March/April 2015 Toolbox
Coming clean about family business challenges.
Dirty Little Secrets of Family Business: How to Successfully Navigate Family Business Conflict and Transition, by Henry Hutcheson • Indie Books International, LLC 2014 • 196 pp., $20
Henry Hutcheson grew up in a business family and became a family business consultant after a management career with IBM, UPS and Sumitomo Electric. He has written about family business topics for newspapers in North Carolina, where his practice is based. In his new book, he sheds light on some issues that family business owners don't want to admit to others—or, in some cases, to themselves.
Dirty Little Secrets of Family Business contains advice that can help a wide range of readers, from those who have been educating themselves about family business best practices to those just beginning to address the challenges of combining family and business.
The opening pages of the book are most relevant to the latter constituency. The first "dirty little secret" mentioned is a fundamental family business truth: that the family system (based on unconditional love) and the business system (based on profit) are often at odds.
Hutcheson notes in his first chapter, "[F]or a family business to be successful long-term, it must put forth effort in some key areas: communication, governance, management succession and planning." (The italics are the author's.)
Subsequent chapters delve more deeply into family business dynamics. Hutcheson takes a no-nonsense approach to explaining many of these issues. Take, for example, his advice on grooming successors: "If the owner is truly interested in the company moving forward, it is necessary to begin handing over some control and allow the next generation to get the creative juices flowing and shape it in their own way. But the problem with the next generation is that years of doing things the owner's way may inhibit ingenuity."
Later in his text, Hutcheson shares a "dirty little secret" about entitlement: "While entitlement can come from many different places, the cause, and the place where change must begin, is typically with the parents."
Hutcheson is a grandson of Olan Mills, founder of the eponymous portrait photography studio that was sold after nearly 80 years of family ownership. He explains why his family sold the company and reflects on his reaction to the news. Another personal anecdote involves Giovanni Agnelli, a classmate of Hutcheson's at the McCallie School in Chattanooga, Tenn. Agnelli, a great-grandson of the founder of Fiat, was being groomed to take over the company when he died of a rare form of stomach cancer at age 33—evidence of how the best-laid succession plan, even with a well-chosen successor, can go awry.
The book's strength lies in its practicality. It offers advice on what to say when firing your child, as well as how to explain to your offspring that he or she will be compensated according to fair market value for the position. For next-generation members, Hutcheson suggests language for gently informing your parents that you don't want to take over the family company.
Dirty Little Secrets also provides helpful tips on training next-generation members, as well as a detailed discussion of the importance of a buy/sell agreement. There is also an extensive discussion of non-family CEOs. Hutcheson warns against installing a non-family executive "who is called the leader, but whose job is really to negotiate between the siblings." A brief essay by Bill George, who served as the president and CEO of SC Johnson from 1993 to 1997, provides a look at family business leadership from a non-family executive's point of view.
Given the book's title, and the wisdom contained in Hutcheson's "dirty little secrets," it's a shame that these insights aren't used as an organizational framework for the book, or even highlighted within the text. Another flaw is that the role of a board, and the advantages that seasoned independent board members can bring to a company, are mentioned only in passing (and Hutcheson recommends an advisory board without discussing a fiduciary board).
These drawbacks aside, Dirty Little Secrets of Family Business provides solid advice that is realistic and action-oriented. Hutcheson does family business owners a great service by sharing these secrets and suggesting how that knowledge can help them put their company on the road to long-term sustainability.
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