In this issue
In 2008, when the search firm helping IDEAL Industries find a non-family CEO suggested Jim James, third-generation leader Dave Juday balked. James was then working an hour and a half away from IDEAL’s Sycamore, Ill., headquarters as a group president at Illinois Tool Works.
In late August, Dave Glenn, a family shareholder in Elkay Manufacturing Company — an Oak Brook, Ill.-based manufacturer of commercial and residential sinks and other products — hosted a few relatives at his home. Glenn, who doesn’t work in the company, also invited Elkay’s non-family CEO, Tim Jahnke, to the gathering.
Many family businesses will reach a point where non-family executives are needed to manage the company and take it to the next level. There are myriad challenges to overcome in attracting outside talent to a family firm. Some executives are concerned about the uncertainty of family dynamics. Others are discouraged by what they see as the slim chance of a lucrative exit.
All businesses need solid CEO talent, but multigenerational family businesses need another type of leadership as well. Someone (or several someones) must step up to unite the family and inspire them to work together in support of the family enterprise.
Every family business has a unique narrative with fascinating characters. There’s the founder, whose vision and values originally defined the company. The founder’s legacy directly affects the members of successor generations. Some may wonder if they have the expertise to lead, while others may question their parents’ or grandparents’ business decisions.
On a snow day in 2012, when kids had the day off from school and people were encouraged to stay off the roads, Jeff Westphal, second-generation CEO of Vertex Inc., called his sisters and asked for a meeting that day.
The controlling owner in a first-generation family business may not fully appreciate the need for family governance. This person built a business, controls the finances and has typically spent more time at the office than at home. Founders’ children rarely (outwardly) question their parents’ decisions about the business. After all, Mom and Dad have the final vote, and their kids hope they will share the success.
How many times have you heard a business leader say something like this: “I want to retire and our NextGens aren’t interested in taking over the business, so we have to sell it”? Or you might have heard this: “I’m ready to retire, but our NextGens are too young [or too inexperienced] to take over the business, so we have to sell it.”
Friends Christopher Martin, 29, and Cam Murphy, 30, both succeeded entrepreneurial parents as leaders of growing businesses.
Martin is president of American Health Associates. The company, based in Davie, Fla., was founded by his mother, Debbie L. Martin, in 1990. He joined American Health in 2013 to help the company acquire MEDLAB from bankruptcy. Before joining American Health, he founded a software company with two college friends.