In this issue
The tiny stickers on each apple in the supermarket bin are an advertising opportunity. So are the giant graphics that cover the side of semi trucks. For companies to advertise in these places, someone must create the promotional products. One of the leaders in this business is The Vernon Co., a 111-year-old family-owned enterprise based in Newton, Iowa.
“We’re in the business of helping other companies market themselves and build brand awareness,” says Chris Vernon, the fourth-generation president and chief operating officer. “It’s a fun place to work.”
Many families have experienced family councils as a form of governing the family. Almost always, the formation of the family council comes with very high expectations for a vibrant and productive governing entity. Some launch with great success; others struggle to gain enough momentum to get off the ground. Whether you are just starting a family council or have had one for years, much can be gained by considering the lessons others have learned in making their family councils work.
Frank Fat’s restaurant is a Sacramento institution. Located a few blocks from California’s State Capitol building, it was for decades the gathering place for California legislators. The restaurant was as famous for its good food and service as it was for the political maneuverings that took place there. The corner booth was reserved for the most influential politicians, and many bills that later became law were first sketched out on napkins in Frank Fat’s restaurant.
Family business struggles are well known to anyone working in the field, whether as a proverb (“shirtsleeves to shirtsleeves in three generations”), as a statistic (only 12% of family businesses make it to the third generation), through regularly published accounts of prominent families caught up in litigation or through personal experience. Despite having access to professional advisers working to promote intergenerational success, many family businesses continue to struggle. This suggests the need for family business leaders to adopt a new planning paradigm.
Succession planning may have an undeservedly morbid connotation. Many entrepreneurial leaders, including family business founders, define themselves through their business. Ironically, failing to plan may bury their legacy with their coffins. William J. Rothwell makes a holistic and compelling argument for succession planning in his book Effective Succession Planning: Ensuring Leadership Continuity and Building Talent from Within (4th edition). Rothwell advises leaders to proactively develop a talent pool in response to, and in support of, strategy.
The most critical but often overlooked policies for large family businesses tend to fall into two categories: transitions and day-to-day business operations.
Leadership and other transition issues may be frequently discussed, and sometimes put into writing, but without the proper structures you could find your policies falling short at the worst possible time—in the midst of an unexpected change. In addition, sometimes informal practices around day-to-day operations become entrenched. Failing to discuss these practices with counsel can leave you vulnerable.
Alexander Slack, who founded the Slack Mop Company in 1909, developed an adjustable wet/dry mop that his four sons sold door-to-door. The invention was sort of a do-it-yourself kit. “They just sold the stick with this contraption on the end—the socket that would hold different rags,” says Alexander’s great-grandson, Thomas G. Slack III, 66. Users inserted cotton into the dowel for a wet mop, wool for dry.
Generation of family ownership: Third.
Annual revenues: $1.5 billion.
Number of employees: 2,977.
Years with the company: 55.
First job at this company: Manning the switchboard on Saturdays, taking TV service calls and working in the warehouse.
At what age? 16.
Most memorable thing I learned from my father: Everybody has ten little fingers and ten little toes, and you must treat them fairly and equally.