plans, and he objected only once: when Roger changed Olympia's credit policy.

“My father was very Swiss,” Roger explains. “If customers were one week late in paying bills, he didn't want to do business with them. I argued that the business couldn't expand unless we took more risk. It was hard for him, but he eventually went along with me.”

Roger had other winning ideas. He introduced a new protective glove for motorcyclists that became Olympia's best seller, and he won a contract to manufacture gloves for Ralph Lauren. This past year, he added a line of women's gloves.

Today Roger runs Olympia from its new office and warehouse facilities in Elmsford, a Westchester County suburb of New York. A force of 50 independent sales representatives promotes its products, and an office in China oversees production in Olympia's factories. During the 1990s, the company grew at a rate of close to 20%, with revenues last year approaching $20 million.

Fred never said much to Roger about the transformation of his “small potatoes” company. But he followed it closely. Until his death last year at 91, Fred stopped by the office a few times a week to look at the books.

“When I came into the business,” says Roger, laughing, “my father told me, ‘You'll always be able to grind out a living here.' That's what he said—‘grind.' He never imagined the business could grow this big.”

A tough act to follow

Like Roger Heumann, John White Jr. saw his future in the family business. But just as he entered the company in 1982, it fell on hard times. His grandfather had founded Taco in 1920, and his father, John Sr., had run it since 1935. The Rhode Island company makes products used in commercial and residential heating and air-conditioning equipment, so Taco's business rises and falls with the construction industry. In the early 1980s, that industry was pummeled by the nationwide savings and loan crisis, and Taco suffered too.

Before Taco (pronounced “Tayco”) had a chance to recover, the recession of 1990-91 struck a second blow. After five years of flat sales, Taco's business dropped by 20% in the spring of 1991. With a backlog of inventory, high fixed expenses and low cash flow, the company's situation seemed bleak. It wasn't clear whether Taco would remain in the family or even if it would survive.

John Jr. is the youngest of six children and the only son. One of his sisters had earlier tried her hand in the business, only to be eased out by their father when she didn't work out. To prevent his daughters and their husbands from exercising any further influence on management, John Sr. bought back all the company shares held by his daughters. At the same time, he brought his son into the business with the expectation (but not the promise) of succeeding his father. John Sr. still entertained the possibility of selling the company if business didn't pick up.

John Jr. started off in sales in the early 1980s. Over the next decade, he worked in every phase of the business—but without authority to make decisions.

Like Fred Heumannn, John White Sr. was 44 years older than his son. But whereas Heumann was ready to retire at age 75, White, at a similar age, showed no signs of relinquishing power to anyone. By 1991, he had controlled the company for 56 years.

“My father managed me the way he managed the company,” John Jr. says. “He was always right on top of me.” But after decades of micro-managing the business, in 1991 John Sr. loosened his grip on his son and a few other key employees. The decision to delegate authority was motivated not by a change in management style but by his frustration with Rhode Island's business climate: Incensed by high taxes and strong labor unions, he took his complaints to the public. In 1991, he launched “Red Alert,” a ten-year campaign to encourage voters to pressure politicians for change.

“My father became famous,” John Jr. says, “but he got so swept up in the campaign that he neglected the business. Even before the campaign, he ran the company conservatively. From the 1960s through the 1980s, management didn't change much. In all that time, he didn't introduce any new ideas or strategies.”

While John Jr. and his father shared the same goals for the company, they had very different personalities. “My father was from the old school,” says John Jr. “He kept a tight hold on the reins and made all decisions by himself.” By contrast, John Jr.'s emphasis was on building trust between employees and management and on giving employees more say in decision making. He candidly admits that his approach stems less from philosophy than from necessity. “I delegate authority because I have to,” he says. “I'm a good communicator but not the strongest manager. I need employees who are motivated and willing to take on more responsibility.”

With his father distracted by the Red Alert campaign, John Jr., then 33, saw an opportunity to take a larger role in running the company. After ten years of working in all phases of the business, he felt that he had a handle on its problems. He presented a plan for restructuring the company to his father. “Give me six months,” he said. “If my plan works, then give me six more months. If it doesn't work, we can talk about selling.”

John Sr. gave his son the go-ahead to begin restructuring the company. To bring costs under control, the company took the painful step of substantially reducing its factory and office staff. Then, together with the workers, John Jr. brainstormed ways to make the factory more efficient. Workers were organized into teams, and work stations were relocated to increase efficiency. The company established the Taco Learning Center, an on-site education program where employees could increase their skills and chances for advancement. And to improve customer service and deliveries, John Jr. divided the company into four divisions or product areas. As these changes kicked in and profits increased, Taco invested in new plant equipment and bolder product development.

The innovations paid off. Between 1991 and 1995, Taco's productivity and sales rose while annual employee turnover fell below 1%. But at first John Sr. was skeptical.

“My father had a hard time accepting that the changes I wanted to make would work,” says John Jr. “When the business first started turning around, he'd say, ‘Well, wouldn't you rather be lucky than sorry?' But after five years of witnessing sustained growth, he finally acknowledged that I was right.”

In 1996, when John Jr. was 38 and his father 82, John Sr. became Taco's CEO and made his son the president. By the time John Sr. died last year, Taco had become an international leader in its industry, and revenues had climbed to $120 million—up 150% from $48 million in 1991, when John Jr. began restructuring the company.

“When I first started at Taco,” says John Jr., “my father wasn't sure I had what it took to run the business. If he hadn't gotten so caught up in the Red Alert campaign, I might never have had a chance to prove what I could do.”

Deanne Stone is a writer who lives in Berkeley, Calif.

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Fathers love to advise sons, but few have done it with such willing heart and grace as Nick Lyons. Several months ago, after 15 years as head of The Lyons Press in New York City, Nick, 67, turned the page of leadership and made his son Tony, 36, the new publisher. To guide his son, Nick, a former English professor at Hunter College, executive editor at Crown Publishers, and author of 18 books, also sat down and wrote —longhand —two bound notebooks collectively titled, “Notebook of Publishing Tips to the New Publisher.” The excerpts here convey practical business lessons as well as Nick’s pride in the business and his son’s role in it —inspiration for any parent and child building a business together.

—The Editors

Dear Tony:

I'm in the emergency room at Mt. Sinai Hospital, waiting to be examined for a possible “deep-vein thrombosis”—a clot in my left calf, the third such serious threat I've had in the past two years from one thing or another. It hurt severely yesterday morning—so much so that I could barely walk—and then the pain subsided. The fellow who gave me my brand-new titanium hip thought it might be a clot, so I'm here. All hospitals make me think of mortality and confirm my decision to appoint you president of this business I founded years ago.

I want to give you some notes, thoughts, worries, praise, cautions—all that I'm thinking about, in no particular order, as I plan to change my life and to put you in charge of what it has taken me 35 years (if you include my years as editor at Crown Publishers) to conceive and shape and grow.

•   •   •  

It's a spasm, not a clot.

•   •   •  

What a joyous and worthwhile thing it is we do—the bringing of words from the darkness of oblivion into the world; old words that need reprinting; the vision of a book, its portal to other worlds; good words that help people tie a better fly, play better tennis, grow a garden. I cannot think of an adult human activity as worth a life's effort as book publishing.

I have enjoyed publishing immensely. I've liked the choosing of books, the framing of them so they would have the best chance in the world, and I have liked some of the selling, though that and other parts of the business less. I like the fact that there is a business after all these years, a base, a backlist of titles that continue to sell, a logic of how to be a profitable and respected small publisher. I'm proud of how this business started on the dining table of a middle-aged English professor with a lot of children, as a second full-time job, and is now something worth your great energies and vision.

•   •   •  

You have changed our publishing house and you will change it much more over the next years. Not all of the changes sit easily with me, since, as you know, we're different; you're quicker to decide, more confrontational, mathematically sharper, a tough negotiator, a strong sales advocate, and the hardest worker I've ever known. I'm entirely satisfied that your backbone and good sense will mediate between long- and short-term decisions and meet them both. I am satisfied that putting the financial fortunes of me, your mother, and your sister and brothers in your hands is the wisest thing for me to do now. I'm hopeful, even confident, that you will take the base that now exists and raise a great structure; you've already helped powerfully these past three years to build that base. You have great intelligence, vigor, and strength, and they will surely serve you well—though you might want to consider how the suggestions that follow can help temper your steel:

• Seek experience and more experience. Publishing is the most varied of businesses, with an infinite number of different skills and abilities to develop, all of which contribute to the success or failure of a book-publishing firm: the design of the books, the quality of the editing, production values, sales inventiveness, and much more.

• You can't do it all. Delegating properly will duplicate your strengths—and give people beneath you a way to learn and grow.

• Loyalty (to you and the company) is important to cultivate, especially in book publishing—since books take years to develop and the loss of key personnel interrupts the development period needed.

• Any book will do better if it's carefully wrought inside as well as out. This is part of what your editors can do for you—they can keep the boat well trimmed and caulked so it doesn't sink.

• Educating employees is extremely important—even though we have recently experienced the loss of three or four that I educated too well.

•   •   •  

Some random but pointed maxims that came to me this morning, during breakfast:

• Bears sometimes make money and bulls sometimes make money...even hogs make money, but generally lose it.

• You cannot expect to create a machine, ever, that will neatly turn out hundred-dollar bills without problems.

• A larger business—which is what we both want—is not merely a bigger small business; it is a related but new entity, with new laws.

• All businesses are different—especially publishing businesses—but they all overlap.

• Only when you have built a proper pipeline, and tested it, can the oil flow.

• The capacity to take risks is the adrenaline that energizes all business enterprises...but betting the farm frequen t ly (or even ever) is for gamblers, not businessmen.

• A business may have to reinvent itself every day, but it must never forget the guidelines that enabled it to grow and flourish in the first place.

• There are always 11 more details to consider.

• The pursuit of white whales need not lead to disaster...if one has a brilliant accountant.

• A business is not a social-services agency...nor is it a concentration camp.

• Trends come and go, but the timeless, useful book like “Practical Fishing Knots” sells forever.

• It is a lot easier to hire a friend than to manage or fire a friend.

• Seeds, seeds, seeds—always be planting them; some will never bear fruit, some will bear it only in a dozen years.

• No business is perfect; no batter ever batted 1.000; but the percentages matter gravely.

• A “work ethic” is a lot more valuable to a business than a “friendly atmosphere”...or a whip.

• If you try to look too far down the road that stretches mysteriously into the future, you're liable to trip on a rock; if you look just past your toes, you'll miss the bear—always hungry, licking its lips, waiting eagerly for you around the bend.

• Forget all of the above business maxims from an old English professor rather than do something truly stupid.

•   •   •  

All of our employees bring different strengths and weaknesses to the house. Like the Arab in “Ben Hur” with his beautiful horses, it is important to learn the special traits of each and then to put the sturdy horse in the center, to keep the others honest, and the flyer on the outside, for speed.

•   •   •  

People like to work with good tools—and you're right in thinking that some new, better computers will be valuable and appreciated. I, who use a Royal Standard manual machine from the 1950s, utterly fail in the arena of technology. You won't.

•   •   •  

I suspect, for all your vast strengths and wise judgment, the thing you should be most conscious of is your love of the quick judgment—on management matters, on books to buy, and such. So many of your quick thoughts are good that you may not be fully aware of the few [decisions] that you make without full awareness of consequences. Don't be shy of asking advice—of me, of the editors, of the people in our production department. We all work for you now. You need to prove nothing with any of us. You are not expected to know all the little skills, only to direct others who have them. Pacing is thus important—making the decision when you have all the proper information to make it. This may be in an instant...or in three months.

The balance of a publisher's book list in any given season, and its size, are worth the most careful consideration. This might include balances of:

• literary and commercial titles;

• expensive-to-produce and cheap-to-produce books;

• new books and classic reprints;

• a list of a size that can be managed by the editorial, sales, and publicity departments;

• the number of books that will last a season and the number that will last for 10 years.

•   •   •  

You are a tireless worker. But think of how much more energy you had after a short vacation.

•   •   •  

Many small publishers, our size and smaller, fail for a host of reasons:

• undercapitalization;

• over-borrowing (at 12 percent, when you're lucky to make 6 percent or so on turnover);

• failure to balance a list between the practical and the literary;

• trying to be what they're not;

• snobbishness;

• failing to understand the value of a backlist;

• a bad accountant;

• a belief that sales should be handled by others outside of the house, or the belief that sales are in some way beneath them;

• lack of a dominant niche—like our fishing books—or the belief that “niche publishing” is beneath them;

• too narrow a niche;

• inability to understand the value of a nickel;

• inability to take proper risks;

• weak management;

• lack of planning;

• timidity, mediocrity, overboldness, or idealism that undermines practicality;

• failure to institute structures that permit and encourage growth.

•   •   •  

Let's call the previous pages the seeds for discussion, as you see fit. Forgive the repetitions, the pontificating, the worries. The main thing is that I believe you will run and develop our family business, The Lyons Press, brilliantly.

Love, Dad
12/24/98

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Paul Mazonson came to work at his father’s insurance agency in 1975 mostly because he didn’t want to go to graduate school. He had just finished a psychology degree at the University of Vermont, and with no compelling drive to continue, joined Eigner & Mazonson in Lynn, Massachusetts.

His father wasn’t that keen on hiring him, either. “Paul had gone to school to ‘find himself’ and have a good time,” says Barney Mazonson. “He worked very hard at both.” Still, he was glad his son would have a job.

Ambivalence was perhaps the best foot on which father and son could have started what would become a gradual succession process; neither had any false expectations. But after five years, as Paul realized he liked the insurance game, his relationship with his father changed. “I had gotten good at the business,” Paul says. “I knew there was much more I could do. I wanted to see how big an organization I could grow. That’s what got me juiced.”

Barney had a different model in mind. “My objective was conservation,” he says. “I wanted to run the business at slow-growth, low-expense, no-risk, high-profit...sort of coast along. I had made good money and I wanted to preserve it.” The tension between their agendas sparked more and more disagreements.

Despite the turmoil, Barney managed to give Paul just enough room to master the agency on this own. He didn’t consciously engineer Paul’s rise, but swallowed hard as he let Paul make larger decisions. Barney’s enlightened approach enabled his son to become a worthy successor. But when Paul was ready to take over, Barney wasn’t ready to go. Paul had to turn his new-found command of the agency against his father, forcing him to leave. The decision was necessary for Paul truly to take over—and for Barney truly to retire.

Opposing agendas

Barney had run Eigner & Mazonson with his partner, David Eigner, since 1954. He became sole owner in 1971 when David died. His brother, Joe Mazonson, had joined along the way, becoming a top salesman.

Barney had no intention of favoring his son when he arrived for his first day of work. Paul felt his salary should be set at $150 a week, just because he was the boss’s son. Barney felt $125 was quite sufficient. That’s what Paul got.

After five weeks at insurance school, Paul was put under Joe’s wing for on-the-job training. The two made a good team. When Joe left in 1980, Paul took over his accounts. He was also signing on new clients, often without Barney’s prior approval. Barney let this go, but drew the line on other matters. One involved the agency’s location. “I was trying to hire people,” Paul explains, “but I couldn’t find anyone willing to work in Lynn. The city was a hole and rapidly going down the tubes. I had been reduced to interviewing the dregs of society, and even they didn’t want to work there. I told my father we had to move. He said no. I pressed the issue. He said, ‘When it’s your company you can move it wherever you want.’ That was that.”

The incident was the first strong evidence that father and son had two opposing agendas. “Paul was really functioning on his own,” Barney says, “with little call on my time or energy. But I had not yet begun to think of him as my successor. I loved the insurance business, the satisfaction that comes from making a sale, from solving a problem. I expected to work until I died, with the hope that I could staff up to provide me with more free time.”

To make that possible, Barney ran the agency cautiously. “My father wanted to preserve the business,” Paul says. “I wanted to grow it. My father was a child of the Depression. All he had ever wanted out of life was to have his family, have a small business, and make $100,000. He did that. Making it big was not what he was striving for. His strategy was to limit expenses so he could keep making that kind of money.”

Neither Barney nor Paul openly accused the other of blocking his own approach to the business. The tension, however, caused more conflicts. One day the pair met with an important client in the agency’s conference room. “I was all charged up,” Paul says. “I got up in front of the meeting and said, ‘I’m going to do this for you, and I’m going to do that.’ After they left, my father called me into his office. He was angry. He said, ‘Don’t you ever use the singular pronoun, ‘I,’ around here again. I’m not dead yet!’”

Learning to talk

Paul recalls that, “After I got over being mad at him for telling me off, I began to realize that the tension between us was surfacing in bad ways. I also realized that how I spoke to others, and how he and I spoke to each other, was important. Even though I knew at that point I was going to be the successor, I still needed to respect his role. I began to monitor not only what I said, but how I said it.”

Paul and Barney also agreed to hire a consultant, Will Calmus, a psychologist, management consultant, and principal of Calmus Associates in nearby Chestnut Hill, to help them learn how to talk to each other. “My father and I met at Will’s office for an hour, about once every two weeks, for two years,” Paul says. “We didn’t get into Freudian things about a father and a son. We simply talked about what was happening at work. In that meeting, when my father said, ‘Don’t use the word I. I’m not dead yet,’ there would have been no way we could have had a conversation. When he said that to me it just ticked me off. I thought, ‘I don’t want to hear that. I know what to do.’

“But when we met at Will’s office, off-site, away from the company, with no other incidents or agendas taking place, then we were much more able to communicate. I would say how I felt about something, and he would say how he felt about it. By doing that, we started to understand each other’s point of view. We also started to learn that what we said was often different from what we meant. We had to look past our words to our meanings.”

As tensions started to ease, Barney was able to take a more objective look at his son’s progress. Paul was making much of the money for Eigner & Mazonson. Another employee, Tom Goode, who had joined Barney back in 1971, was also contributing substantially. The agency had grown from about $1 million in billings in 1975 to $4.8 million by 1982, largely due to Paul and Tom. “I became aware that the growth of the business was now more the result of Paul and Tom’s efforts than mine,” Barney says.

The conversations at Calmus’s office, he says, also “made me very aware that Paul and I were on two different tracks that conflicted with each other. I began to rethink my plans—or lack of plans—for retirement. There was still a low level of tension between Paul and me, and I knew I couldn’t fight him every step of the way. He had to have the opportunity to run the business his way if it was going to succeed.”

Barney didn’t tell Paul of this realization, because he felt Paul still had to prove himself a worthy successor. Conflicts still arose, although they were more tolerable. Often, when they did, Paul thought of leaving, but he didn’t. “Without inertia,” he quips, “the world would fall apart.”

Looking back now, Paul recalls there was another reason for staying which he didn’t realize then. Barney was deliberately giving Paul opportunities to succeed, and Paul was attracted to the challenges. “For example,” Paul says, “I was pushing my father to let me hire a salesperson. He didn’t really like the idea, but he told me I could look around. I tried for a while but didn’t find the right person. Then one day I happened to be discussing all this with my old college roommate, Bruce MacDougall. I found that I wanted to hire him for the job. My father thought it was a bad idea. We had a financial consultant working for us, who had described the kind of background the new salesman should have. He also said we shouldn’t hire my roommate, because he didn’t have the right qualifications. But I went back to my father and said this was who I really wanted. In the end he said okay.”

The best part of that story, Paul continues, “is that Bruce is now one of our two executive vice presidents. He’s my friend and I love him, and he’s done wonderful things for the business. All because my father gave me some room to carry out a decision that he didn’t agree with. He gave me the opportunity to create my own space within what he had created.”

A sudden proposal

Paul’s performance continued to impress Barney. He knew, however, that he would have to step aside if Paul was going to really grow the company. He appeared suddenly in Paul’s office and said he wanted to begin to plan for the future. He told Paul that he would sell him the business in five years, on April 9, 1987, his 68th birthday. He also said that the sale price would be the 1982 value of the company, and that any profits after 1982 up until the sale would be split three ways between him, Paul, and Tom.

“I proposed the profit-sharing plan, and based the sales figure on the Dec. 31, 1982, value,” Barney says, “because I wanted to acknowledge the fact that any growth in value from that time on would be more the result of their efforts than mine. It was not difficult to establish the sales price because there are good guidelines for appraising an insurance agency. It was not intended to be a sweetheart deal because I needed the proceeds for retirement. As it turned out, it was a sweetheart deal, because the agency’s billings had increased to $10 million by 1987. I was happy, and Paul and Tom were happy.”

Paul was floored by his father’s sudden proposal. “It was a very loving thing he did,” Paul says. “He saw that the two of us could no longer co-exist. But he didn’t say it in that way to me. He said he wanted to begin to plan for the future. And so we started to discuss how myself and he and Tom could set a sales price, and each get one-third of future profits. Setting the transfer to take place five years down the road was also smart. He created time for us to adjust.”

Paul admits, however, that he didn’t immediately see his father’s wisdom. “Even though we discussed the sale, my father said, essentially, ‘I’m going to sell the business to you and this is how the sale will go.’ I felt empowered by it at first. But then I thought, ‘Well, I better do my homework and figure out what the price really should be.’

“When Will Calmus found out I was going to do this, he gave me a strong warning. Will had picked up on something that I, at that age, hadn’t. He saw that the deal wasn’t about money. It was really a way for my father to get himself to leave. Will told me, ‘Don’t counter your father’s offer. Just accept it and say thank you. Keep in mind the bigger goal is to give your father a way to commit to retiring.’

“I could have ignored Will, gotten a high-priced lawyer to figure out how much more money I could’ve gotten, and presented that to my father. But my father could’ve sold the business in a heartbeat to a competitor. The insurance business is very liquid. Companies are bought and sold all the time because the assets are very concrete. In fact, my father could have gotten more money by calling up a competitor. They could’ve had a done deal in 30 days. If I had pushed him, that’s probably how he would have pushed back. He would have said, ‘Well, I’m just going to sell it to someone else, then, and we’ll be done with it.’”

Asking Dad to leave

Barney, Paul, Tom, and their dozen employees worked in relative harmony through the early 1980s, until it came time for Barney to retire. Originally, the plan was to pay off Barney in installments over 10 years, starting in 1987. But a 1986 change in the capital gains tax laws made it advantageous for Barney to receive a lump sum before Jan. 1, 1987. The business had grown so well in comparison to its 1982 value (and hence sale price) that Paul and Tom were able to borrow 100 percent of the money against the business, and pay Barney.

The one-time payoff was also psychologically beneficial, father and son later realized. “It eliminated the potential for further conflict,” Barney says. “My concern for safety over the payout period could have resulted in my looking over Paul’s shoulder and curbing his desire to invest for growth. If I had no ongoing financial stake in the company, it certainly would be less likely that I’d be hanging around giving unsolicited advice.”

Paul says the transaction “gave me the freedom to do my own thing. I could make decisions without my father still having oversight because he still had ownership. It also gave my father the freedom to retire without worrying that my decisions could undermine his retirement.” In October 1987, only 10 months after the sale, Paul moved the company to Peabody, Massachusetts. “We went from paying $23,000 a year in rent to paying $120,000,” Paul says. “If my father still owned the company, he would have had a heart attack.”

Since the lump-sum deal created a more abrupt transition than the Mazonsons had planned, they agreed verbally that Barney could keep an office at the company and come in several days a week. “My father needed a place to go,” Paul explains. “Sometimes it was sort of comical, though. He would pack up his big fat briefcase at home, put on a bow tie, and come into the office. Then he’d get on the phone for an hour and call around to banks to find out where he could get better rates on his certificates of deposit.”

Within two years, however, Barney’s presence began to disrupt Paul’s activities. “It wasn’t so much that he was looking over my shoulder,” Paul says, “but he came from the old school, where employees were there to serve the boss. That’s fine as a model, but that’s not the model I wanted. I wanted to build an organization of people who are here to serve clients first, in whichever way they see as best, as long as it is succeeding. My father’s presence in the office created conflict between those two models. If he happened to get a call from an old client, after he’d hang up he’d bark out orders and expect everybody to drop what they were doing and march.

“So I went to him and said, ‘I know I agreed that you could have an office for the rest of your life here if you wanted it, but it’s creating disruption in the company and it’s becoming a difficulty for me.’ Giving up that place was painful for him. Yet he was wonderful about it. He didn’t really see the difference between serving customers and serving the boss. He said, ‘I don’t really understand the problem, but if you feel strongly that you need me to be out of here in order for you to succeed, I’ll do it.’ ”

Barney was slowly preparing to depart when he had an unnerving experience. “One of my original clients came to the office,” he explains, “to review his insurance with one of our employees who was now handling his account. I joined them. He was interested in business-interruption insurance. I suggested extra-expense insurance instead, which I thought was better. After the client left, the employee politely explained to me that both types of products were now one in the same. I realized I could be a liability rather than an asset. That’s when I stopped going in.”

Barney’s final exit gave Paul a stronger feeling that he was the real leader of the company. “Ironically,” he says, “I think the staff already perceived me as the leader. I was the one who was taking longer to grow into that role. Even after I changed the name from Eigner & Mazonson to Mazonson Inc., still, when I walked in each day I felt like I was walking into his company. Having him move his office out was part of what helped me get over that. The rest was just getting older, having more experience, having my own children, and just letting the time pass.”

Buying out a partner

Feeling freer than ever before, Paul set his sights on growing the company at a fast clip. However, new resistance developed.

When Barney first proposed selling the company to Paul, he had suggested Tom Goode buy in also. “I went to Tom,” Paul explains, “and said, ‘Maybe you and I should be partners. But I want to know that you’re going to commit to growing the business.’ He said that he was.” Tom took a minority interest of 25 percent. After several years, though, Paul realized that he himself was the only one growing the company. “Tom was servicing clients and doing that well, but he wasn’t generating new revenue or opportunities for new revenue,” Paul says. “I decided that I should buy him out.” After some discussions Tom agreed, leaving in 1991.

In retrospect, Paul says, taking a partner was a double-edged sword. “My father felt responsible for Tom’s 18 years of service, but I’m the one who ended up paying for it. In the end, it cost me more money to buy out Tom. But it was good to have Tom in the beginning, because I wasn’t fully ready to take over on my own, and I couldn’t actually have focused on growing the business if I would have had to service the clients as much as Tom was doing.” Paul thinks now, however, that it would have been better if he had purchased the whole company and found another way to reward Tom so that he would stay on.

Love and fulfillment

Mazonson Inc. has since grown to $40 million in billings and 40 employees, up from $10 million and 15 people when Paul bought the agency 11 years ago. More important, commission income—analogous to profit—has risen from $1 million to $4 million. Paul, now 47, is president and owns 90 percent of the company. Bruce MacDougall owns 5 percent, and another executive vice president, John Greenbaum, owns the remaining share. The firm offers a full line of insurance, from commercial property and casualty coverage, disability, and medical plans, to life insurance and homeowner’s and automobile policies. Barney, 78, continues to live during the summer in Marblehead, Massachusetts, and spends his winters in Florida.

Father and son are now closer than when they worked together. “One of the things I’m most grateful for in the outcome of all this,” Paul says, “is that I have an extraordinary relationship with my father. I am so blessed that he had the foresight to create the space for me to make decisions and grow into the successor role, and that he was willing to step aside.”

Paul feels fulfilled in his work, too, because “I love what I do. That’s what I now tell my own son, who’s 11, and my daughter, who’s 15. I tell them that the challenge in life is to find what you really love and to do it. It doesn’t matter if you make $20,000 or $200,000. The happiest people I know are doing what they love. The rest works itself out.”

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In my top drawer, I keep a black-and-white photograph of myself at age 12 standing inside a smokestack before it is to be hoisted into position above Erving Paper Mills. Since that day, I have planned my succession as president and CEO of the company. My high school and college summers were spent in the laboratory, in the warehouse, on the customer service phones, and on the production floor helping to run the huge, steamy machines. I insisted on those jobs so that I would know the business inside and out and so that no one would ever tell me that I didn’t earn my position.

When I graduated from Carnegie Mellon University in 1985, my father and I decided that I might want to learn more about the paper business from the customer’s perspective. I spent the next six months at the elbow of the CEO of a major paper distributor in the Southeast. I listened to every phone call, attended every meeting, and read every memo, plan, and forecast. At this point in time, my father and I corresponded regularly about business. He often sent me articles, internal memos, and reports regarding operations at Erving Industries. In exchange, I reported on every aspect of the distributor’s operations and marketing plans.

After a year and a half, I had grown tired of Southern hospitality and decided to move north. I created a job for myself at our Erving Health Care Division in New Jersey. As a “project specialist,” I found myself completely focused on the operation, spending little or no time on the company reports my father had been sending. I developed a new costing system, cut production costs, and improved the market penetration of one of our product lines. I had lost interest in those reports, and my father and I talked more about personal matters than business. He visited the New Jersey facility infrequently. As a consequence, the employees looked to me for leadership. This feeling of ownership and attachment was a powerful incentive for me and I worked harder than I ever had. My management style began to take shape. Though my dad had always been concerned with sales growth, my priority was profit, then growth. I focused on margin management, inventory management, and machine efficiencies.

At the end of 1989, I graduated from New York University with an MBA in finance. I was determined to completely devote myself to corporate matters. I planned to work diligently in the finance department, ascend to the CFO position, and then move into the CEO spot—a natural progression. I accomplished some of these goals. I revamped the finance department by introducing some of the latest financial tools, developing reporting methods to improve analysis of the business units, and implementing new capital budgeting procedures. But as I worked, I found myself less and less inclined to climb. I found other non-executive opportunities that interested me. I moved to the packaging department, then the customer service department, then into sales. In hindsight, I realize I was caught between the desire to make a real bottom-line impact in order to earn respect from my father, the CEO, and the fear of failing.

In 1991, I returned to Erving Health Care as controller. Here I could make an impact that would be seen on paper. At EHC, I took complete responsibility for the books. I obtained financing for a $500,000 piece of equipment and implemented Electronic Data Interchange for our customers and vendors. During this period, my dad appointed me assistant treasurer of Erving Industries. He felt that it was important for me to be involved with corporate issues such as company benefits, the pension fund, and banking. Although pleased with the appointment, I was not anxious to pursue what I perceived as essentially administrative tasks. I was more eager to manage and improve our operations.

In 1993, we determined that Erving Health Care did not fit our corporate strategy and we decided to sell it. I spent several months finalizing the transaction, after which I returned to Erving Paper Mills with the objective of assuming more corporate responsibilities. As vice president I reported directly to the executive vice president. Although my father and I talked, most of his higher level business discussions were with the EVP. The business was performing quite well under the EVP’s watch. When my father and I discussed the possibility of my assuming the EVP position, I analyzed the business climate and my own feelings, and determined that it made sense to keep the current EVP in place. I also began to feel that with all my years at Erving, I still hadn’t had full bottom-line responsibility at a smaller division. How could I move from a staff position to president of a $100 million business?

As assistant treasurer, I began analyzing our Wisconsin business unit. I identified significant unexploited opportunities in a few market niches we were serving. I recommended that we break out three of these “businesses” and create a new division. This concept had been discussed before, but never implemented. I pursued it. I realized that this would be a great opportunity for me to have bottom-line responsibility for a division and report directly to my father, the CEO. My father agreed with the concept of setting up a new division, but instead of having me run a newly formed Erving Industry division, he decided he wanted to sell it to me. My original intent was lost. This new opportunity presented a new dilemma. I had an opportunity to own and run my own business, but it would take me out of the loop at Erving Industries.

In May, 1996, I incorporated Birch Point Paper Products Inc. I currently own and manage the three profitable businesses under one roof. Sales are $4 million and I intend to double that in three years—profitably. I am 33 years old. My office is about 15 minutes from my home. My daughter is six months old. My wife and I often socialize in Boston, which is 45 minutes from my office. Three weeks ago my father indicated that he wanted to pursue more extracurricular activities and asked me if I wanted to run Erving Industries. Not own it, but run it. Erving Industries is located an hour from my home, and it is a capital intensive, high risk collection of factories. Profit in the paper industry fluctuates as frequently as the point at which the supply and demand curves cross. My uncle and grandfather bought the mill many years ago. It has been a part of our family and has provided for us for as many years.

In the past three weeks, I have crunched numbers trying to forecast the sales and costs of Erving Industries for the next five years. I have spent time wandering through the warehouse full of rolls of tissue paper, asking myself if I will ever be able to fill my father’s shoes. I have made decisions regarding my personal, professional, and financial goals.

Well, here’s my decision: I have decided to follow in the footsteps of my great uncle, my grandfather, and my father. I, too, will be a paper maker. And perhaps my little daughter, Molly, if she so chooses, will one day follow in my footsteps. When she graduates from college, I will be sure to reread this article to remind myself of how to pass the family business to her.

My experience at Birch Point has made me realize that I will operate Erving Industries differently than my father has. He and I have very different styles. He is an entrepreneur, buying assets because they look exciting. He enjoys the hunt. I take more calculated risks, being sure the fit is right before making a move. I need results. My challenges will be different and my focus will be different. As he says, “The next 30 years will be nothing like the past 30 years.”

My road to succession has been a long, windy one, while my dad’s was short and straight. He was pulled from his law practice to take over the presidency. It is important that the parent let the child find his or her own level, but the child must assume bottom-line responsibility. This alone creates the confidence and experience necessary to run a multimillion dollar organization.

 

Morris Housen is president of Birch Point Paper Products Inc. in Shirley, MA.

 

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In the annals of business families, there are a few classic examples of father-to-son letters that contain wise advice on preparing for careers in the family company. There are also letters that probably shouldn't have been written, that only incite the young to rebellion.

A new biography of Ted Turner contains a superb example of how not to do it. Porter Bibb's It Ain't As Easy As It Looks (Crown, $25) recalls a letter written by Ed Turner to his son, Ted, in the late 1950s, when Ted was in college at Brown University. Ed Turner was a flamboyant entrepreneur who went into the billboard advertising business after World War II. He was an alcoholic given to severe mood swings and beat his young son for the slightest infraction—sometimes with a wire coat hanger. Bibb's interviews suggest Ed Turner dearly loved the boy and beat him to toughen him and provoke him to greatness.

Ted Turner grew up a defiant loner who spent much of his boyhood away from the family at boarding and military schools. Ed sent his son to an Ivy League college to gain the sophistication he felt Ted needed in a business career. At Brown, however, Ted was impressed by an instructor of classics named John Rowe Workman and informed his father that he intended to major in the field.

Ed Turner's scornful and rambling response is reprinted below. It was characteristic of Ted—and his love-hate relationship with his father—that he then showed up his father by having the letter published (anonymously) in the college newspaper.

During the 1960s, Ed Turner began buying up outdoor advertising companies in the South. Apparently feeling overextended, he shot himself to death at the age of 53. Porter Bibb's book provides a fascinating account of how the young Ted Turner firmly seized the helm of Turner Advertising and kept it afloat; he later added onto it an Atlanta TV station and began building his worldwide news and entertainment network.

 

My dear son:

 

I am appalled, even horrified, that you have adopted classics as a major. As a matter of fact, I almost puked on my way home today. I suppose that I am old-fashioned enough to believe that the purpose of an education is to enable one to develop a community of interest with his fellow men, to learn to know them, and to learn how to get along with them. In order to do this, of course, he must learn what motivates them, and how to impel them to be pleased with his objectives and desires.

I am a practical man, and for the life of me I cannot possibly understand why you should wish to speak Greek. With whom will you communicate in Greek? I have read, in recent years, the deliberations of Plato and Aristotle, and was interested to learn that the old bastards had minds which worked very similarly to ours. I was amazed that they had so much time for deliberating and thinking, and was interested in the kind of civilization that would permit such useless deliberation. Then I got to thinking that it wasn't so amazing after all. They thought like we did, because my Hereford cows today are very similar to those 10 or 20 generations ago. I cannot understand why you should be vitally interested in informing yourself about the influence of the Classics or English literature. It is not necessary to know how to make a gun in order to know how to use it. It would seem to me that it would be enough to learn English literature without going into what influence this or that ancient mythology might have had upon it.

These [Roman and Greek] subjects might give you a community interest with an isolated few impractical dreamers and a select group of college professors. God forbid!

It would seem to me that what you wish to do is to establish a community of interest with as many people as you possibly can. With people who are moving, who are doing things and who have an interesting, not a decadent, outlook.

I suppose everybody has to be a snob of some sort, and I suppose you will feel that you are distinguishing yourself from the herd by becoming a classical snob. I can see you drifting into a bar, belting down a few, turning around to the guy on the stool next to you—a contemporary billboard baron from Podunk, Iowa—and saying, “Well, what do you think of Leonidas?” He will turn to you and say, “Leonidas who?” You will turn to him and say, “Why, Leonidas, the prominent Greek of the twelfth century.” He will, in turn, say to you, “Well, who the hell was he?” You will say, “Oh, you don't know anything about Leonidas?” and dismiss him. And not discuss anything else with him for the rest of the evening. He will feel that you are a stupid snob and a fop, and you will feel that he is a clodhopper from Podunk, Iowa. I suppose this will make you both happy and, as a result, you will wind up buying his billboard plant.

There is no question but this type of useless information will distinguish you, set you apart from the doers of the world. If I leave you enough money, you can retire to an ivory tower and contemplate for the rest of your days the influence that the hieroglyphics of prehistoric man had upon William Faulkner.

It isn't really important what I think. It's important what you wish to do with your life. I just wish I could see that the influence of those oddball professors and the ivory towers were developing you into the kind of man we can both be proud of. I am quite sure that we both will be pleased and delighted when I introduce you to some friend of mine and say, “This is my son. He speaks Greek.”

I had dinner during the Christmas holidays with an efficiency expert, an economic advisor to the nation of India, who owns some eighty thousand acres of valuable timber land down here. His son and his family were visiting him. He introduced me to his son, then apologetically said, “He is a theoretical mathematician. I don't even know what he is talking about. He lives in a different world.” After a little while I got to talking to his son, and the only thing he would talk to me about was his work. I didn't know what he was talking about either, so I left early.

If you are going to stay on at Brown and be a professor of classics, the courses you have adopted will suit you for a lifetime association with Gale Noyes [Yale's noted professor of English literature]. Perhaps he will even teach you to make jelly. In my opinion, it won't do much to help you get along with real people in this world. I think you are rapidly becoming a jackass and the sooner you get out of that filthy atmosphere, the better it will suit me.

Oh, I know everybody says that a college education is a must. Well, I console myself by saying that everybody said the world was square, except Columbus. You go ahead and go with the world, and I'll go it alone.

I hope I am right. You are in the hands of the Philistines, and, dammit, I sent you there. I am sorry.

Devotedly, DAD

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My father owns a textile business. It was his father's once. And because I am the first son, it could have been mine. But I've chosen to do something else for a living, and I think about that more and more as my father nears retirement. I think about it because I fear he's thinking about it, too, that he's thinking how much easier it would be to wind things up, how much nicer, if he had someone to carry on for him, if it were clear the business would survive without him.

We never talked about it much, my father and 1, but as I grew up, the notion of my someday joining the family business hung in the air as a distinct possibility. There was a silent expectation that the business would survive all of us — my father, his children, our children.

And yet my father never issued to me any sort of formal invitation to join him in what he does. Business was discussed only in broad strokes — things were busy or not busy, good or bad, fast or slow. Even my father's place of business — an office and a factory where he makes novelty braids and fabrics — became couched in euphemism as "the place," as though the very idea of work was too much for his kids to deal with over dinner.

Oh, I knew where my father went when he left the house each morning, but I wasn't entirely sure what he did when he got there. Perhaps he took his cue from Ozzie Nelson and the other reigning television fathers of the day. Everything had its place, and the place for work was, well, the place. Father knew best, and that was that.

Sometimes there were problems at the place, and, once in a while, we'd hear that one of the workers in the back lost a finger to one of the knitting machines. These were stories I cherished hearing and telling. There were times — school vacations, weekends — when I'd accompany him to the place, and he'd be all proud and beaming when one of the men in the back would call me something like "Little Boss." His pride rubbed off on me. It made me feel in charge, or at least sort of in charge. But then I'd be put to work in manual tasks that made little sense to me. I performed routine chores with no grasp of how what I was doing fit in with what everyone else was doing, with what my father was doing. When we'd return home, my mother would ask what I did all day, and I'd tell her as much as I knew: "I put things on things."

What I remember most clearly is that my father never seemed to enjoy what he did, and he almost never talked about any fulfillment or any of the personal perquisites I'd been taught to expect from a career. What may have been right and good and enough for my father was not quite right and good and enough for me. I wanted no part of a dreary factory that operated to its own beat, a place where men lost their fingers putting things on things. I decided to become a writer.

My father has a tough time understanding how I earn my living, but no tougher than I have had understanding what he has been up to all these years. Maybe he'd have an easier time if I'd become a doctor, or lawyer, or investment banker, something that would fit more traditionally into his world. Although he has never said so, I sense he's proud of me, of the choices I've made, but I also know he must wonder what leaves me uninterested in a life at the place, what leads me to struggle in a career that offers nothing like the guarantees of the family business. Money is a big part of it, I'm sure. I can't shake the feeling, when I pass along details of a new writing assignment, that my father does some quiet figuring to see how what I'm earning holds up against what I'd make in a real job, in his job.

I recently found myself in my father's neighborhood on some business of my own, and I stopped by the place for a visit. He wasn't in, so I sat down at his desk to use the phone, catching up on my own day's work. Sitting there, it slowly occurred to me that I have no real notion of what my father's life would have been like had it not been for his own father's business, what his dreams were, where his special talents lay, what he has missed, or if he thinks he has missed anything, if he even thinks that way. There I was, at the very desk that, most likely, his father used, and I thought for the first time what I'd put my father through, what we've put each other through in our year long dance of not saying anything, of looking away from a big issue in both of our lives.

My father, coming in finally, must have been thinking some of the same thoughts, for I could see in his eyes, in his enthusiasm for finding me there, the would-be or what-might-have been visions of our someday working together. I felt oddly, and suddenly, out of place.

We didn't say anything, though, as has become our custom. I avoid the subject because part of me is certain my father harbors a secret hope that I'll come around. When asked, my father will say he has never wanted to pressure me, that he's happy to see me off on my own and doing well, but it is clear to me he's holding something back. I'm afraid that our not talking about his business serves only as mask and bandage to a very real disappointment. I worry that I have let him down.

When I was 10 or 12, my father and I had one of our few genuine talks about what he did for a living, what I'd someday do. He mentioned the possibility of my taking over his business.

"Oh, I don't think you'd want that," I said.

"Why not?" my father asked. "What could you possibly do with the business that would upset me?"

And here, with a kid's insight, I got closer to the differences between us than I probably ever will again. "I'd sell it," I said.

I don't know why, but my father loves this story. He tells it all the time.

Daniel Paisner has written a novel, Obit, and several other books. He collaborated with Ed Koch on the former New York Mayor's forthcoming autobiography, Citizen Koch (St. Martin's Press). This column originally appeared in the New York Times Magazine. Copyright 1986 by The New York Times Company. Reprinted by permission.

 

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ED STOVALL, 62, owner of the Wheatality Baking Co. in St. Cloud, Minnesota, is seething over something he has just noticed in his son Gary's expense report. The bill lists restaurant and motel charges in Chicago, on a weekend when his 33-year-old son was supposed to be in New York City attending a marketing course. Ed suspects that his son visited a married woman he's been seeing in Chicago that weekend instead of going to New York.

"Please tell me that this is a mistake," he asks after bursting into his son's office. When Gary admits that he was in Chicago seeing Cynthia, and that he had put some expenses on the company card because his own had not been accepted in a few places, Ed Stovall can barely contain his anger.

"You lied to me," he says in forcibly hushed tones. "I asked you flat out whether you were going to see that woman, and you said no. Then you have the gall to charge the expenses for your affair to the company. How did you expect to get away with it?"

Obviously uncomfortable, Gary, too, tries to keep his cool. "You don't want to know about Cynthia, Dad, so I don't tell you. What's the big deal? So I charged a few things to the company; I'll pay it back. As for that marketing course, I can take that another weekend."

His father is not mollified. This time, he thinks, Gary has crossed the line. Returning home later in the day, Ed confides to his wife Marian that he is thinking of firing their son. "Once I've lost confidence in a person's integrity," Ed says, "I have no way of working with him — even if he is our son."

Ed's father was a fundamentalist Christian minister, and he learned at an early age to draw lines. He prides himself on running a moral company, which has strict rules for cleanliness and behavior in the plant. At the same time, he is a generous employer who offers his 120 employees exceptional benefits, including on-site day-care and health club memberships.

Ed Stovall started out 30 years ago working for a grocery in St. Paul that was later bought by a supermarket chain. He built a career in the supermarket business, rising to vice-president in charge of packaged baked goods for the company's stores. At age 40, Ed heard that one of the commercial baking companies that supplied pies, cakes, and rolls to the stores was up for sale. With his savings and a bank loan, he bought Wheatality Baking, which then had annual revenues of almost $1 million.

Ed had never wanted his children — two daughters and two sons — to go into the business. His experience at the supermarket company, which had a lot of the owners' relatives working in it, had taught him that family and business were never meant to mix. "A lot of businesses put their kids on the payroll," he once told a friend. "lt destroys the morale of the other employees and turns the kids into parasites."

The Stovall children grew up in St. Cloud, a small city about 40 miles northwest of the Twin Cities, in the heart of Garrison Keillor's fictional Lake Wobegon country. It was a town where the churches were filled on Sundays, and children were expected to attend Bible classes as well as services. Like most kids, the Stovall children sometimes balked at their parents' strict rules on things like dating and use of the family car. The oldest, Gary, a good athlete with better-than-average grades in school and lots of girl friends, occasionally pushed the limits.

After getting a degree in education from the University of Minnesota, Gary became an administrator of a school district in a central Illinois town with a population of 11,000. Townspeople took an immediate liking to this friendly young educator and his attractive blonde wife, Ingrid, whom he had met in college. Gary was soon assistant superintendent, and in 1982 was elected mayor of the town, a part-time job, on the Democratic ticket.

Like Gary, the other Stovall children went their own ways. Nancy, two years younger than Gary, became a teacher. Bill, their younger brother, studied engineering and took a position with a manufacturing company in Chicago. The youngest daughter, Amy, wanted to be a filmmaker but dropped out of college and moved to Chicago.

OVER THE YEARS, Ed stood firm in his belief that it would be a bad idea for any of the kids to come into the company. That article of faith was tested for the first time one day in August, 1986, when Gary appeared at his father's office and asked whether there was an opening for him at Wheatality.

Gary and his wife had split in 1985. The messy divorce hurt him politically in the conservative, Illinois town, and Gary felt it might also set back his career in the school district. He decided not to run for another term as mayor and, after the school year ended, left the state altogether. When asked to take his son on, Ed, as expected, was hesitant. Ed knew his son was a hard worker and a good organizer, but he had always doubted Gary had enough "financial moxie" to be CEO of the company.

"I really want to make a go of this, Dad," Gary assured his father. "Many of my managerial skills are transferable, and I'm sure I can pick up the industry knowledge quickly. I'll do my darndest to make it work."

Though not convinced, Ed sympathized with Gary, who was rebounding from a crisis in his life. How could he deny his own son a place? He hired Gary to direct Wheatality's training program, but made it clear from the start that he was to serve a kind of apprenticeship. Gary would learn the business and, if all went well, after two years or so would move into the position of operations director. According to the father, it was understood that this might be as far as Gary could go at Wheatality.

IN THE FIRST SIX MONTHS, Gary tackled his new responsibilities with a zest and energy that seemed to make him forget the emotional turmoil of the previous year. He took courses in production at the American Baking Institute in Chicago. He wandered around the shop floor closely watching procedures at the mixing bowls, ovens, and packaging machines. He drafted a statement of company values that his father liked and the employees embraced.

Far from resenting the boss's son, the workers seemed to appreciate his easygoing style and interest in their work and their families. Before long, be was making suggestions for improving procedures. He recommended a method of measuring ingredient wastage at the end of the day that enabled Wheatality to streamline its ordering practices and cut costs.

Ed, watching his son's progress warily, seemed encouraged. They clashed only once, over what seemed at the time like a silly detail. For years a Wheatality favorite had been a large coffee ring with nuts and raisins that was sold by the slice in restaurants throughout the area. The recipe had been developed by a head chef who had retired. The new chef felt tastes were changing and people did not want a cake with such a sweet, buttery taste. He prepared a few samples of a revised, lighter recipe, which Gary tasted while making his rounds on the night shift. He liked it and the next day urged his father to try a piece.

Ed felt there weren't enough raisins and nuts in the new recipe. Gary suggested a market test. Samples were prepared with more raisins, but still Ed felt the new recipe wasn't right. Gary thought a larger issue was involved: Wheatality should test market its recipes continually. Ed agreed in principle, but put his foot down on the coffee cake issue. "We've been making this cake for 20 years, and it's one of our biggest sellers," he said. "We've been using a cup and a half of raisins, and I see no reason to change," Only half joking, Gary suggested that this "let-them-eat-cake" attitude might hamper any effort to develop new and better products. Ed didn't like that comment at all, coming from a son who had been in the business less than a year.

Relations between father and son did not really begin to deteriorate, however, until Gary met Cynthia. Oddly enough, they met at a family gathering. Cynthia, married and the mother of a three-year-old boy, was visiting friends of the Stovalls in Minneapolis, who brought her along to a party thrown by Ed and Marian. She and Gary spent most of the afternoon talking.

Soon the whole family was aware that Gary was traveling to Chicago on weekends to see Cynthia, whose businessman husband took frequent trips. At the office, Gary's work began to pile up, and some Wheatality supervisors confided to Ed that Gary had been sloughing off. He had not yet implemented a training program for supervisors and another for new employees that he had been working on for months.

To Ed, it confirmed once again the risks of having family in the business. He spoke to Gary about the neglect of his work. After church one Sunday, he and Marian questioned him about his affair. They could tolerate some behavior not to their liking, they told Gary, but they could not abide a "home wrecker." The affair would lead to disaster and pain for everyone. Even some workers at the plant knew about it and disapproved.

Gary resented this interference in his personal life, and denied that his relationship with Cynthia was hurting his work. "Sometimes people's lives are just not as neat and orderly as you and Mom would like," Gary said. "Cynthia and I will figure this out ourselves, but we need time."

REALIZING THAT a family problem had become a business problem, Ed decided that it was time to deal with the longterm future of Wheatality Baking. He and Marian own all of the company stock. Ed has always felt that when he retires or passes on, the family can either sell the company or hire a professional to manage it. But the situation with Gary has persuaded him that family members should learn something about the business so that, when the time comes, they'll make informed decisions on selling or hiring a manager. At the suggestion of a friend, he sets up an advisory board that includes Marian, their lawyer and their accountant, and two of their children — Nancy and Bill. Gary and his sister Amy are not invited to participate.

Before taking up the problem of Gary's trip to Chicago with the whole board, Ed and Marian ask Nancy and Bill to come to the Stovall home for a family discussion

As soon as they are seated, it becomes plain that there is some disagreement over how to deal with the problem:

ED: I've got to fire Gary. He hasn't been doing his job, and it's only going to get worse. He wants power without knowing what the hell he's doing. It's better to make the break now. I'd rather have a son than a disgruntled employee.

NANCY: Dad, you're letting your feelings hang out in this. He's having emotional problems right now, but he'll straighten out. Gary really likes the business and wants to help you. You yourself said he was doing a good job when he started. Why don't you give him some time off to think about what he really wants and to work things out with Cynthia?

ED: He lives too much in his emotions. He's always been that way. To run a business, you have to give 100 percent. Your life can't be in a constant uproar. Anyway, this is an integrity issue. In business, values are important and lying can't be tolerated.

NANCY: You and Mom approve of Bill and me because we share your strong views on right and wrong, and because we've always been pretty middle-of-the-road, stable people. You don't like Gary's lifestyle, so you're going to punish him!

MARIAN: Nancy, I'm shocked. I've never heard you talk this way. Dad felt sorry for Gary and gave him a chance to prove himself. This is strictly a business decision. He feels he and Gary just can't work together after this. What do you think, Bill?

BILL: I feel a little uncomfortable telling Dad what to do in this. It's his business, after all. [To Ed] I know how much it means to you and how depressed you've been about Gary. But maybe he'll settle down.

ED: He didn't ask me for a job until he was 33 and in trouble. If he was really committed to the company — and me — he wouldn't have blown it. He wouldn't have lied.

NANCY: We always looked up to you, Dad, but we also knew that you had strict standards. There were lots of things we wouldn't tell you because we knew you'd disapprove. Also, you made it pretty clear when we were young that you weren't keen on having any of us in the business.

ED: If all of this proves anything, it's that I was right all along. I am afraid that Gary has to go, and better now than later.

THE STOVALLS' DILEMMA raises questions about the terms under which a new generation enters the family firm. What standards of conduct, both in the business and outside of it, can and should be required of them? How important is agreement on values to the smooth functioning of the company?

On the next page, four family business authorities advise Ed Stovall on whether he should fire his son. They also offer opinions on what father and son could do to make their business relationship work if Ed doesn't fire Gary, and how other family members and the Wheatality board might support them.

See if you agree. Then turn to page 31 and use the "Your Turn" sheet to tell us what you think the Stovalls should do, and whether you agree with the experts.

 

HOW THE EXPERTS SEE IT

FATHER
DAVID MARSON
President, The Newcan Co., a fourth-generation metal-stamping company in Holbrook, Massachusetts.

Ed should move quickly to establish a board of directors that includes people experienced in strategic planning in closely held businesses. Only a dispassionate board can help him deal with Gary and the future of the business.

Ed's antipathy to hiring family members has become a selfulfilling prophecy. He hired his son for the wrong reason — not because he wanted Gary but because the son was rebounding from an emotional crisis. Then, to make matters worse, Ed turned to totally unqualified children (plus his lawyer and accountant) to solve the problem with Gary and deal with the long-term future of the company.

Preparing family members to participate in a business can't be done overnight. Ed never tried to pass on his knowledge to family members and his children were not motivated to seek suitable training to work in the company.

Ed's rigid morality may have forced Gary into lying. It made forgiveness between father and son difficult, if not impossible. As for Gary, his enthusiasm when he first started at Wheatality faded when he became involved with Cynthia. That may say something about his resolve to meet the daily demands of running a business. His background in politics also suggests that his career interests may lie elsewhere.

Because he hasn't been properly prepared to run the business, some of Gary's actions at Wheatality seem arrogant. His expectation that his failure to attend the marketing course and his personal charges on the company credit card would go undetected were, to say the least, naive.

PSYCHOLOGIST
JOHN A. DAVIS
Executive director, Owner Managed Business Institute, Santa Barbara, California.

The conflict in the Stovall family has little to do with Gary's affair and much to do with the natural, even predictable, differences between father and son, and with Ed's exaggerated fear of having family in the company.

Don't misinterpret my use of the word "exaggerated." I believe that a business ought to be run like a business and a family ought to be run like a family. I applaud Ed Stovall for having strict, clear rules in the company defining right and wrong. These build a strong organizational culture of fairness, which motivates employees to do their best.

But his belief that rewarding his son Gary will destroy morale is distorted. People who work in a family business understand that family members will enjoy certain advantages. If a family member performs as well as a nonfamily employee, he should get the job he needs to advance in the business. Ed's fear of family participation is hurting his relationship with Gary and driving away a potential leader.

The evidence indicates that Gary is performing reasonably well and has leadership potential. He is innovative, comfortable with people, and respectful of the company culture — even though he doesn't fully agree with his father's moral code. Ed's daughter Nancy is right when she says that he is punishing Gary because he disapproves of his son's affair. Ed is using Gary's affair as an excuse to fire him and eliminate his own anxiety about bringing a family member into management.

As for the moral question of Gary's affair, that has to be isolated from the business and dealt with by the family.

I hope Nancy, who is clearly the mediator in the Stovall family, brings dad around to giving Gary another chance.

SON
GREGORY POOLE III
Board member, Gregory Poole Equipment Co., a Caterpillar dealer in Raleigh, North Carolina.

Don't fire Gary! To fire Gary is to avoid the underlying problem, which is a lack of communication in the family. The giveaway is where Gary says to his father: "You don't want to know about Cynthia, so I don't tell you."

Ed doesn't listen to Gary and, in my opinion, he isn't going to listen unless the family brings in a facilitator or mediator to lead discussions between family members.

Only a mediator can help level the playing field, providing the sense of equality that Gary and Amy need.

The so-called advisory board should be dismantled. At least in its present form, it cannot work. By ostracizing Gary and Amy from the board, Ed has set up yet another obstacle to improved family relations.

The board can do much to eliminate strife within the family. Perhaps the siblings would be allowed to elect one of their generation to sit on it. That would reinforce sibling ties and enhance the credibility of the group as a whole.

BUSINESS ADVISOR
W. GIBB DYER JR.
Associate Professor of Organizational Behavior, Marriott School of Management, Brigham Young University, Provo, Utah.

Charging personal expenses to the company credit card and lying to one's employer are clear violations of company rules and ethics. Instead of firing Gary, however, Ed should give him a formal reprimand, as he would any other employee, and warn him of the consequences of further violations, which might include termination. A reprimand is particularly important. It will set a bad precedent if a family member is allowed to get away with such actions.

Gary's behavior is erratic; he would benefit from counseling. He has difficulty talking honestly with his father. The Stovalls should seek an impartial third party to serve as a mediator and to help them negotiate a set of expectations and standards for behavior.

Gary does appear to have ability. Employees respond well to him, and he's had a positive impact. Ed, however, does not seem to welcome input from Gary. Even if the son grows in competence, Ed may not be willing to share decisionmaking power with him.

Ed's judgment of Gary is influenced by his feelings about his son's personal life. The father has certain biases; he has excluded not only Gary but Amy from the advisory board.

Managers should focus on performance when evaluating employees. It's unrealistic to believe that employers' feelings about an employee's personal life — especially when that employee is one's child — can be cleanly separated out from such judgments.

— H.M.

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STORIES OF ALAN CRANE'S TEMPER are legendary at the Crane Carton Co. in Chicago. Typical was the day that Alan, while patrolling the plant, found a loaded pallet blocking the fire door. According to a veteran employee, the company founder and general manager blew his stack, chewing out the nearest worker and ordering the poor man to stop what he was doing and got a forklift to remove the merchandise immediately.

When the lift arrived, the veteran employee says, "he shoves this guy out of the way, jumps on it, and moves the staff himself, and, for good measure, he cusses out a couple of other guys who had nothing to do with the situation."

Employees still talk about the time when, because of a paperwork error, a batch of cardboard for a packaging order was printed on one side with black instead of blue. "It was pretty bad around here," says another worker. "Alan yelled at everybody. He just couldn't understand how such a terrible thing could happen."

Old-timers in the company didn't always like Alan's style but they understood and tolerated it because they knew bow hard he had worked to build the company. Alan, and a partner whom he bought out when he retired, started the company in 1962 with $7,500 worth of used machinery. Alan steered Crane Carton successfully through the sixties when industry giants were swallowing up the little guys one by one. In 20 years he had made it one of the largest independent manufacturers of cartons in the country, with gross sales that this year could reach $26 million.

Alan's accomplishments perhaps excused his occasional tantrums. During the eighties, however, his style of dealing with people began to create real trouble. By 1982, the company had 115 employees, many of whom were members of a new generation and remembered little of the pioneering days. They were frequently upset by Alan's penchant for countermanding orders, dressing people down in public, and keeping everyone on edge.

This management style exploded when Alan brought his nephew, Andy Weil, and his son, Bruce, into the company. The three had distinctly different styles and personalities, and when they began working together, face to face, on a daily basis, sparks were generated throughout the company.

Andy Weil was a corporate airplane pilot before coming to Crane Carton in 1981. He arrived a year ahead of Bruce, who had taught skiing and worked as a firefighter in Vail, Colorado, for a couple of years after college. Both had previously worked summers at the company but they were not given management titles when they joined the business full time. After an apprenticeship, Andy, now 42, gravitated to the factory and eventually moved up to plant manager. Bruce, 34, started selling and became sales manager. His sister, Jennifer, 37, joined the company two-and-a-half years ago, after a career as a teacher and a technical writer; she's now one of two customer service reps.

Andy was a perfectionist who insisted on managing by the book and was controlled emotionally. His obsessiveness about detail sometimes brought him into conflict with Crane's workers. His approach to managing was bound to clash with Alan's. "You get emotional and you're dead," he believed. "The employee remembers your biting comment. You have to carefully weigh what emotion can do to your effectiveness."

Soon after coming aboard, Bruce Crane took a keen interest in all levels of the Crane operation — even more interest, some said, than was appropriate. More laid back and soft-spoken than his father, Bruce nonetheless had strong ideas about how a well-managed company should be run. He believed successful company leaders respect lines of authority and delegate to middle managers in order to help them gain self-confidence. He argued with his father about losing his cool in front of employees, ignoring organizational channels, and trying to run the company singlehandedly.

For several years life at Crane Carton was more tension-filled than any of the three men at the top had anticipated. Alan certainly had never expected, when he brought on Andy and Bruce, that he was laying a minefield for himself in his own company. Unlike many founders, Alan was willing to share power. He was not thinking about retiring; far from it. He simply felt it was "time to hand over a little responsibility, to let the second generation start running things." According to all the family business gurus, he was doing the right thing.

What he could not fully appreciate was how painful the process of bringing in a new generation can be. To a great degree, his collision with his son and nephew typified generational conflicts that occur when an entrepreneurial company has grown beyond the reach of its founder and must develop an organized style of management. Some of the hottest battles of succession are fought around issues of leadership style.

"Me skills that make for a successful entrepreneur not only aren't well suited for later growth and development, they must be overcome if a transition to a new stage is to occur," says Craig E. Aronoff, director of the Family Business Forum at Kennesaw State College in Marietta, Georgia. Leon Danco, director of the Center for Family Business in Cleveland, puts it this way: 'The entrepreneur-founder is like a bush pilot, flying by his wits and instincts. You can't fly a commercial plane that way. He's now got to go by the gauges, and share responsibility with people who have special expertise."

Crane Carton is now flying more by the gauges. The 66-year-old founder, and his son and nephew, have come through most of the storms of transition, and today the company is managed in a much more professional manner. Given their differences at the start, their success is a tribute to the art of compromise.

ALAN CRANE acknowledges that his style is different from both Bruce's and Andy's. "I'm not an organized person," he says. Sitting in his office at the factory, his antique, rolltop desk cluttered with papers, Alan keeps glancing nervously at the clock on the wall. "I don't function well thinking through several solutions and taking a lot of time to decide which is best. I'd rather make 15 decisions right now and face the fact that three or four are going to be wrong than sit around talking. But I'll tell you this: Time is not your friend in a job shop!"

In the years when Crane Carton was hell-bent for growth, Alan's machine-gun style of decision making served it well. By the early eighties, Crane was making 10,000 tons of paperboard yearly, which it turned into packages ranging in size from little boxes for spark plugs to big ones for pizza pies. The paperboard was cut to customers' exacting requirements, printed in up to six colors at each run, shaped, glued, and shipped at the rate of more than 2 million cartons a day.

Alan knew everyone in the plant by name. They knew he and his partner had created the business by spending their mornings visiting customers, their afternoons cutting and laying out patterns, and their nights running the presses. Alan took off few weekends in those days. He occasionally worked 22 hours straight. His hands-on approach was his greatest asset. He was just as apt to be wielding a wrench on a malfunctioning printing press as poring over the books in the office. Older employees always took the long view when Alan went on the warpath. "Sure, he's a hard man to work for," says Nat Randle, printing foreman and a 14-year veteran. "But he's straight and fair. You don't get that everywhere."

Unlike his father, Bruce Crane has an abundance of dark hair and Tom Selleck-like bushy eyebrows and mustache. Unlike his father, he has no clock on his office wall. "My father and I are very different persons," Bruce says. "I tend to plan things carefully, move more slowly, and reevaluate my decisions. I don't have the same drives as my father."

Although Alan was far from pleased when his only son dropped out of college at 19, acquiring a steady girlfriend, a customized Ford van, and very irregular living habits, their relationship, survived. Bruce later returned to school, earning a degree in physics from Grinnell College. But he still resisted settling down. "There were things I just had to get out of my system," recalls Bruce, who is now married and has a daughter. "I didn't want to jump into the work world and spend my life as a frustrated skier."

Company veterans recall Andy Weil's early days as a plant manager with wonder and alarm. "He picked up this industry like a sponge," says one. "There isn't anything mechanical that he can't fix." That ability translated into plant efficiency and quick solutions to complex problems. One worker recalls calling Andy at home in the middle of the night because a printing press had broken down and no one could find the malfunction. "Right over the phone he told me what to do," says this employee. "It was like he had a set of blueprints in his head."

Some older employees had problems with Andy's style. One 15-year veteran recalled that Andy was always taking notes. "Everything had to be just right," the man says. "You couldn't talk to him or he'd get mad." Unlike his uncle, however, Andy did not display his displeasure with outbursts of temper; he tended to hold it in and remain silent. Even today, emotion for him is the enemy.

Andy's style was shaped in part by his piloting experience. A graduate in aeronautical engineering from Western Michigan University, he flew corporate jets for an Ohio company for 10 years. Over the desk in Andy's office is a large color photograph of the instrument panel of a Beechcraft Starship, a marvel of engineering design and precision. Andy himself is a handsome man with the everything's-under-control manner of the airline pilot in a television ad. He is direct but very careful in his comments — no need to alarm the passengers.

In some respects he found the transition from flight to factory not too difficult. "The technical aspects of flying cover only about 20 percent of the job," he says. "The other 80 percent is working effectively with your co-pilot, building confidence so you don't make snap decisions." At Crane, he adds, smiling, "the worst thing you can do with a thoughtless decision is bankrupt the company; in the air, a bad decision could have more permanent results."

If Andy thought Crane managers had to "fly by the gauges," however, his uncle was still the adventurous bush pilot who was in on every decision. "The company had been a one-man show," Andy says. "Alan was on top of everything all the time. And when a mistake occurred, he wanted everything changed right away." Andy had learned it was important to develop capable middle managers answerable to him and confident in their own responsibilities. But his efforts to delegate often backfired. Andy was, after all, not a Crane; he could claim neither the authority of the father, nor — when Bruce joined the firm — the aura of the only son.

Bruce and Andy did not mesh perfectly either. Since Bruce was in sales and Andy in the plant, they had different, sometimes conflicting agendas. Bruce wanted the customer's needs met on schedule, did not appreciate delays, and freely offered ideas for improving operations. One employee says that Bruce tended to become "a kind of Tinkerbell, bouncing in an out of situations and offering his advice uninvited. And since he was the boss's son, people felt they'd better listen." Although he carefully weighed alternatives before making a decision, the decisions too often were his and only his. When members of his salesforce encountered obstacles within the company, his style was to run interference personally for them — an indication that he may be more like his father than he realizes.

Alan did not take counsel humbly from his son or nephew. Employees recall that he occasionally clashed openly with Andy on the factory floor. His arguments with Bruce were apparently behind closed doors. Alan would inevitably get his way. But Bruce and Andy also had another strategy for resisting Alan's actions. At times, they simply tried to wait him out.

On one occasion, Alan insisted that a chalk board be mounted near the truck dock and that forklift operators be required to keep a running tally on it of what they load onto trucks. That way the company could track items that customers may complain were missing from a shipment. Bruce contended that Alan's idea was fine for a small company, but given Crane's output, it would consume too much of the forklift operators' time. As for Andy, he felt that a better way to ensure that orders were filled accurately was more efficient paperwork and better coordination between front office and factory foremen. He proposed a method by which a clerk would double-check the order after it went from factory to loading dock and keep a tally on paper. Alan said, "Put up the board!"

They didn't do it. That created a state of unresolved tension that lasted for weeks, until Alan observed that the paper check was producing acceptable results and quietly dropped the chalkboard ultimatum.

SUCH RUN-INS ARE TYPICAL of many family firms in which a personal style of management still prevails. John L. Ward, a professor at Loyola University and author of Keeping the Family Business Healthy (Jossey Bass, 1987) argues that once an organization grows past 40 employees "effective informal communication begins to suffer ... and the organization needs to replace the leadership of a powerful individual with the leadership of powerful management systems."

Bruce and Andy felt that Crane Carton needed such systems. They believed that Alan didn't see the larger implications of his behavior. In the case of the blowup over the pallet blocking the fire door, for example, the founder had ordered the nearest man to pull up a forklift and he, Alan, had personally moved the obstacle. But, notes Bruce, that didn't explain how the load got there in the first place. And it didn't take into account what happens when an employee is suddenly pulled off a job. "The carton industry is so lean," Bruce says, "that we don't have any spare workers standing around, so if you grab someone who's been loading pallets on a truck, you set up a chain of delays and complaints that can cost you a customer in the long run." Besides, he says, the "quick fix" embarrassed an innocent worker and undercut the authority of the foreman.

SIX YEARS LATER the climate is much different at Crane Carton. The three top bosses generally deal with one another in a calmer, more reflective manner. They meet weekly along with the chief financial officer and the company's quality assurance specialist. They rely on their department heads for information, and Alan feels more relaxed about staying in his office instead of roaming the plant looking for answers himself.

Without anyone waving a white flag, confrontation has yielded to compromise. For everyone, life in the plant is less hectic. Eustaquio Romero, a cutting pressman and 12-year Crane employee, remembers the turmoil at the top but feels he was not overly disturbed by it because he had always been treated fairly. "Things are better now," he says. "Not perfect, but better."

Bruce has discovered that modem management doesn't come as easily in life as in a textbook. He acknowledges it takes time and effort to solicit and honor the views of others.

Andy says he has come to appreciate the difference between working with a co-pilot in a company jet and running a carton factory. "If I go in talking about team spirit all the time, I'll only get frustrated," he says. "Everybody isn't enthusiastic about the job." He is trying to learn to be a good listener. "Our employees are our greatest asset, more important than the printing presses and the die cutters and the lift trucks. Without them, we're nowhere."

Most remarkable, even Alan seems to have gotten religion. "I'm convinced I have to go through the proper supervisor when I see something wrong out on the floor," he says. "I don't go to employees directly anymore. And I don't lose my temper either."

How come everybody at Crane Carton now sounds so upbeat? What accounts for this seemingly triple change of heart in men with such basic differences of style and viewpoint?

Ironically, Alan was both a big part of the problem and a big part of the solution. At his suggestion, the three began to consult with Peter Chinetti, an industrial management psychologist who has worked with family-owned businesses since 1968. None of the family members recall the precise issue that brought them to the psychologist, though Bruce says that it happened in 1984 when his cousin and father were often "at each other's throats."

In the beginning, all three met with the psychologist for hard "honesty sessions," in which he tried to show each one how he is perceived by the other two. None of them could handle criticism and were inclined in difficult situations to blame rather than seek constructive solutions, Chinetti says. Alan felt Andy was too rigid and wouldn't listen to him. Alan, in his dealings with Andy, could be punitive and vitriolic, which made his nephew resentful. Bruce's difficulties with Andy were complicated by Bruce's feeling that his cousin did not share his feelings and did not socialize enough with him outside the office.

Chinetti worked with Alan to show him why his behavior was getting reactions that were precisely the opposite of what he wanted. He taught Andy ways to avoid pushing Alan's "hot buttons," and also coached him on a looser management style that would support his employees rather than making them fear they would "get their heads cut off for a mistake."

As for Bruce, Chinetti tried to convince him that he and Andy didn't have to be close pals for them to have a good working relationship. The cousins had very different personalities and interests outside the office. Chinetti emphasized to Bruce that Andy would never be the kind of person who talks freely about his emotions and personal life. But they didn't have to go camping or play golf together or socialize frequently in order to support each other in the business. They didn't have to be the best of friends in order to work toward common objectives.

The Crane family's strong sense of loyalty has encouraged compromise. Alan may have a mercurial disposition, but his storms tend to pass quickly; none of the three seem to carry grudges.

Alan's apparent willingness to provide for the family's future in the business strengthens the family ties. About 18 years ago, when Bruce was only 16, Alan changed the structure of the firm from a corporation to a limited partnership, establishing more than 50 trusts which have ownership in the names of various family members and their present and future decendants, including Alan's six grandchildren and his second wife. He says he set up the trusts partly as a way of passing ownership to the next generation without incurring a heavy inheritance tax, and partly to protect the family from liability lawsuits.

The trust arrangement means that Alan is no longer the majority stockholder. There is always the possibility that the nonfamily trustees, who have voting power, could gang up and oust him. "I think the legal arrangement says something about the trust and respect he's always had for us," Bruce says. "You don't do something like that if you're selfish and insecure."

Alan says, 'They could kick me out tomorrow. I know that, and I've never given it a minute's thought. I know these people."

Another saving grace at Crane Carton was its understanding workforce. The nonunion company has always paid wages that were competitive with the best in the industry; the Cranes provide excellent benefits (a family health insurance plan with a $400 deductible costs $10 a month) and has a history of extending itself in time of need. "Alan may rant and rave around here," says one worker, "but if you've got a personal problem and go to him, the man is a marshmallow. You can go to Andy and Bruce, too — same thing."

Cranes' employees have noted the changes taking place in their bosses. Several commented on Andy's sensitivity and maturity. "He's grown in the job," says one. "He's turned into a caring person." A few others, however, contend that Andy's listening skills are still in the formative stage.

Alan has cut down his schedule a bit in recent years, as a concession to age. He works only 10 hours or so a day and is taking more time off with his wife. Characteristically, he goes about his recreation with a passion. He is an accomplished skier (a family addiction), shoots golf in the upper eighties, and works out regularly. Still, Alan brings work home and even talks about it when he's "relaxing" on his 40-foot cabin cruiser on Lake Michigan.

The family business literature is filled with stories of founders who have fought against change even when it was clear that, without it, the business would sink. Alan Crane was not one of those. It is significant that Alan himself suggested that the family consult a psychologist. Alan seems proud of his conversion. To illustrate, he mentions a recent incident in which a clerical error led to a printing overrun that produced 140,000 more sheets than the customer had ordered. "I didn't raise my voice," Alan recalls. "I never said a word." He bit his lip, he adds, because "yelling isn't effective," and also because "frankly, I can afford to take a loss nowadays."

Jennifer Crane says the error, in fact, cost the company tens of thousands of dollars. It was discussed, but at a regular staff meeting, during which she says Alan joined other managers in trying to identify the reasons for the slipup and ways to prevent it. Alan's reaction, she feels, suggests how he has mellowed.

WHILE THE GOOD ALAN has surely changed, some it doesn't come naturally and Bad Alan occasionally reappears. "You have to understand that Alan is a self-starter," says Don Roscoe, the company cost estimator and a 24-year employee. "So bureaucratic system comes hard for him. In the beat of battle, he'll still circumvent it at times, and then we have to put it back on track."

Crane Carton is doing very well. In 1990 the company expects to gross up to $26 million, churning out paperboard boxes at up to 60,000 an hour. By any standard, the company operates a highly efficient plant. Rejects by customers comprise only about one-tenth of 1 percent of production, and the amount of paperboard lost through cutting, trimming, trial runs, and error comes to less than 7 percent a year; both are considered excellent figures in the industry.

Asked if he worries that the second generation may not be able to handle the pressure, Alan's comment is revealing. He says that if he spent as much time talking and planning as Bruce and Andy do, sales would plummet by 50 percent.

If his conversion is not complete, if after years of counseling Bad Alan occasionally shows his face, it only confirms how difficult it is for anyone to unlearn long-standing behavior patterns. As with many reformed business founders, the battle to keep Bad Alan under control is likely to continue.

Alan quickly recovers from his point. "Now don't get me wrong," he says about Bruce and Andy. "They're both doing a damned good job. They have great intelligence and boundless energy. They've taught me things. I'm proud of them."

— R.M.

THE CRANE CARTON CO.

Product: Cardboard boxes for everything from Crest toothpaste and A.C. Delco spark plugs, to cheese, crackers, and popcorn.

Established: 1962.

1989 revenue: $23 million.

Employees: 115.

Founders: Alan Crane and George Duncan, partners.

CEO: Alan Crane.

Family involvement: Son, daughter, and nephew of Alan Crane.

Ownership: Stock distribution to 50 trusts in the names of numerous family members.

Goal: Replace personal, one-man management with modern corporate organization and procedures.

HOW TO MANAGE YOUR KIDS

When kids and other relatives come into the business, the owner bears most of the responsibility for seeing that they work out. Alan Crane of Crane Carton has given a lot of thought to what it takes to successfully manage family members.

"First," he says, "you must be exceedingly secure and independent. If you live vicariously through your son or daughter, the arrangement will fail, because you can't accept the kids' mistakes. You take everything as a reflection on yourself. The kids need the right to make mistakes; they need permission to fail. That means separating your life from theirs. And that doesn't come easy."

Second, Alan says, "You have to listen to what they have to say. And that's hard too, because a parent is used to telling his child what to do, even after the child is an adult. If it's a regular employee who comes to you with a problem, you try to study it objectively, from the problem's point of view. With your child, you may try to solve it yourself, and tell the kid, then and there, what to do, even when dealing with his own children."

— R.M.

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