In this issue
It seemed as if wedding bells were about to ring.
The love story circulating in 2015 was that the famed, folksy investor Warren Buffett was discussing a possible union with family-owned snack food company Utz Quality Foods of Hanover, Pa. These rumors arose after The Oracle of Omaha told Fortune magazine that his meals sometimes consisted of Utz Potato Stix and a Coca-Cola. Buffett, chairman and CEO of Berkshire Hathaway holding company, is famous for buying companies whose products he loves.
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?
Walking into Newbury Corp.’s headquarters for the first time, we were taken aback by the three-story-high painting of the founder that dominated the entry atrium. We had been invited by the current leadership team — a combination of next-generation family leaders and non-family executives — to help build a strategy for the future of the company.
When I first joined Family Business in the summer of 2000, I thought the main issues facing family companies were avoiding family arguments in the workplace, ensuring that NextGens earn their stripes, choosing the right successor, encouraging the senior generation to plan for retirement, and running the business like a business and not a family piggy bank. Those topics are all important, of course, but I quickly learned that family enterprise is much more involved than that.
Many family businesses focus on creating long-term value and place significant importance on supporting multiple stakeholders, including their employees. For these family business leaders and owners, employees are like family. And, right now during the COVID-19 pandemic and associated lockdowns, many employees are suffering. While much emphasis is appropriately placed on physical health and economic needs, mental health may be neglected.
Wesley Fehsenfeld has been named president and CEO of The Uhlmann Company, based in Kansas City, Mo.
The Uhlmann Company, formerly known as the Standard Milling Co., owns flour brands Hecker’s and Ceresota, as well as farmland and commercial real estate.
Fehsenfeld, a married-in fourth-generation member, joined the company in 2011 as a vice president, overseeing the baking flour division. He is a 2008 graduate of the College of Charleston and earned an MBA from the University of Missouri-Kansas City.