On Working in the Family Business

By Carin Rubenstein

Pleasures and Penalties, Hopes and Fears

HIGHLIGHTS

  • Compared with the American work force generally, members of family businesses are a great deal more satisfied with the quality of their work lives. Almost all of our respondents are satisfied with their chance to do something worthwhile at work. A majority feel that they'll spend the rest of their lives in the family business, and two-thirds wouldn't want a new career ifgiven the chance.

     

  • The three biggest bonuses of being in a family business are independence, a feeling of accomplishment, and money.

     

  • The penalties of a family business include difficulty separating home life from work, problems raised by the issue of succession, and hard work.

     

  • There are notable differences among family businesses, depending on the number of generations of family working in them. For example, those employing members of a single generation (husband and wife, siblings, and so on) are most concerned with serving customers well, whereas those with two generations are most concerned with maintaining profitability.

     

  • The Oedipal struggle between founders and sons is almost universal. Founders feel a greater sense of control than do sons over financial rewards, company policy, and concerns relating to succession. Sons, lacking the founders' sense of control, are more tense about the prospect of losing the company one day.

During the summer of 1989, the editors of Family Business mailed a one-page questionnaire to members of 3414 family businesses, asking about their work lives: its rewards and penalties; pleasures and frustrations. What, we wanted to know, do the various generations in a family business hope to achieve? What do they fear? We received 1076 replies, often accompanied by letters describing the family business experience in more detail. Many respondents also agreed to answer additional questions in telephone interviews.

Why would people who work almost 50 hours a week, on average, take the time to answer our questionnaire? One answer came from the founder of a large family business in the Midwest, who felt the questions were so important that he distributed copies to all four of his sons at a weekly staff meeting. Another explanation came from a husband and wife team, the only original employees in a manufacturing plant that now employs 80, who sat down at their kitchen table and filled out their surveys together. Until then, they wrote, "we'd never actually discussed the business in such detail."

Our respondents are from all parts of the country: Gloucester, Massachusetts, and New Albany, Indiana; Phoenix, Arizona, and Flushing, New York; Chicago, Illinois, and Burbank, California. Their businesses run the gamut: from grocery stores and printing firms to automobile dealerships and plastics manufacturers; from limousine companies and car-wash chains, and restaurants and hotels, to women's retail clothing outlets, health-care facilities, insurance offices, and funeral homes. Some of these companies have annual sales of less than $500,000; others do more than $10 million a year. (For a complete description of the survey respondents, see "Who Answered the Survey?", below).

For the people who answered our questions, being in a family business is a Catch-22. Their work offers unique psychological rewards, but it also carries the responsibilities of ownership. Compared to most other employed Americans, our respondents are more loyal to their company, have a greater personal investment in doing their job well, and derive a greater sense of accomplishment from it. But they also complain that their work follows them home at the end of the day, into the dining room and sometimes beyond.

Michael Fisher Jr., 29, president of the printing plate manufacturing company his father founded in Modesto, California, says that the most frustrating thing for him is "the complete confusion between personal life and business life, and the difficulty in identifying each family member's role." He emphasizes the rewards as well, though. "It's the feeling of complete trust in the people you work with and the sense of accomplishment you receive from being successful as a team."

Allison Webb, 37, is president of a custom textile mill in El Cajon, California, that her father founded 43 years ago. She is proud of the fact that "there isn't a cutthroat feeling here." In addition, she says, "The familiarity made possible by our daily contact is as close to the old-fashioned 'extended family' as it's possible to be. When we need help, there are plenty of hands and minds ready to pitch in. When we've accomplished something great, there are cheers and congratulations on all sides."

It is this sense of accomplishment, in fact, that all American workers, whether they are in a family business or not, say is the most important aspect of work, ranking even above high pay, job security, or the chance for advancement. This according to the 1988 General Social Surveys (GSS), an annual study of working Americans conducted by the National Opinion Research Center at the University of Chicago. Our survey suggests that members of a family business are likely to have the sense of accomplishment that most Americans yearn for. Almost all of our respondents (93 percent) are satisfied with their "chance to do something worthwhile" at work. Not only that, but 81 percent say that they expect to work in the business for the rest of their lives. This is contrary to the experience of most working Americans, whose average time on a job is now about three years. Although two-thirds of American workers say they'd like to keep their current job, half believe that they won't have it five years from now, according to a 1989 Time poll conducted by Yankelovich Clancy Shulman.

People who work in a family-owned company "clearly have a strong identification with the business, more so than you find anywhere else," says Philip Mirvis, an organizational psychologist. Mirvis is coauthor of The Cynical Americans, a recent study of cynicism and distrust among American workers.

 

More Than Just a Job

 

"With all the goods and the bads," as one member of a family firm asks, "doesn't it still come down to 'do you like your job?"' His answer? "You bet your ass I do; I love my job."

This sentiment is echoed by a majority of our survey respondents, 78 percent of whom would work even if they had enough money to live as comfortably as they'd like for the rest of their lives. In comparison, a 1989 Gallup poll of 796 workers shows that only 70 percent would continue to work if they didn't have to.

The loyalty among family business employees is also uncommon. Although two-thirds of American workers say they'd like to keep on working, only one-third would stay on at their current job. Among our respondents, most wouldn't want a new career if given the chance (see "Dreaming of a Second Chance?", below), and are more satisfied than other Americans with the work they do (see "Taking Pride in Work," below). Half also believe that they have the best of all possible jobs (see "Believing in Your Work," below). A large number expressed their satisfaction in terms of their ability to influence long-term planning, and their opportunity to develop skills.

Part of the reason for our respondents' bullish view of work is that these people or their relatives are in charge; they run the place. (Only 4 percent of those responding are non-family.) More than half of the respondents say that they have a great deal of control over changing company policy, scheduling of work, and planning for the future. Having control over one's work life is indeed a powerful source of gratification.

"I have total control here," says Michael Fisher. Because of his sense of control, "the reward system is greater, more spontaneous, and quicker than it would be in [another kind of] corporate life," he believes.

"I can't imagine owners having anything but strong feelings of control," explains John Ward, author of Keeping the Family Business Healthy, and a professor of private enterprise at Loyola University in Chicago. 'That's what they want and who they are," he adds. 'Their strong achievement orientation encourages their need for control, to be responsible for what they do."

 

Payoffs and Problems

 

Part of the desire to control is reflected in the sense of identity members of a family business derive from their work. Overall, half of our respondents use their family name as part of the company name. A 1989 Gallup poll, too, finds that those who are self-employed are the most satisfied of all workers, probably because of the sense of identity that comes from their work.

Bob Coleman, 35, the fifth generation in the Coleman Dairy of Little Rock, Arkansas, says, "The business is in our blood." A daughter of the founder of a retail business prides herself on her ability to "do a good job carrying on the family name. When a customer comes in and remarks that I'm my father's daughter, it makes my day."

Aside from independence, a sense of accomplishment, and money, the three most important advantages of being in a family business (see "The Good News . . . ", below), 8 in 10 agree that their work is challenging, and just as many believe that their family is more supportive than most.

When it comes to the most serious disadvantages of their work situation, two-thirds pointed out their difficulty in separating home life from work (see "Now, the Bad News," above). "We tend to be consumed by the family business," says Barbara Nipper, 45, of Cookeville, Tennessee, who founded a sporting goods manufacturing firm with her husband. "It seems as though all of our waking hours are spent working or talking business, and time away from it all is hard to come by."

 

Generation Games

 

The structure and satisfactions inherent in a family business differ dramatically, depending on the number of generations actively involved.

Three in 10 of our respondents are in firms where all the family members employed — on average two or three — are of the same generation (husbands and wives, siblings, and so on). Their companies have generally been in business for about 16 years; their annual sales are less than $1 million; and they have between 10 and 19 employees. A high percentage of these businesses lack a formal hierarchy: 45 percent have no board of directors and three-quarters have no succession plan in place. Family members in a one-generation operation are least satisfied with their financial security and quite concerned about the possibility of going bankrupt. But they're also least worried about losing control of the company. Unlike businesses in the other stages, they are the ones whose top priority is "serving customers well." Four in 10 of them use their family name as part of the business.

Frank Pusey, 40, of Jackson Center, Ohio, began his own wholesale business 18 years ago. He is president and his brother is vice-president, but they have no other formal management structure. "I have to oversee everything," he says. "I'm responsible for everything. I've seen second- and third-generation people in family businesses. They don't know how anything works. In my business, I can go out and do anything. If somebody tries to tell me 'this can't be done,' I know right away if they're pulling my leg or not." He has the advantage, he feels, when he is "not at other people's mercy."

Six in 10 firms in our survey have thrived for about 28 years; on average, they contain four family members (out of a total of between 20 and 49 employees), and their annual sales are from $1 million to $5 million. Three-quarters of these businesses have a board of directors and half have some kind of succession plan. Their members are more satisfied with their financial security than are those in a one-generation business. For them, "maintaining profitability," rather than "serving customers well," is the top business priority. Financial success does not come without a price, however. Family members in a business that contains two generations are significantly more anxious about being crippled by estate taxes, dominated by a sibling, and treated like a child than those in a company with only members of their own generation. Founder-son (rarely founder-daughter) struggles are most likely to emerge in two-generation firms.

Billy Combs, 36, works with his father in the family building-supply business in Gainesville, Florida. He's at the top of the tension ladder about the possibility of being crippled by estate taxes. "You can't inherit a family business anymore," he complains. "If it's got any value at all, you've got to sell it just to pay the inheritance taxes."

Finally, 1 in 10 of our respondents is in a business employing three or more generations of family. These businesses have been family-owned for an average of 42 years, they employ five family members, and have annual sales of at least $5 million. Most of these firms have a board of directors (82 percent) and two-thirds have a succession plan. Six in 10 use the family name as part of the company name. These family members are most tense about losing control of the company; they also have the most to lose.

Bob Coleman is the great-great-grandson of the founder of the Coleman Dairy, a 127-year-old business with about $45 million in annual sales and 300 employees. He is worried about losing control "through a buy-out by some conglomerate, because even if it's a good price, it would still mean that it's not ours anymore." While he acknowledges that "four times book value" would be "nothing to sneeze at," he chokes up at the thought of losing the business. "When you walk on these hallowed grounds, as I call it, and your name is Coleman, that means something." If owned by some other company, he adds, "the name Coleman would mean nothing."

 

The Oedipal Drama

 

Many of those involved in a second- or third-stage business are engaged in founder-son feuds over company decision-making and power. Because so few women are included here — 12 percent of founders and 23 percent of the second generation are women — we refer to these troubles as between fathers and sons. (In our next issue, we'll report on gender differences and surprising facts about the "Daughter Track.")

About 43 percent of our respondents are founders or their spouses, 33 percent are the sons of founders, and 10 percent are grandsons. Although there are striking differences between the first and second generation, the second and third are remarkably similar. Founders and sons often differ in their personal style, for instance, and in their views of who should control what, when. The qualities that are important for starting a business, such as an entrepreneurial spirit and a preference for ambiguity, are quite distinct from the managerial skills needed to maintain or expand one.

"My father's style is entrepreneurial, heads-to-the-wall, get all the business we can, with no accountability, no structure, and little focus on employees' needs," says the son of a founder. The fact that his father started the business, he says, means "that's what he's good at. I maintain it, and that's what I'm good at."

Another founder's son writes that as "I began to 'move up' and sometimes challenge the 'old ways,' the fine line between father and boss, son and subordinate was often crossed. This makes it very difficult in the decision-making process, never knowing your boundaries. To this day, our roles have yet to be clearly defined."

For the founder, though, the problem is his lack of confidence. "I have given my son a lot of freedom in managing the company, although I retain control with of 51 percent of the stock. He has not had the experience of starting a business and we differ about direction and financial matters. I am much more conservative."

In his research, John Davis, the executive director of the Owner-Managed Business Institute, in Santa Barbara, California, finds that for sons, the father's inability to let go is the most common problem. For fathers, "getting the son to make decisions that don't seem to harm the company," is a major concern. First-born sons, he adds, tend to be most unlike their fathers, while last-born sons are most like them.

Nicholas Wolf, 43, the first-born son of the founder of a barbeque restaurant chain in Evansville, Indiana, agrees. As the self-proclaimed "black sheep in the family," he spent 17 years working elsewhere before he came home to the family fold. "I tend to be more forward-thinking," he says, "and Dad is a tad conservative. That definitely affects how we get along."

Many founders hold on to their power as long as they can. Half of our founder respondents, in fact, would advise the older generation in a family business to "work as long as you can." Two-thirds of sons, however, would advise their elders to consult their children about when to retire.

One son writes that he is frustrated by "the almost complete unwillingness of the founder, my father, to accept the 'winds of change,' divulge certain financial aspects of the business, and relinquish the reins. After 49 years in our business, he's understandably anxious about retirement, and part of the reason is his lack of faith in us."

While founders and sons tend to agree on the advantages of working in a family business, they part ranks when it comes to their complaints (see "Climbing the Tension Step-Ladder," above) . Founders perceive hard work and financial insecurity to be major disadvantages of their position. But sons pinpoint problems of succession and sibling rivalry as two of the most serious drawbacks of family business. Daughters' perceptions of these and other matters will be discussed in the second and final survey report.

The conclusion of the Family Business Year-End Survey, dealing with succession, business goals, family politics, and the work rules of women, will appear in the next issue.

 

Carin Rubenstein holds a doctorate in social psychology and is coauthor of In Search of Intimacy, a book based on her research on loneliness in America. She has conducted surveys that have appeared in many national publications, including Money, Redbook, and Psychology Today.

 

Believing in Your Work

People who work in a family business are more likely than other Americans to be convinced that they have the best job they could possibly find.

How easy would it be for you to find another job with the same income and benefits you have now?

 

 
Not very easy
Very easy
Somewhat easy
Family Business survey respondents
47%
22%
31%
GSS* survey respondents
34%
27%
36%

 

*Refers to 1988 General Social Surveys, conducted by the National Opinion Research Center at the University of Chicago, an annual survey of 1481 Americans.

Note: For all tabulations in this article, numbers may not total 100% because of rounding.

Taking Pride in Work

Compared to other working Americans, people in family businesses tend to be more satisfied with their work.

On the whole, how satisfied are you with the work you do?

 

 
Very satisfied
Moderately satisfied
A little dissatisfied
Very dissatisfied
Family Business survey respondents
58%
37%
5%
1%
GSS* survey respondents
46%
39%
10%
4%

 

*Refers to 1988 General Social Surveys, conducted by the National Opinion Research Center at the Univesity of Chicago, an annual survey of 1481 Americans.

Dreaming of a Second Chance?

If you could profitably dissolve the family business right now and begin a new career, would you do it?

 

No Yes
70% 30%

 

The Good News About Family Business

The qualities that our respondents value most are autonomy and a sense of accomplishment.

What are the three most important advantages to you in working for a family business?

 

Independence
52%
Feeling of accomplishment
41%
Money
39%
Job security
31%
Flexibility of hours
28%
Ability to be innovative
26%
Meaningful work
23%
Closeness of family
18%
Something to leave children
12%
Sense of continuity
10%
Pleasing parents
5%

 

Figures total more than 100% because respondents gave more than one answer.

Now, the Bad News

The majority of respondents agree that they have trouble segregating their home life from life on the job. They also acknowledge that, although being the boss provides the bonus of independence, it also includes the penalty of hard work and lack of freedom.

What are the three most serious disadvantages for you of working in a family business?

 

Difficulty separating home life from work
57%
Problems of succession
29%
Hard work
27%
Less freedom
23%
Sibling rivalry
22%
Less privacy
20%
Financial insecurity
20%
Too much responsibility
20%
Retirement difficulties
18%
Jealousy
14%
Less independence
8%
Divorce problems
4%

 

Figures total more than 100% because respondents gave more than one answer.

Who Answered the Survey?

Three-quarters of those who responded to the Family Business survey are men. On average, the respondents are 44 years old. Most are married. Half of them have worked in the family business for more than 12 years. About 86 percent of those who answered work full-time in the family business; 11 percent work part-time and 2 percent are non-working partners.

The majority of respondents say that their business was started from nothing (68 percent); others report that theirs was either purchased (18 percent) or inherited (14 percent). Manufacturing firms and wholesale/retail businesses were most likely to have been purchased. Manufacturing firms, also, tend to be in business the longest (32 years), followed by construction companies (29 years), and wholesalers (27 years).

About one-third of the respondents are the founders of the business, another third are the sons or daughters of the founder, and 10 percent are the grandchildren. Those in transportation and construction are most likely to say that their long-term objective is to keep the business in the family.

Type of Business

Wholesale / retail trade
35%
Construction
7%
Transportation / communication / public utilities
4%
Manufacturing
23%
Financial / insurance / real estate services
7%
Other*
25%

 

"Other" includes: Service, consulting, restaurant, car restoration, temporary agency, hotel, and printing.

Full-Time Employees

 

1 to 9
35%
10 to 19
15%
20 to 49
24%
50 to 200
19%
200 +
6%

 

Family Involvement

 

Number of Generations Employed
One 28%
Two 61%
Three or more 11%

 

Number of Family Members in Business
One or two 26%
Three or four 41%
Five or more 33%

 

Annual Sales Volume

 

Less than $500,000 13%
$500,000 to $999,999 27%
$1 million to $4.9 million 32%
$5 million to $9.9 million 11%
$10 million or more 16%

 

U.S. Region

 

West 15%
Midwest 39%
Northeast 26%
South 20%

 

Climbing the Tension Step-Ladder

Overall, most of our respondents are not tense about work. Yet sons and daughters in the second generation are significantly more tense about several potential disasters.

How tense do you feel about each of the following possibilities?

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Premiere 1989

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