In this issue
Tom Flesch, CEO of Gordon Flesch Company in Madison, Wis., chuckles as he describes his ascent to the presidency of the office equipment dealer in 1986. "My dad pretty much just did it one day," Tom says. "He told my brother John and a few others in the company a week before he announced it at a board meeting. It was very old-school. Back then, you made a decision and moved forward."
As the fourth-generation lead family member of a family-owned Midwestern business, I witnessed firsthand the complications that stem from "culture and business conflation"—the melding of a family-owned business's cultural and values requirements on the one hand, and the objectives of the business on the other. These complications are even more apparent as a result of my experience as lead director of several family- and founder-owned private companies.
Managing personal wealth is, in many ways, like running a business; a coordinated and holistic plan is required to ensure your most important objectives are achieved. Successful business leaders develop strategic plans for growth in consultation with a group of financial and non-financial advisers, such as a board of directors, lawyers and accountants. Wealthy individuals require similar management of their financial matters—meeting growth goals, reducing risk, managing taxes, planning for future generations, developing a plan for charitable giving and so on.
As a family business owner, you are pleased when you walk by a marketing team meeting and see your son suggesting ideas for the new website. You are impressed when you observe your daughter working with the operations team to reorganize warehouse layout. You have built a strong, successful business, and you are proud to be able to pass it down to your children someday. While running your company, you are also preparing your next generation to take over. Early exposure to all facets of your business, including accounting decisions, is vital for the development of strong, wise leaders.
The Business: In the early 1960s, Marshall Paisner was working for J&H International, selling promotions to supermarkets. The job had him traveling constantly. Most weeks he'd board a plane on Monday and not return to his family until Friday; sometimes, he'd be away for two weeks. Every time he came home he'd have the same sinking feeling: He was missing the opportunity to watch his kids grow up.
In 1910, William F. Dierberg Sr. bought Creve Coeur Farmer's Bank in Creve Coeur, Mo. The bank, founded in 1906, served residents of the small community near St. Louis. The French phrase crève coeur means "heartbreaking," but the bank—owned by the Dierberg family for four generations and now known as First Bank—has repeatedly bounced back from difficulties.
William Dierberg doled out cash to customers from apple bushels during a 1930s bank run. "It's no use hiding behind the counter. You might as well go out and face it," explains William's grandson, James F. Dierberg, 79.
Ask for a "bowl of red" in Texas, and you may well taste the chili seasoning that's been sold for five generations by the Pendery family. Their ancestor DeWitt Clinton Pendery is widely (although not exclusively) credited with the invention of chili powder.
Generation of family ownership: Third.
About the company: Forty stores in 11 states. [Revenues for 2015 reportedly were $200 million to $250 million.]
Number of employees: Between 1,700 and 1,800.
Years with the company: Fifteen as an executive. I've worked in just about every role—merchandise ticketer, cashier, floor merchandiser and sales. I took over as CEO 10 years ago.
First job at this company: Receiving and stock clerk in the warehouse, at age 13 or 14.
We have been working on enhancing the role and responsibilities of our owners' council (family council), along with identifying the set of skills required to serve as a council member. We hope to draft an application and job description for owners' council membership. Do other families use a formal application and job description to select owners' council members? What key points should be included in these documents?
Advisers' and family members' replies: