Saturday, October 23, 2004
1998: When a business is a family affair
When a business is a family affair
Sunday, April 26, 1998
By Bill Densmore
Special to The Eagle
WILLIAMSTOWN
Susan Glaser marched into the office of her brother, Peter, who runs
the family manufacturer. His back was to her as she strode in. He was
facing a window, standing, and reading some papers.
"Peter, you've got to do something about that brother of ours. He's
being rude and overbearing with employees and we're going to lose some
of our best people," blurted out Susan.
Peter kept reading and didn't turn around. "Oh? What's the problem,
has John asked some people to get off their duffs and start working?
Who's complaining to you now?"
Susan flashes an exaggerated role of her eyes to the audience of 100
dining patrons and launches into a litany of her "brother's" abuses.
Susan and Peter are not actually brother and sister; they are husband
and wife. Although they own a business together, it is a two-person
leadership training and organizational development consultancy, not a
manufacturing company. And the audience one night in March was a
gathering at a Holyoke restaurant of family business owners from
around Western Massachusetts.
The Glasers, who are based in Eugene, Ore., produced their two-hour
dramatization of family-business problems and solutions -- skits
followed by lectures and lessons from real experiences -- at the
request of the Family Business Center at the University of
Massachusetts-Amherst, one of dozens of such study and resource
centers at universities nationwide.
Much of every day's business news focuses on Wall Street megamergers,
antitrust and world economics. But many of the businesses in the
Berkshires and elsewhere are still owned by fathers, mothers, sons,
daughters, sisters or husbands and wives. How do they thrive?
"You work harder for each other," says Donald Ward III, 39, the eldest
of three brothers who share ownership of Ward's Nursery Inc. in Great
Barrington. "You also are willing to work longer. And there needs to
be a lot of communication. If there is a key to a family business
that's it right there -- communication."
Ward and others, including the Glasers, say the recipe for making a
success of a family business involves the same staples as running any
business, but with a few extra ingredients and some changes in
emphasis.
"'It's a great myth that family businesses fail any more frequently
than non-family businesses,' says Mark A. Fischetti, of Lenox,
managing editor of the quarterly Family Business magazine, which was
started in 1989 in Great Barrington and is still edited from there.
"They fail for the same reasons any business fails -- tough markets,
financial hard times and competition."
Family Business has 6,000 subscribers and costs $95 a year.
For families, the key trouble points -- and in some cases strengths as
well -- usually involve succession, communication and responsibility.
SUCCESSION
Leaders of any business need to plan for the day when new leadership
will take control. In a public company, the options are wide open, and
the pool of potential successors broad. In a family business, one
generation must pick leadership from a small pool of relatives or
offspring if it wants the business to stay "in the family."
Picking a leader from such a small group can be divisive if it is not
done with care, communication and consistently over a period of time
which allows for careful training.
"The biggest problem is succession, that's clear," says Fischetti.
"One part of the problem is that most times the person who is running
the company as CEO has been there for decades. They know
intellectually they should make plans for a successor but emotionally
it's much more difficult and so they tend to put it off."
Fischetti says this procrastination tends to frustrate family members
waiting in the wings and puts operation of the business -- and key
decisions -- in a holding pattern.
"But the flip side is that if the family is enlightened about
succession, the opportunity is they know long in advance who their
potential successors can be and so can spend a long time grooming
them, teaching them, getting a good support system," adds Fischetti.
"So it can be much more orderly and the successor can be more prepared
to take over."
COMMUNICATION
Any business needs professional communication among management and
employees. But how do members of a family, who also share control of a
business, keep their business communication professional without
allowing historical rivalries or personality quirks to creep in? By
paying careful attention to keeping communication frequent and
straightforward.
"Because family members know each other, what they don't hear allows
them to make assumptions based upon the history of their
relationship," says Ward. "When there is a close relationship, you
tend to take each other for granted and be a bit more lazy in your
communications. You have to be overstated. When something bugs you,
don't carry it. Get it out and deal with it early on."
Efficient communication among members of a family can often make the
business they own more agile in a competitive environment, says
Fischetti. That's because a private, family business is not burdened
by responsibilities of disclosure and approvals to large boards of
outside directors or shareholder groups.
"The family company oftentimes in a day can make a major decision and
get on with it," says Fischetti.
RESPONSIBILITY
Ideally, businesses are run by managers whose responsibilities are
clearly defined so that employees know who is in charge of which part
of the business. But what happens if family members begin treating the
workplace like the home front, and overlapping responsibilities? How
do employees then know who to please, and who makes the final
decisions?
"I think it's important that you identify your responsibilities and
let each one do their job," says state Rep. Peter J. Larkin,
D-Pittsfield, 44, who co-owns The Fahey Beverage Co., with his father,
William D. Larkin Jr., 72. "You don't need duplicative efforts and you
don't need dissention. You've got to trust that each is capable."
Fahey, a Pittsfield-based beer, wine and soft-drink distributor, has
14 employees.
At Ward's Nursery, for example, Donald Ward III is in charge of
contracting, brother Michael, 36, runs the sale of retail shrubs,
perennials and plant material and third brother Gregory, 38, watches
over the Ward's retail store and all non-plant sales.
The trio's father, Donald Ward Jr., still has an office on the
premises, but he isn't involved in the nursery. Instead, since he sold
the business to his sons in early 1995, he has been a regional
nursery-sales representative.
Management gurus didn't begin to focus on the dynamics of family
businesses until about a decade ago. For much of the 20th century,
most businesses were family businesses. Now they are perceived --
perhaps wrongly -- as a shrinking or at least fragile genre.
Actually, 90 percent of U.S. businesses -- especially smaller ones --
are family owned, says Ira Bryck, who runs the Massachusetts Family
Business Center.
Bryck's interest in the genre is personal as well as professional.
"I grew up with family businesses on both sides of my family," says
Bryck, who moved to Northampton in 1994 after closing the
fourth-generation Freeport, N.Y., children's retail clothing, toys and
book store he had taken over from his father.
He started working the cash register when he was age 5.
"I swore I would never join the family business, but I spent 17 years
there," recalls Bryck. In the end, he said, the hours didn't justify
the profits and other rewards possible in a specialty now dominated by
nationwide players.
Bryck wanted to raise children in a less-urban environment. When the
family arrived in Northampton, Bryck developed a business plan for a
new retail business -- then decided that was a crazy idea. At the same
time, he learned UMass, following a nationwide trend among land-grant
institutions, wanted to start a support center for family business. He
applied and got the job running it.
Now Bryck's center is funded completely from fees for conferences and
seminars and from five corporate sponsors who ante up another $50,000
to $75,000 a year.
"When a family member calls, they usually are looking for a referral
to an objective, skilled person to help them with a transition,
management, control, or communication problem," says Bryck. "It might
be a priest, an insurance agent, a lawyer or a mediator. Sometimes I
advise them to build an outside board of advisors."
He adds: "There are always difficult issues and conflict in the family
and having a forum to be able to raise them and just to dispel a lot
of anger and fear becomes very important."
The pride felt by the founder of a family business naturally fosters a
desire to see the business perpetuated in the hands of an able spouse,
relative or offspring. But Bryck and others say that may not always be
the best thing for the business. Any business needs to have the best
person at the helm and a founder normally needs to feel that the best
person is another family member -- and that the family member wants to
be part of the business. That may not always be the case.
Both the Wards and the Larkins have several other siblings who aren't
part of the family business by choice.
"A family member should only be working in the family business if they
have the desire to do a good job and the talent to do a good job in
that particular field," says Bryck.
Corydon L. Thurston is executive vice president of Berkshire
Broadcasting Co. Inc., which owns radio stations in North Adams and
Great Barrington. The company was founded by his father, Donald, who
remains active as president although he is of retirement age. Thurston
made a conscious decision to adopt the community-oriented lifestyle of
running a small-market broadcast operation, but he doesn't assume it
will be right for his children.
"I don't have any interest in forcing them into the broadcast or media
fields," says the younger Thurston, who thinks his own career
benefited from some time away from North Adams headquarters.
"If after they have an opportunity to explore life in other places
they want to, we'll certainly find an opportunity for them. The
commitment to the area and to the business has to be there."
Thurston adds two other elements to his measure of success in the
family business. One is the ability to leave the business at the
office. "You've got to program time to separate, be apart, leave the
business at the door and relax and re-energize," he says.
The other element, he says, is to understand that "being someone
else's son is a positive experience. For some it might be hard. It
hasn't been for me. Dads are always involved."
Fifteen years ago, when Martha and John Storey of Williamstown founded
Storey Communications Inc., a "how-to" specialty book-publishing
business in Pownal, Vt., one often-typical problem they didn't have
was defining roles. The couple have known each other since ages 12 and
13 respectively and had worked on enough projects together to have
things pretty well sorted out.
But almost from the beginning, says John Storey, they realized the
need to get regular outside advice as their publishing house grew to
its current $16 million-a-year size.
Although keeping the legal board of directors small, they formed an
eight-member board of outside advisors which meets regularly. Despite
the Storeys' offers, the advisors don't accept pay, preserving their
independence.
"They usually go home with a big box of books and a big hunk of
Vermont cheese," jokes Storey.
With children ages 30, 28 and 23, the Storeys now have annual family
meetings with a semi-formal agenda to talk about the future of the
business. So far, none of the children are directly involved in the
company.
"The kids originally didn't have much to say or ask," says Story. "But
now they are quite lively sessions where it is apparent that all three
kids have absorbed a lot of information about the company and are very
keenly interested in what's going on."
With a company the size of Storey Communications or larger, there
would always be a logical role for a family member to play, says
Story. But he says too many businesses make the mistake of assuming
that knowing how to manage is the same as knowing how to be a leader.
And a company needs a leader.
"Clearly, if familiy members are not prepared for leadership, then
they have no business running the company," he says. "But they can
contribute nicely in various areas of interest and real capability."
______________________________________________________________________
© 1998 by MediaNews Group, Inc. and Pittsfield Publications, Inc.
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