There are many myths about family businesses. One of the most common is that all family companies are led by a family member. In fact, many family-owned companies, including some of the world’s most successful family firms, have non-family CEOs at the helm. Yet some people—even those who are family business owners themselves—find it hard to fathom that this is a viable arrangement.
Professional outside management can improve business performance and family relationships. In November, I moderated a panel discussion entitled “Separating Ownership from Management” at the Transitions West conference in Marina del Rey, Calif., presented by Family Business Magazine and Stetson University’s Family Enterprise Center. The three panelists—Jim Ethier, chairman of the board, Bush Brothers & Company; Michael Rucker, former chairman of the board, Geo. H. Rucker Realty Corp.; and Roger Muselman, chairman and director of DRG—described how their businesses are flourishing under non-family leadership. Muselman, whose publishing and fulfillment enterprise was profiled in Family Business in 2007, said that he and his cousin, as owner/investors rather than owner/managers, focus on strategy rather than management.
Ethier, whose maternal grandfather founded Bush Brothers, maker of the nation’s leading brand of beans, said non-family management has led to increased growth and profitability at the company.
Rucker said that if his family company had not named a non-family leader, the family probably would have decided to close the business. As he told Family Business when we profiled the company in 2008, the move to outside management helped the factions within his family to unite.
Yet even when moving to non-family management makes business sense, it can be a challenge to get the family on board with the shift. Rucker explained that his company’s first outside leader was initially brought in as a consultant; after he gained the family’s trust, he was given an executive title.
The family member who champions this move must be prepared to respond to relatives’ questions and concerns, and demonstrate how the family can add value as owners without involvement in day-to-day issues. In this issue, Meghan Juday, chair of the IDEAL Family Council, describes how her family developed a “family strategy” that supports and enhances the ambitious business strategy of IDEAL Industries Inc. IDEAL, too, is led by non-family managers.
As our Transitions panelists noted, the path to non-family management may have bumps along the way. But the move can be the change that is needed to ensure your business can continue as a family-owned company.
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