IDEAL Industries Inc.
IDEAL Industries, founded in 1916 in a kitchen, is now a global, diversified business. The company, based in Sycamore, Ill., designs and manufactures products and tools for the electrical, wire processing, data communications, aerospace, automotive and construction industries. It has experienced great growth in recent years. Non-family member Jim James, who has served as CEO since 2008, took over as chairman from third-generation member Dave Juday in 2014.
Today the IDEAL family comprises about 50 members; there are 30 family shareholders, who represent the third through fifth generations. No family members serve in management roles at the company.
Over the years the family has changed its governance system to reflect family members’ changing attitudes and expectations. Founder J. Walter Becker created a consensus model of governance, rather than a proxy vote model, for his two daughters. In later years the family moved away from governance by consensus to a “benevolent dictator” system.
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Dave Juday and his sister took steps to shift family governance back toward consensus. But as the fourth generation came of age, it became apparent that the family council was too rigidly structured to meet the family’s needs. Beginning in 2003, fourth-generation family champion Meghan Juday, Dave’s daughter, spearheaded a transformation of family governance.
The formal council membership structure of the past has been replaced by a volunteer council that any family member may join at any time. The family hired a non-family member to chair the IDEAL family council in order to help mitigate family risk and maximize the value that the family brings to the business. The family council chair recently started analyzing family engagement metrics, which are reported to the board quarterly. The family hired a family governance manager, also a non-family member, to help with meeting planning, logistics, coordination and communication.
In accordance with the values shared by the G4s, the IDEAL family now focuses on process and transparency. The family recognizes that access to information helps build trust and that family members will accept an outcome that emerges from a process everyone buys into.
Task forces of family volunteers research ways to resolve disputed issues. Initiatives are presented to the family via webinars, in which options and supporting data are laid out in PowerPoint slides and everyone is given an opportunity to comment. Those who raise the issue are encouraged to serve on the task force. Task force members conduct outreach to ensure those who support or disagree are given ample opportunity to comment. It often takes a year to gain consensus on a new policy or program, but the inclusive decision-making process allows for a deep buy-in with the larger family.
The fifth-generation program, started in 2003, ensures that every interaction that the fifth generation has with the family is exciting, fun and educational. Every time adults have a family council or family assembly meeting, alternative programming is provided for the fifth generation. The G5s have built strong, lasting relationships, although they live across three time zones.
An annual three-day “family camp” enables the extended family to have fun together outdoors at a shared property in Wisconsin. Family camp is scheduled, planned and executed by the fifth generation, allowing the younger children to learn how to plan events and collaborate on a shared outcome in an age-appropriate way.
IDEAL has created a family education program, funded by the family, and a family leader development program, funded by the business. These programs help family members develop personally and acquire qualifications to serve as family leaders, voting trustees or directors.
The family leader development program allows individuals to become board-ready at their own pace. Education includes post-board meeting learning sessions with the CEO and lead director, financial analysis training, board governance education and case study simulations. Various levels of education are offered based on the individual’s role: standing board visitor, aspiring family leader, associate director or director. Individuals are provided a portion of the board fee depending on their level in the program.
Multiple fourth-generation members have stepped up to take on leadership roles at a variety of stages along the development path. Meghan became the non-executive vice chair of the majority-independent IDEAL board in 2018.
Meghan emphasizes that the family’s role is to be the best possible partner with the board and management, with all three partners working toward the same goal: smooth execution of the business strategy. The family believes it would not have been able to attract or retain a top-caliber chief executive without strong governance in place, which provides a stable foundation upon which the family and business can grow.
Coinciding with IDEAL’s centennial in 2016, the family took steps to ensure the company would remain family-owned through future generations by protecting 98% of the IDEAL stock in newly created perpetual trusts. To explain the elaborate plan to the family, 25 webinars were presented on five topics. Each webinar built on the preceding one, with buy-in from the family secured before the next webinar was held.