In this issue
It seemed as if wedding bells were about to ring.
It’s common knowledge that only a handful of business families continue beyond the third generation as a family with a shared enterprise. How can younger families prepare to join that exclusive club? To gain insights into this question, our research team interviewed members of 100 large, global families. We call these families “generative” because they have succeeded beyond their third generation as both a thriving business and a connected family.
Scene: In a gilded townhome several floors above New York’s Fifth Avenue, a family toasts its patriarch’s 80th birthday. Rather than bask in the warmth of his family’s love and respect, the patriarch makes an announcement: He intends to remain CEO of his family-controlled media conglomerate for another five or 10 years. The patriarch has made this decision even though he himself — and a Forbes magazine cover story — anointed his second-eldest son as CEO-in-waiting.
The boards of family businesses must find the proper balance between compensation for the management team working in the business and earnings for the family shareholders who own the business. It is likely that some family members will wear both hats, which heightens the challenge of distinguishing the return on labor (management) from the return on capital (shareholders).
Family businesses can represent both the best and worst form of capitalism. We’ve seen families build and nurture businesses that invest in the long term, in their communities and in working and growing together as families. But we’ve also seen the other side: At their worst, family businesses can generate conflict that destroys their wealth, scores of jobs and their family relationships in the process. What separates the best from the worst?
Pamela Kan and Laura Markstein are presidents of family businesses in male-dominated industries. Both of their companies are based in the East Bay region of California’s San Francisco Bay area.
Kan is the second-generation leader of Bishop-Wisecarver Corporation, a Pittsburg, Calif., industrial automation company specializing in linear and rotary technologies. She joined the company in 1991, was named president in 1999, gained a controlling interest in the company in 2009 and became the sole owner in 2020.
Generation of family ownership: Second.
Revenue: $50 million to $60 million.
Number of employees: More than 120.
First job at this company: My dad and I started the guitar case business in 2000. Previously, he was in the music business and I was in business school. I did a little bit of everything: marketing and accounting, and entering orders and purchase orders.
The Business: Known globally for its signature products — residential and commercial bottle fillers, drinking fountains, stainless-steel sinks, faucets and kitchenware — Elkay Manufacturing Company today comprises manufacturing facilities across the United States; international operating facilities in China and Mexico; and locations and partnerships in Europe, South America, the Asia/Pacific Region and the Middle East.
Small independent retailers have enough challenges without adding “pandemic” or “civil unrest” to their list. But Lee’s Flower and Card Shop, a third-generation institution on U Street in Washington, D.C. — once known as the city’s “Black Broadway” — has stayed strong through many challenges, from a changing neighborhood to all the uncertainties of 2020.
People want to support Black businesses during this time of protest against systemic racism. And the floral industry has fared well during the pandemic, says co-owner and president Stacie Lee Banks, 57.