In this issue
The phrase “new normal” made a comeback after the financial crisis, suggesting a fundamental shift in the economic and business landscape. A few years on, many family enterprises are still struggling to define the new normal for themselves. It’s not surprising that many of those businesses remain hesitant to make bold moves.
E. Ritter & Co. began as a farm established by Ernest Ritter in 1886. For the next century, Ritter and his descendants expanded the operation and lived near the company headquarters in Marked Tree, Ark. But by the time the fourth generation had taken ownership of the business, the family was spread around the country. When the fifth generation came of age, no one stepped forward to work in the business. Many family members in their 20s and 30s still owned stock, but they had little idea of the company’s history and purpose.
As family enterprises anticipate a future generational transition, a number of critical questions emerge:
• What does the next generation need to be prepared for?
• How big is this challenge, and how will it be met?
• What is the priority? Is it to develop the human capital of the family or future leaders, or a combination of both?
Cinda Jones welcomes a visitor to her pleasantly cluttered office, a farmhand’s bedroom some 60 years ago, reachable via a flight of creaky steps in what used to be a barn. The structure is attached to the homestead built by her ancestor David Cowls (pronounced “Coles”) in what is now Amherst, a Western Massachusetts college town. Nine generations of the family have lived in the house, which was erected in 1768; it has also always served as the headquarters of the family’s forestry company, W.D. Cowls Inc. The family farm is even older than the home; it dates from 1741.
Planning for the future of your family business can be one of the most challenging tasks for the family; it is also one of the most critical. One of the most difficult decisions for family business owners is whether to transition the business to the next generation or to sell it.
Why is conflict in family enterprise often so extreme and intractable? It is extreme because roles in a family business, or access to family wealth, are not as negotiable as these issues would be in a non-family enterprise. This is true in large part because family members tend to take their role in the business very seriously. The disagreement is about more than just a job or money, it’s about what these signify to the stakeholder. Dismissing conflict in a family enterprise as greed is too easy.
In a December 2001 article entitled “Executive Coaching Helps Companies Achieve Goals,” the Wall Street Journal declared, “Perhaps the most important and direct benefit of good executive coaching is the development of high-impact future leaders.”
In Krebs, Okla., a former coal-mining town with a total area of 3.4 square miles, “There’s almost more restaurant seats than there are people,” says Joe Prichard, third-generation owner of Pete’s Place, a family-style Italian restaurant with its own microbrewery on-site.
Pete’s Place was founded in 1925 by Joe’s grandfather, Pietro Piegari, who Americanized his name when he entered the country at age 11 with his family.