Beyond the family

By Barbara Spector

Many entrepreneurial families who have big dreams for their companies understand that non-family employees can help them make those dreams come true. A smaller percentage of family business owners have taken this logic a step further —they’ve hired non-family employees to run the place.

 

Some family business owners may be slow to embrace the idea of an outsider in the CEO’s chair. For instance, it took Wm. Wrigley Jr. Co. 115 years to hire its first non-family CEO. The gum giant, founded in 1891, was struggling amid competition from Cadbury Adams USA, and its earnings per share had declined after it acquired Altoids and Life Savers from Kraft Foods. When it named William D. Perez—formerly of S.C. Johnson & Son and Nike—to replace Bill Wrigley Jr. as CEO last October, a Credit Suisse analyst wrote to investors, “The biggest positive here is that management now seems to recognize that it needed to change from a paternal culture to a professional one.”

 

In this issue, Family Business profiles several families who have chosen non-family members to lead their businesses, and offers a behind-the-scenes peek at the analyses behind their decisions to do so. Rich Products Corp. of Buffalo, N.Y., one of the largest U.S. frozen foods manufacturers with annual revenues of $2.4 billion, named William G. Gisel Jr. as president and CEO last August. “For me, a family business does not just mean those with the same last name that’s on the front door,” company chairman Robert E. Rich Jr. tells reporter Ellyn Saft.

 

At Houston-based Kanaly Trust Company, the quest for the right non-family CEO took more than a decade. In 2001, Family Business reported on the Kanaly family’s struggle with leadership decisions. On page 45 of this issue, David Doll, who in 2005 became the first non-family member to hold top post, offers a follow-up to the 2001 article, describing the lengthy succession plan journey. Fortunately, the Kanalys had their new leader in place when the firm’s legendary founder, E. Deane Kanaly, passed away last July.

 

The Muselman family, owners of Dynamic Resource Group, a publishing company in Berne, Ind., view themselves as investors in their company, which has been managed by non-family executives since the late 1990s. As Dave Donelson reports on page 50, the Muselmans established this management structure because they believed the business would become more successful if they divested themselves of direct control.

 

After you’ve recruited a non-family executive, you still have work to do. As a trio of family business advisers notes on page 54, you must provide a means of motivating and rewarding that person. Non-family executives must be made to feel like part of the extended family, not the hired help. Read the article for advice on how to ensure their success.

Article categories: 
$10.00
Issue: 
Spring 2007

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