Words of Wisdom
Over the past 25 years, family business stakeholders have shared with our readers the lessons they learned from experience. Here are their thoughts on what works ... and some advice on what doesn't.
"Something my father did that was brilliant was that he included all of us in this process. He really handed it over to the four siblings and said, 'I want you to figure this out; it's going to be yours.' "
—Susan Curtin, describing how her father, Dave Power, deployed the wealth from the 2005 sale of J.D. Power & Associates to McGraw-Hill and encouraged the formation of family governance structures (May/June 2014).
"With a growing number of shareholders, you have an increasing diversity of views. The family council is the mechanism that gives them one voice. Without that, it would be kind of like the Wild West."
—Jim Clark, chairman, Leupold & Stevens (March/April 2014).
"We welcome talented family members into the business, but we don't have enough top positions for all of them. We're preparing the third generation to be great owners, not managers, and finding other ways to include them in the business."
—John Tracy, CEO, Dot Foods. The Tracy family includes 12 second-generation siblings and about 75 extended family members (November/December 2013).
"I found out very quickly that we did not have to reinvent the wheel in terms of family business. Almost all the problems that we faced were faced before by other family companies, and we could gain perspective from their experience."
—Harry Mariani, president emeritus, Banfi Vintners, on an insight gained from working with family business advisers on leadership transition issues (January/February 2014).
"You are all aware that there are pitfalls inherent in having a family business. Sometimes a power struggle between persons or factions splits the family. Sometimes it is the loss of a common purpose that causes trouble. Disinterest or inattention will surely result in a slow demise. Not infrequently greed shows its ugly face. You have built-in structures to avoid those dangers, but you would do well to be ever vigilant for warning signs. I would rather that you dismantle the business than squabble over it or that your goodwill toward each other be endangered."
—Caroline Keller Winter, in a "legacy letter" to her grandchildren, stewards of Keller Enterprises (November/December 2013).
"It's important to have the family involved in the company. When you start considering it simply as an asset, the structure falls apart and the power of being a family business falls apart. You need to be proud of the business. . . You need to tie the family to the business on something besides the numbers."
—Hal Yoh, chairman and CEO, Day & Zimmermann (May/June 2013).
"Growing to 75 stores from one was a monumental feat. In some ways, it was harder to do than growing the way we have now. You run into more barriers going from a small family business to a medium-sized one. There are different regulatory issues, different accounting and finance issues, personnel issues. It's a whole different scale. There were fewer people wearing more hats at that stage of the game."
—Stan Sheetz, president/CEO, Sheetz Inc. The company now has well over 400 stores in six states (July/August 2013).
"[K]eeping the family engaged, educated and entrepreneurial gets harder as the family grows and disperses. Without engagement, the entrepreneurial energy of the next generation dissipates or is redirected into non-family business opportunities. Or, in many cases, a lack of engagement leads to the sale of the family business. The role of the family, often through its governance system, is to harness that energy and direct it inwardÂâ€”to the family business."
—Sylvia Shepard, fifth-generation owner, Menasha Corporation (March/April 2013).
"Our first step toward change was to help the family understand what impact, both positive and negative, they could have on the business. Up until this point, the family had always thought that if they 'stayed out of the way and didn't create public conflict,' they would be doing their part. The truth is that if the family isn't actively pursuing growth, sound governance and partnership with the business, then the business will have difficulty achieving its growth objectives."
—Meghan Juday, chair, IDEAL family council and director, IDEAL Industries (January/February 2013).
"When I was a kid my dad picked me up after school, and we worked in the fields together. No one had to tell me what kind of person he was or what was important to him; I could see it. I hope my generation can do as good a job of passing on values to our kids as our parents did to us."
—Grant Lundberg, CEO, Lundberg Family Farms (Summer 2010).
"Each generation has lived, and treated the company, very conservatively. We've always reinvested in the business and kept money in it. The rewards are that in tough times we were able to weather the storm and stand up strong. We're in a great financial position to do these things without borrowing money and loading up on debt."
—Gregg Richard, president, P.C. Richard & Son (Autumn 2010).
"If you communicate, it keeps people out of trouble. If you don't, people assume things."
—Mike McVaugh, president, Laboratory Testing Inc. (July/August 2014).
"Moving from an informal to a formal generational transfer is a huge change for us. We're in the process of a massive exchange of information, knowledge and experience between the generations. It's already sparked the younger generation's interest in the business and helped them see how they fit in. Family engagement with the board, management and colleagues has protected Wiley's independence and guaranteed its stability. We want future generations to carry on the tradition."
—Peter Booth Wiley, chairman, John Wiley & Sons (July/August 2012).
"There's no resting on what happened yesterday."
—Josh Johnson, president, Fidelitone Logistics. The company, founded as a maker of phonograph needles, now operates in supply-chain management and third-party logistics (Autumn 2010).
"A business should make money, not just try to minimize its losses."
—Christian F. Martin IV, chairman and CEO, Martin Guitar Co., who rescued the company by refocusing on its core product after his father's misguided diversification schemes (Summer 1999).
"To some people, ownership equals leadership. I'm not part of that group. Leadership is something you have to earn."
—Howdy Holmes, president and CEO, Chelsea Milling Co. (Winter 2008).
"Our parents didn't pressure us to join the business, and we aren't pressuring our kids. The way we're raised, we know that if we join in the business, we're expected to grow the business so that it can afford us. We choose to work here because we love it. You have to have that passion in a family business because it's 24/7, and your family depends on you."
—Carolyn Wente, fourth-generation winegrower and CEO, Wente Vineyards (Spring 2008).
"We have to get on the same page, especially with the family members who are not as involved in the business. We need to make sure they understand why we reinvested in this or why we think this was a good idea or not. That is why family meetings are recommended."
—Bill Cecil Jr., president and CEO, Biltmore Companies (Summer 2006).
"The family cannot think about expanding until the components are in place to trust someone else. It was the willingness to trust someone else with the keys at the third store that led to accepting the fact that the best leadership is not always a family member. You need to be able to trust someone else with your livelihood and then provide the support necessary for those individuals to succeed."
—Hank Meijer, co-CEO, Meijer Inc. (Summer 2007).
"We are very lucky. We are very sure of each other and we trust each other very, very much. I think that's a key in a family business: trust, more than love. Love is very important, but love doesn't mean trust."
—María Luisa Ferré Rangel, CEO, Grupo Ferré Rangel (Winter 2010).
"You make sure what you say is what you do. You tell [other family members] what you want to achieve and how you will do it. . . Having to be so clear and transparent forces you to really think things through. My brothers are there to make me do things more thoughtfully. I have to make sure that things are successful so the skeptics believe in me."
—Andrew Ly, CEO, Sugar Bowl Bakery (Winter 2006).
"There are people who are emotional about business, but I'm not at all. A corporate entity is not something I attach to. I know that I'm in the minority for not wanting to see that my kids take the business, but that's not the key."
—Edwin T. Johnson, who pioneered the 401(k) plan in 1981 and sold his firm, The Johnson Companies, in 1990 (Summer 2001). Johnson died in 2012.
"I would love it if one or more of my children joined the business, but I don't want them to feel it's an obligation. It would have to be something they would really want to do, and they would have to be able to make a contribution."
—Stuart Marwell, CEO, Curtis Instruments (January/February 2013).
"Much has been written about succession planning. That facet of the family enterprise is important. However, it should be complemented with an equal dose of reality: The family business may not always be around. It is a tough world out there and children of family businesses should be prepared to fight in it with vigor. They should remember it is the older generation who usually holds the voting stock and will make the sell decision. Afterwards, the children will have to pick up the pieces and go on with their lives. The key to doing that successfully is possessing marketable skills."
—William G. Mennen IV, a fifth-generation descendant of the founder of The Mennen Company, which was sold in 1992 (Summer 1993).
"My father and grandfather had always talked about two things you keep track of: One is the score, and the other one is how you play the game."
—Charlie Luck, CEO, Luck Companies (May/June 2012).
"My father made many significant contributions in his last 20 years, but by continuing as CEO until he was 83, he compressed the career development of everyone underneath."
—Marilyn Carlson Nelson, who retired as board chair of Carlson in May 2013 (September/October 2013).
"[M]ake sure you know yourself and what your goals are before you start the planning process—be honest about what you want out of it. Figure out what your priorities are in life, what it is you want to accomplish, and what opportunities you want to make available to people in the company and family members. Decide what you're willing to live with in terms of objectivity toward, and protection of, offspring, so that nepotism won't drag the business down. Most family businesses don't survive because they forget they're in business to satisfy their clients' expectations."
—The late Henry "Skip" Nottberg III, former president and CEO of U.S. Engineering Company (Spring 1997). Nottberg died at age 47 of melanoma on Feb. 3, 1997, before our article was published. His son Tyler Nottberg is now the company's president and CEO.
"Someone who inherits a business with a lot of old inefficiencies has a terrific opportunity, because just doing some obvious things, like plugging leaks, will improve your bottom line."
—Tama Starr, president, Artkraft Strauss (December 1990).
"It took some time to adjust to working for my father. I had to remind myself that at work, my father was my boss and not my dad. . . The more I demonstrated that I knew what I was doing, the less my father got involved in my work. . . During this time, there was never any certainty that my father would pass the business down. I concentrated on fulfilling my own goals for the company."
—Julie Copeland, president and CEO, Arbill Industries Inc. (Autumn 2006).
"I am interested in the family being able to govern itself, to handle its own disciplines, to be able to share the values and the vision of the company and also to be aligned with these as our mission."
—James Warjone, former CEO, Port Blakely Companies (Autumn 2007).
"I just looked at the numbers and concluded the money wasn't there. I told the board that we'd be kidding ourselves and other people if we didn't make this cut."
—Dan Gerber, poet and former director of Gerber Products Co., describing his recommendation that the company's quarterly dividend be cut (October 1990). Gerber Products merged with Sandoz Laboratories in 1994 and was sold to Nestlé in 2007.
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