Testing a sibling partnership

Chuck and Terry Barebo said ÒSee yaÕÓ and flew off to Arizona and retirement, leaving behind their three offspringÑCharlie, Chris, and CarlaÑto sink or swim as leaders of the familyÕs water-quality management company.

By Shu Shu Costa

The first professional partnership of the Barebo siblings was not a business, but a rock band. Chris, the middle child, played guitar. He joined the group called The Setbacks first, then convinced older brother Charlie, who really knows how to blow a sax, to come along. Carla, the youngest, with a powerful, bluesy voice, sang solo. ÒWere we any good?Ó The siblings exchange a look and laugh. ÒWe got a few engagements.Ó Truth be told, the three were professional for three years, playing the Stones and Joan Jett at local clubs.

The Barebos (the name rhymes with Òbare bonesÓ) are now in a new band, of sorts. As young second-generation managers and owners of the family business, they have had to learn to play together in a totally different way. Charlie, 39, is CEO and president of Otterbine-Barebo Inc., a water-quality management company in Emmaus, Pennsylvania, that his parents bought in 1980. Chris, 35, is vice president of manufacturing; Carla, 32, is vice-president of sales. Over the past four tumultuous years, ever since Dad and Mom walked onto a plane bound for Tucson, Arizona, and retirement, they have struggled with succession issues that have cemented professional bonds among them but, at times, also strained the bonds of affection. What has emerged from this fiery forge is a partnership of equals. And along the way, to everyoneÕs surprise, the three siblings have reinvented DadÕs company and made it their own.

The creation of second-generation sibling partnerships can be dramatic, often painful, and ultimately life-threatening or life-saving to the business. Experts agree, sibling partnerships are hard to create, and even harder to maintain. The changing of the guard, from the original ownerÑin this case, as in many, a strong, dynamic, and gifted father with a disciplined management styleÑto a triumvirate of siblings, challenges the basics of business management: Who should be in charge and why? Whose vision will they follow? How will decisions be made?

Charlie, Chris, and CarlaÑall fiercely competitive since childhoodÑhave spent the last four years battling through these important questions. Through a year-long series of intense, often loud, often tearful meetings with a family business consultant, they have mapped out a unique strategy of management, with creativeÑsomewhat Òmad-scientist,Ó as Charlie would sayÑmechanisms to deal with both day-to-day issues such as communication and long-range dreams. ThereÕs even room in the equation for the family part of family business. So far it is working, the siblings will tell you with pride. But will it take the Barebo business into the next generation?

The egalitarian sibling partnership is a Òdelicate dance,Ó says a recent book, ÒGeneration to GenerationÓ by Kelin A. Gersick, John A. Davis, Marion McCollom Hampton, and Ivan Lansberg. ÒIf the siblings have always operated as a leaderless group or have rotated leadership according to different tasks and special skills, the egalitarian team can be very satisfying and productive.Ó The book cautions that classic organizational theory argues against such shared power arrangements. ÒAnd yet, in some family businesses, it works.Ó

Bringing up a Dream Team

It is the end of the day, and the three siblings sit around the conference table in the back of the turn-of-the-century silk factory that now houses Otterbine-Barebo. At a busier time, the place would be humming with 34 employees making and selling water aeration equipment. Devices produced by the company keep ponds from turning green; you can see them at over 40 of the top 100 golf courses in the United States, as well as at the corporate headquarters of Ford and John Deere, and at municipal parks everywhere. There are moments when the three siblings seem like kids hanging around the kitchen table. They joke easily, often deferring questions to each other, adding bits to stories as only family members can. Other times, the conversation turns more business-like; tiny bits of past tension hover like a sour perfume. Charlie, jacket off, leads the conversation, his passion for the business worn on his rolled-up sleeve. Chris, immaculate in brown suit coat and tie, sits back, hands in his lap, quieter than his burly brother yet equally intense. Carla, comfortable in a pantsuit, is affectionately known as the family tomboy. She sits on the edge of her chair, bursting with thoughts, Òbull-doggingÓÑas Chris calls itÑto push through her ideas.

They have always been close. The family was nomadic, uprooting every 18 to 48 months as Dad managed a series of plants for Corning Glassworks. Mom loved to live in rural areas, so the three children grew up far away from city playgrounds and neighborhood buddies. Music, bicycle races, childhood pranks, family ski trips - these kept the very energetic, highly competitive children busy and close. ÒWe had to be more than just brothers and sisters,Ó says Charlie, Òwe had to be playmates and friends.Ó They were so tight that ChrisÕs wife is CarlaÕs best friend from high school, and CharlieÕs wife is a close friend of both.

Charlie Barebo joined the company right out of college, a raw finance major from the University of Utah. He didnÕt plan to come back East, but found himself needed at home. Chris, a marketing major at Penn State, and Carla, a Penn State economics major, had more choices but, after some job hunting, they signed up as well. Both had worked in virtually every department since they were teenagers. It was an easy place to work. Dad, with his engineering background and Corning management experience, ran a tight and traditional ship. Hierarchy was textbook. ÒDad was right, even when he wasnÕt,Ó recalls Chris. The siblings worked side by side, but mostly autonomously, Chris on the manufacturing side, Charlie in sales, and Carla in marketing. Mom handled the finances. Family-only board meetings dealt with major business decisions. A family council was instituted to discuss sensitive family issues such as feelings surrounding differences in compensation and whether spouses could be employed in the business. When things got really bad, says Carla, there was always Mom, who would listen and defend one or another of them as necessary.

Then Chuck and Terry Barebo decided it was time to retire and the three siblings had to learn to run the place on their own. Successful sibling partnerships begin with a shared dream, says Ivan Lansberg, a family business consultant and one of the authors of ÒGeneration to Generation.Ó It is a dream that must be created over time, ideally nurtured by the parents when the children are young. It canÕt be inherited. So, Lansberg says, siblings must first decide what they want to accomplish for themselves within the company. Then, through open and frank dialogueÑand this is whatÕs difficultÑthey need to find ways to merge their dreams into a vision that incorporates what is good for both them and for the company. Without that vision, anchored in each childÕs aspirations, he says, the possibilities for collaboration are not great.

For the Barebos, the process of creating a successful sibling partnership started in 1986 with a test. Dad told the three about a buyout offer he had received from a competitor, an offer he had already-secretly-turned down. Carla remembers the question came out of the blue and sounded odd: ÒHow much money would it take for you to walk away from this business?Ó Chuck asked. What he was really probing was what each of his offspring expected from the business. He was looking for one of them to emerge as the strong leader, one who would, in effect, take his place and carry on the business.

ÒI failed miserably,Ó says Chris now. ÒI gave the answer that I thought Dad wanted to hearÑa number I thought would make him happy. I wasnÕt thinking of the legacy of the business.Ó Carla, too, threw out a number, not yet guessing at the purpose of the test. Charlie, says Chris, was the one who came back with the answer Dad was hoping to hear.

Charlie shrugs a bit when recalling his response. ÒI guess I saw my children, ChrisÕs children and CarlaÕs children running this business,Ó he says. ÒI didnÕt see it ending in five years and me teaching music in Des Moines. That was a big test for our family, and for our company.Ó

CharlieÕs response was what Chuck was looking for. It was, Carla remembers, the first time Chuck had verbally communicated to the three of them his own feelings of what the business meant to him, his own dream. He hoped to see the business kept in the family. And he was looking for the same from them. Humbled, the three siblings began rethinking what the business meant to them as the first stages of succession planning began. During family councils with Mom and Dad, the three took their first baby steps, learning how to communicate with one another about topics such as compensation, responsibility, expectations. The sessions were honest, often painfully so. ÒThese were really difficult topics,Ó says Carla. ÒWeÕre a competitive group. WeÕve always been and still are. We expect 125 percent from each other. When someone gives only 123 1/2, heÕs going to hear about it.Ó

Other plans were made: Chuck and Terry began gifting stock to the children. Each of the three now owns 15 percent, while the parents retain 55 percent. The plan is for the siblings to be full owners by the year 2006. The company property was sold to the three children, who now form a legal partnership, CCC Enterprises. Insurance funds were put in place in case one of them dies. Contingency agreements were created if one sibling wants out.

On their own

Despite all the plans, the siblings were still unprepared for what hit them in 1993. That was the year Dad and Mom decided they needed to make a more drastic change and distance themselves physically from day-to-day operations, moving to Arizona. Before they left, they established three councils of key executivesÑone for manufacturing, another for sales and marketing, and a third for research and developmentÑto help steer the company. They hired Henry Landes, a family business consultant, to work with the three siblings on family issues, and appointed Charlie as general manager.

ÒI think they realized,Ó says Charlie, Òthat if they stayed around, we would not step to the plate. The councils, which Chuck sits on, gave him some comfort that the business would continue. But from the moment they boarded the plane, we were on our own.Ó

In 1993 the company went through its worst year ever, for a number of reasons. The commercial real estate market hit bottom, and the flood in the Midwest wreaked havoc with sales. For the first time ever, the company did not turn a profit. Worse, the siblings still had not come to terms with the new leadership structure, and the company was rudderless. ÒOur survival was threatened,Ó admits Charlie.

Charlie, the oldest and most experienced, tried to provide some leadershipÑbut his efforts to assert himself were quickly rejected by his brother and sister. ÒI admire tough-love kinds of leadersÑTeddy Roosevelt, Vince Lombardi. I was too autocratic,Ó he says, Òand that style did not cut it with my brother and sister...and rightly so.Ó

ÒChuck [Dad] was very autonomous,Ó says Chris. ÒUnless there was a glaring issue, he let me do my job. There really hadnÕt been anybody in my backyard for a long time, and suddenly IÕve got a neighbor who wants to be there all the time.Ó It is one of the classic missteps that sibling partnerships fall into. The kind of leadership provided by DadÑauthoritarian, paternalisticÑdoes not work in a partnership of equals, especially of competitive siblings. That position requires a facilitator, someone willing to swallow his of her own ego and work among the troops.

It got so bad that when Chris got into a disagreement with his brother, he would pick up the phone and call Dad in Arizona. ÒHe didnÕt say much,Ó says Chris, adding that his parents have tried to remain quietly on the sidelines. ÒIt probably just worried him more.Ó

Then came the issue of pay. Charlie, as the one who had the most years with the company, had the higher salary. Dad, who was raised in corporate America, went along with this method of doling out pay. It seemed natural. ÒBirth order,Ó Charlie jokes with the tiniest of strains in his laugh, Òis accepted in the Bible.Ó His brother and sister, both of whom worked just as hard and owned just as many shares, were paid less. It was, for them, an unacceptable arrangementÑas bad as giving one child a larger allowance for an equal number of chores. ÒWe own a third of the business,Ó said Carla. ÒWe take a third of the risk. But we donÕt get paid the same for our commitment?Ó Meetings began dissolving in angry shouts; fissures in the team began to show. ÒThere were days,Ó says Carla now, Òwhere I would walk out of those meetings thinking, ÔHeck, this isnÕt worth it.Õ Ò Something had to be done.

Equal pay, equal say

With the help of Henry Landes, the siblings reached agreement on several major renovations of the companyÕs original, more traditional management style, and on a long-term plan to ensure more equality in their roles. The first hurdle the three needed to clear was the divisive issue of pay, an issue they had argued about for over five years. If the siblings were to have equal roles in the management of the company, then it was important to be compensated equally, they decided. Under their long-term plan, pay will flatten out gradually as the siblings become more equal in their professional skills.

It was a difficult issue to resolve. Compensation is tied so closely to management rank, to personal egos, and to more nebulous issues such as trust and control. ÒSome people,Ó says Charlie, Òhad to sit on their egosÓ for the benefit of the long term. That was probably CharlieÕs greatest challenge, observes Carla. ÒAnd I give him a lot of credit for doing so.Ó CharlieÕs dream of being leader, and all that meant to him, had to change. ÒHe realized,Ó says Carla, Òthat each of us has a dream of leadership and ownership. And for all three of us to reach our dreams to a level of satisfaction, he would have to give up a little of his.Ó

It has smoothed matters, too, that each sibling will get his or her turn to be president. In a few years, they have tentatively agreed, Chris will move up to president, and, a while after that, Carla will get her turn as president. Some of the details of the plan remain unclear, however. Although Charlie will get the title of CEO after Chris becomes president, he will apparently have no more authority than his brother and sister; he denies that he will become a Òfirst-among-equals.Ó Nor is it exactly clear when Carla will step up to president.

These days the issue has turned to accountability. This past spring, they instituted what they call 360-degree reviews among the siblings. Under this plan, each sibling reviews himself or herself and then is reviewed by the other two. TheyÕre not happy with the first set of reviews. ÒWe were too soft on each other,Ó says Charlie. ItÕs still tough to be reviewed by a sibling, someone youÕve competed with since childhood. But now that issues of control and rank, which were so closely interwoven with compensation, have been dealt with, the three feel free to concentrate on raising their own professional standards and moving ahead as a team.

Each of the three has a large measure of autonomy in the operations under his or her control. Tasks and areas of control have been divided according to what each does best, as well as what is best for the company. What makes the partnership work, too, is the siblingsÕ complementary talents and interests. Charlie, the salesman, is probably best at articulating a vision for the company. Chris is very pragmatic and tends to focus more on the details of maintaining product quality. Carla is the innovator who delights in pushing the boundaries of business. She is the first to pick up a new software, to institute flex time, to change the patterns of management.

As a result of their differences in personality, they donÕt always see things the same way. But they are learning to recognize and respect their differences. ÒCarla challenges me,Ó says Chris. ÒShe can drive me crazy. But in order for this to work, all three of us have to play a near-equal part in its success.Ó

Management by consensus

The siblings agreed that decisions would be made by consensusÑin other words, nothing could happen without full agreement. It is important in a sibling partnership to have a method of resolving deadlocks, says consultant Lansberg. ItÕs not important what it is, just that itÕs there. The Barebos have decided that if one of them doesnÕt agree with a proposal, he or she may choose to abstain from voting on it in the interest of moving forward. In other words, one sibling may say, ÒI donÕt buy it, but go ahead and make a decision.Ó However, if one of the three abstains, he or she cannot then withhold support of a project. In an extreme deadlock situation, the sibling with control over that area of the business has the final say.

Reaching consensus is often a long process. The agreement on equalizing pay, for example, required months of discussion to thrash out. Another issue that took patient negotiation to resolve was a proposal to have off-site regional sales managers. The idea was first brought up by Carla six months after she started as vice-president of sales. Charlie and Chris were against the idea, unclear how they could manage a group of off-site employees. The idea simmered on the back burner. Carla kept trying to convince her brothers, using potential sales numbers and relevant articles. Gradually, they became more accepting, first trying the concept with one region, then instituting the policy for all.

Why didnÕt Carla, who is in charge of sales and marketing, just act on her own? ÒEverybodyÕs important,Ó says Carla. ÒNo matter what you do in the business, youÕre still going to spend Christmas day with them. If youÕve done something that people are unhappy with, well, that will not be a nice day.Ó

When asked to recall a situation that was unresolvable, the Barebos are stumped. Since the new structure was created, they have had very few impasses, they say, because of their extraordinary schedule of meetings. It is an elaborate, time-consuming regimen. But it has created a three-way communication channel that more often than not puts them on the same wavelength.

Every morning at 8:45, the three siblings gather for 15 minutes or soÑas a rule, they stand rather than sit to ensure the meeting will be brief. They begin with what they call Òeagles and alligators.Ó Each sibling tells something good and something bad that happened the previous day. Anything goes: Both family and business anecdotes are discussed.

Once a week, the three have a lunch meeting where they can discuss issues too complex to cover in the morning meetings. And once a month, they meet for two to three hours to go over even more complex issues. To top it off, the family gathers with consultant Landes every six months for a Òcheckup.Ó ÒIt sounds like weÕre always meeting,Ó says Carla. But the frequent meetings help diffuse arguments before they build up steam.

Twice a year, they have a meeting of the board of directors, which is attended by Dad and Mom, and any family member can call a family council within 72 hours. But partly because the siblings now have regular morning and lunch meetings, the Barebos havenÕt had a family council in two years.

Early on, the siblings worked hard at separating family and business: They called Dad and Mom ÒChuckÓ and ÒTerryÓ at work, and business was never discussed at the dinner tableÑMomÕs rule. These days, however, they find themselves striving to bring family back into the business. In the absence of their parents, the siblings have had to fill not only the management vacuum left by Dad but the emotional one left by Mom. ÒMaintaining the family has never weighed so heavily on us,Ó says Chris.

One of the board meetings is held off site with spouses and children, and each family takes turns planning the getaway. At the siblingsÕ monthly meeting, they spend some time Òjust being brothers and sisters again,Ó says Carla.

What surprises the Barebos the most these days is how far theyÕve come. The three are now working on a five-year strategic plan, the first since Dad and Mom left the company, the first to include nonfamily members. ÒWeÕre creating a common vision,Ó Charlie says, Òsomething, perhaps, weÕve never had, something everyone could work for.Ó His two siblings nod excitedly, one talking about synergy, the other about new dynamism in the councils.

Of course, Mom and Dad are still there frequently, providing the benefits of their experience. Chuck, now 63, returns to Emmaus for board and council meetings. He is hopeful of seeing the realization of his dreamÑthe perpetuation of the business by his heirsÑbut perhaps still a little nervous because the partnership is still so young.

The strategic plan is the final step of a successful transition. The Barebos first needed to separate their dreams from their parentsÕ dreams. Then they worked hard Ñand continue to work hardÑto create a shared dream with all its components. Each issue they resolvedÑcompensation, hierarchy, communicationÑwas another step toward creating a unified team. Now, with that dream in place, they are filling in the details, fitting the companyÕs strategy to their own vision. The next act has begun and the band plays on.


Shu Shu Costa is a freelance business writer in Lawrenceville, NJ.


Rules of engagement

At their worst, meetings of the Barebo siblings used to degenerate into shouting matches, won by nobody. With the help of family business consultant Henry Landes Ñjokingly called Moses by the familyÑthe three devised this code of conduct they describe as the Eleven Commandments:

And, like the adage, ÒNever go to bed angry,Ó the three have resolved to end each day, no matter how horrible, on a harmonious note. ÒThat has really helped us,Ó says Chris Barebo. ÑS.S.C.


Otterbine-Barebo Inc.

Business: Develops and distributes premium and specialty products for esthetic, recreational, and industrial water-quality management.

Founded: 1954 by inventor Dick Ott. Bought by Chuck and Terry Barebo in 1980.

Location: Emmaus, Pennsylvania.

Employees: 34 full-time.

Ownership: Chuck and Terry Barebo, 55 percent; Charlie, Chris, and Carla, 15 percent each. The second generation will be full owners in 2006.

Family employees: Chuck Barebo, chairman of the board; Terry Barebo, vice chair; Charlie Barebo, CEO and president; Chris Barebo, VP of manufacturing; Carla Barebo, VP of sales and marketing.

Claim to fame: Second generation has done an outstanding job of laying the foundation for a successful sibling partnership.