MY DAUGHTER, MY SUCCESSOR

A family business owner recalls the joy, the challenges, and the pain of training his daughter to run the company.

By David M. Marson

Our business was started in 1900 by my grandfather. He was succeeded by my father, who actively ran the company until the mid-1950s.

My brother, Richard, and I are our parents' only children; I am 65, the elder by seven years. We each entered the business after graduating from college. Because the stock in the corporation has not been widely distributed, we have had the opportunity to maintain continuity in family values and philosophy through three generations, and now into the fourth. Our company, Newcan, in Holbrook, Massachusetts, manufactures perforated metal tubes and components for the filter industry.

I don't think that either my brother or I had given much thought to whether our children would enter the business. Both my daughters, Deborah and Marsha, worked for us during summer breaks from college. My brother's two older children worked for us either during college breaks or for relatively extended periods of time thereafter.

My wife and I helped our daughters establish their goals and urged them to attain them, but we rarely interfered. I recall that Deborah, my oldest, once contemplated taking a year off from college to "find herself." I told her I did not approve but would voice no further opposition. However, I let her know if she didn't "find herself" back at college the following week, she had better "find herself" some money during her sabbatical in order to complete college when she decided to return! My wife and I have little tolerance for such self-indulgence, and Deborah and Marsha knew it.

My wife has been a good role model. When the children were young she was president of a number of philanthropic organizations. Later she had a business career; she ran a steel-purchasing firm and then became a purchasing agent for a weight-loss organization, for which she worked for over 20 years. Our daughters heard the details of her work and learned of her strict work ethic not by lecture but by observation. I have always maintained a positive attitude about the business, and have made it part of my conversation at home. There was a lot of dining-room training. Both of my daughters would be up early on weekday mornings and would join me at the kitchen table, there to be regaled with the challenges of the day at the company. Marsha, who now is 35, would take business trips with me whenever she could find the time.

I really never thought about Marsha's coming in the business until the day we were discussing her course election at college, and I suggested that she take a few engineering courses. After all, I said to her, it would be very helpful if for some reason she had to make judgments regarding the company.

But Marsha didn't think that engineering was such a good idea and went on to major in accounting and finance. After college she went to work for a Big Six accounting firm. After she had earned her CPA certificate she received offers to become controller at one or two of her client companies.

It was at that point that I, or perhaps she, suggested the company as a career alternative. I have to concede that it was a very attractive concept for me. I didn't want to pressure her, but I did want to nurture the idea. So in February of 1981 I wrote her a five-page letter discussing the family business, the sacrifices it required, and the potential rewards it might yield.

How wonderful it would be, I remember thinking, to have continuity of management, to know after a century the company would still be producing benefits and employment for the family. Being a major stockholder in a successful family business conveys a sense of security and well-being. There will be another generation to take care of you. It is a role reversal in a certain sense, as the responsibility transfers from the father to the child. There is an implicit rite of passage. But in our case it was complicated by the uncertainty of a female succeeding in a heavy industry that has traditionally been a male bastion.

It was in the summer that Marsha decided, quite on her own and to my delight, to discuss joining the company. She sat in my office and told Richard and me that we would have to be competitive for her to maintain her interest. I think that Richard felt she was pushing us, but she had received offers to become a controller and did not want to start to work for less than they offered. I couldn't have been more pleased; I was then 54, and Richard was 47. Although we had plenty of vigor and drive we both knew that we would have to start building a different organization during the next decade. To build it around a family member, one who would share our interest and dedication, provided a marvelous nucleus for a future organization. At the time the decision to hire Marsha was being made, my older daughter, Deborah, had become a lawyer; my brother's two older children were on different career paths of their own, and his third child was still in high school. That left us with only one of the fourth generation who was a candidate to participate in the business. Richard and I agreed that we would meet the competition.

Accounting was to be only an ancillary part of Marsha's routine. She was being groomed to run the business, and numbers were very important, but she had to be a manufacturing generalist.

The transition from public accounting to manufacturing was not difficult, but there was a culture change that amazed Marsha even though I had, in my preliminary letter, detailed the type of people she would come in contact with in the factory. She encountered uneducated people with openly expressed prejudices, the lack of a work ethic, inconsistent performances even from highly compensated foremen, and in some instances employees whose personal hygiene was obviously poor. Deliberately introducing one's daughter into such an environment is not terribly comforting.

It didn't help my morale when I observed some uncomplimentary writing about her on the men's room wall. Rather than become angry I concluded the person who wrote it was stupid, but for a father the incident was disquieting. I assumed that there were jokes about her not only because she was the "boss's daughter" but because she was a woman. They would not have been spread around had it been a son working for us rather than a daughter.

Some of the details of just how we started are somewhat blurred. I seem to recall, however, that we gave Marsha long hours of exposure on the factory floor, provided her with all the technical literature we had at our disposal, and had the key foremen and engineers spend much time with her explaining how equipment worked. My brother worked tirelessly with her, teaching her with the same intensity and commitment he would have shown had Marsha been his own daughter.

The preparation and training was more intensive than it would have been for a son, for, rightly or wrongly, we felt that she had less knowledge about mechanics and manufacturing. We wanted to prepare her to be more than credible in our male-dominated industry, where we felt the initial presumptions would be that she would know less than a man.

After a while she took charge of our cutting department, where she issued the orders for cutting material and coordinating that production with the needs of our manufacturing departments. As an extension of those responsibilities, she learned how to purchase special material that averaged down our costs. We ultimately turned over the production-control planning of the entire plant to her, and she now chairs the production-control meetings.

I taught her my estimating techniques, which involved pricing and the proper utilization of the most economical manufacturing techniques. This portion of her apprenticeship also involved travel and selling, first in conjunction with me and soon, at her insistence, on her own. When Marsha and I first traveled together I would give her cues so she could participate. Soon that was not necessary, and she needed no prompting to join in the conversation and establish herself as an expert in her field.

On her initial solo trips she was frequently tested by engineers and technically oriented people who were trying to assess her level of knowledge. They seemed to be trying to deliberately confuse her by using jargon. Furthermore, she was asked questions about our proprietary manufacturing techniques, which in the past customers had tried unsuccessfully to explore with me and Richard. Marsha was equal to the task of responding to technical questions and was never tricked into revealing more than the customer was entitled to know.

Marsha also became the company representative on our labor negotiating team. She worked well with our attorney and with the union business agents. She was decisive and tough when it was necessary. People knew that she would not put up with nonsense. I think that she was more sensitive to the needs of employees, and we had debates on how much more "touchy-feely" she was than I or my brother. Her feminine assets enhanced her role.

In the financial end of the business she shared with us detailed monthly statements on all facets of our operation, reviewed the weekly aging of the receivables, and watched the cash flow. She was included and fully participated in every major decision.

We accelerated Marsha's moving into a full executive role by utilizing intensive training. She had the interest, intellect, and stamina to absorb huge amounts of information and contribute innovative ideas. Early on, we gave her check-signing power and had her sign the foremen's checks in case they doubted our resolve to groom this woman executive. We eventually made her a vice-president and a stockholder in the company.

With the foremen and office personnel there were a few times that I had to clarity her importance, the necessity of her training for the success of our plans, and the impact of her entry on the future continuity of the company management. I am known for my candor and I was able to get my point across. Marsha never encountered any direct resistance from the foremen, but she did sense a resistance to cooperate and observed that they tended to forget to provide her with the information she requested or to procrastinate before responding to her requests.

I don't think there was any appreciable trauma for the employees. Marsha has essentially adopted our management style and I believe the employees are comfortable with her. Many of our mature male customers act paternalistically toward her and she is made very welcome on her business visits. She can even overlook their sometimes chauvinistic terms of endearment because she feels that they do respect her abilities. She handles some of our largest accounts almost exclusively.

But should a supplier use the term "honey" or "dear" Marsha is likely to become very upset. She claims she can spot a male chauvinist a mile away. One supplier inadvertently took himself off the approved list when he used the phrase "get in bed with you" as a metaphor for a long-term business relationship. I think she overreacted, but he was a terrible supplier anyway and the incident gave her the opportunity to respond to insensitivity in doing business with a woman. Were the situation duplicated today, I think that she would be just as angry but would outwardly deal with the situation more diplomatically.

The major changes took place at the level of the family's interests in the business. Before, we were essentially a two-person company. The stock was owned by me and my brother and our mother. Richard and I had a stock-purchase agreement in which, when one of us died, the company would repurchase the stock of the deceased with the proceeds of some life insurance policies. Through this medium and with some insurance in other vehicles we had established ample estates. It made both of us feel good to know that we had taken these steps to protect our families.

But how does one give a member of the next generation stock if there are restrictions on such gifts in the stock-purchase agreement? If there is only a child from one side of the family working in the business, it might be inappropriate for the grandmother to make gifts of such stock. How does one deal with this issue in a family that has had rules of equality for three generations?

The matter of equity in the business became the focus of much energy and expense. The fact that it was inevitably intertwined with estate planning and the security and well-being of the family made it very complex.

I think it took three years and innumerable meetings with accountants, lawyers, and laymen to come up with the solution. Even the solution we reached is incomplete, because it does not deal with a transfer of voting stock or leave the fourth-generation management ultimately with more than 50 percent ownership. It is, however, a start and answers a very rational target of Marsha's, which was to either become a stockholder in 10 years or leave. It was separate from anything I had done for her mother, and, frankly, it was substantially more than I had done for her sister, because Marsha's situation was unique. The equality rules were bent to accommodate this situation. Considering the personal sacrifices her commitment entails, I believe that was a reasonable position.

We made many mistakes struggling for the solution. We sacrificed countless hours and spent a lot of money, but the final product is very good. I don't think there was an easier way, though I wish there had been. It is very difficult to balance diverse interests and concerns and solve them in one simple document.

The prospect of Marsha becoming disenchanted with the business or simply running out of energy adds pressure to our daily lives. Marsha, as one would suspect, would not be an advocate for a sale. I have mixed emotions, for although I would like more time to do the things I enjoy I also want to provide a career for my daughter, and I am convinced that my future is more secure owning a viable business than being an investor.

The logical solution is to begin to build a support group around Marsha, one that will be in place, trained, experienced, and ready to perform long before time takes its inevitable toll on Richard and me.

If all goes according to plan, a few years hence we will hire a general manager to help Marsha oversee the entire operation. We hope to establish an orderly transition of total responsibility for the company from one generation to the next. Although our departure may not be as quick as some might like, having such an organization in place makes good sense as a defense against the unknown.

However, I am concerned that, very subtly, pressure is being put on Marsha. If the additional staff is going to work out, if her career is going to continue in this enterprise, she will have to provide much of the energy. It is a tall order in a tough business environment, and I worry that the demands on her time and stamina could have a negative impact on her personal life. Can a woman be both feminine and a competent executive at the same time?

Once the managerial team is in place, other problems must be addressed. We are rapidly approaching the time when the kitchen-table board of directors will become a liability. As a complement to Marsha's managerial role, a carefully selected board could be invaluable.

It would probably be a different experience and quite uncomfortable for Marsha to have to hold action in abeyance until a board of directors approves. There could be appreciable costs associated with lost opportunities. On the other hand, for those members of the family who do not participate daily in business decisions, serving on the board would give them an element of control over one of their important assets, which would be desirable and reassuring.

As I reflect on this experience, I realize that perhaps I didn't know what I was offering to Marsha, and she didn't know what she was accepting.

How would I suggest that fathers deal with daughters in similar situations? Prepare the orientation and training very carefully and be certain to enlist the aid of your entire staff. Your daughter will expect to enter a professional environment, and proper preparation will demonstrate the seriousness of your purpose and make her feel that her job is meaningful to the organization and to the family.

Try to remain open-minded; she will bring feminine assets that may be missing in your organization. These should not be construed as weakness, for they may include sensitivity to human relations that should indeed be demonstrated by management. You will be astounded at her ability to provide back-up and fresh perspective. Don't stifle it.

Remember that the business provides diametrically opposite forces. It will pull the two of you together, but, simultaneously, it will induce much more tension than the customary father-daughter relationship. You may get angry but probably not as much as you might with a son, especially since it is quite impossible to ignore the fact that she is a woman. Anyway, a little restraint is good for the soul.

We use a technique that helps separate business life from family life. While we are at the office or calling on customers, she always addresses me as David; it is businesslike and provides her with equality. When we leave the business, I am once again "Daddy," and that appellation tends to submerge any tensions we may have experienced. It worked for me and my father, and it works for me and Marsha.

If there is more than one child either in or out of the business, you may feel comfortable giving them equal treatment in all conceivable economic situations. It makes for easy decisions. Remember, however, that the concept of equality often obscures the issue of fairness. Your daughter will expect you to appropriately recognize her special effort and treat her fairly.

It's distressing to contemplate your age, the end of your career, retirement and its concomitant loss of power, your demise. The closely held firm and the family passively demand that your attention focus in this direction, for management succession is vital for the health of the business and the welfare of the family and employees. Richard endorsed the concept of family succession, and together we dealt with the issues.

Would the transition have been easier if Marsha had been a man? Frankly, yes. There would have been fewer barriers to break down, fewer precedents to establish. It would have been easier for me, and I would not have had as many concerns about the present and the future. I suppose I feel that I could commit a son to long hours, hard work, and the uncertainty of the future without the same worries as with a daughter. Those concerns were based not on doubts about her ability, but on emotional elements between fathers and daughters.

Would a son have been more readily accepted by the employees, particularly the rank and file? Unquestionably, yes. The paternal attitude they displayed to Richard and me when we entered the business could hardly be replicated with Marsha. After 10 years I am not certain that the emotional gap has been bridged, but the working relationship is effective. In forging the areas of understanding it has produced a very tough Marsha, one who can stand on her own and brooks no nonsense.

In the long run the fact that Marsha is a woman will have no adverse effect on the business. She will, of course, make some decisions based on her feminine point of view, but that in no way discredits those conclusions. Essentially she is a very competent, talented, highly motivated executive, and a business person with excellent judgment and a good sense of timing.

I wonder what I might have done differently. At times when the going has been really tough I have questioned whether or not I did Marsha a disservice in encouraging her to join the family firm. It troubles me when I think about the future and Marsha holding down the fort by herself, not only because she is a woman, but also because she could be doing it alone. That is why we are building — and must build — a quality management team while both Richard and I are active.

I summed up my worries in my 1981 letter to Marsha: "Now, let's deal with some of my concerns. Although I have absolute confidence in your abilities and am certain that you would become a very capable executive, I have never been able to disengage myself from the concept that female equals fragile, and I still feel somewhat cast in the role of not only your father but your protector. For, indeed, running a business is a tough life, both mentally and physically. The hours are long; the leadership role is difficult and, at times, enervating; travel is ultimately a bore, and it is characteristic of closely held corporations that successes cause great elation while failures swing the emotional pendulum in the other direction, eliciting great depression.

"To effectively manage a business calls for an inner toughness and tremendous staying power, as well as a keen awareness for recognizing opportunities. It demands expertise in your field, integrity, and just plain hard work."

If those two paragraphs touch on the parental anxiety and the toll running the family business can take, the following excerpt from my note welcoming her aboard sums up the potential joy of working with your daughter and, I am certain for my brother, with his niece:

"When Papa Julie died [Marsha's grandfather] I stated that I had lost much more than a father; I lost a partner and friend. I hope our relationship matures to that point! As sure that I am that it will, I also know that life sometimes takes funny turns. I want you to always feel free to come to me if you are unhappy or tired or discouraged. I am your father first and always, and you never need to be timid about broaching any subject concerning our relationship or your aspirations for a full and meaningful life."

The trouble and hard work are accepted. The camaraderie and mutual regard are virtually impossible to replicate in other family situations. Together, the three of us have experienced adversity and success and have responded to an environment much different from that of the rest of the family. The trust is unquestioned among the three of us; the questions will be resolved somehow. The experience is rewarding.

David M. Marson is president of Newcan, a manufacturer of metal tubes and components for the filter industry in Holbrook, Mass. This article and the interview that follows were adapted with permission from Family Business Review, Vol. III, No.2, pp.183-198. ©1990 by Jossey-Bass Inc., Publishers, 350 Sansome Street, San Francisco, Calif. 94104. For subscription information, phone 415-433-1767