While most families keep their work and personal life separate, there are some who choose to fuse both with a family business, bringing new challenges to both environments. Rick Raymond, a Baruch College Lecturer shares some note-worthy anecdotes on handling the complicated dynamic.
There are 2 stories I often find myself telling to emphasize that multi-generational success in a family business requires clear intentions from the beginning and a plan to keep these objectives alive for years to come. While the actual transfer of the operating and ownership agreements might be done rather quickly, preparing the next generation of leaders takes a lifetime.
I grew up in a family business in Scranton, Pennsylvania with two friends who were also raised by entrepreneurs. Both were second generation, and both became involved in the businesses started by their fathers.
When one of my friends was in his late twenties, his father suddenly passed away. Shortly afterwards, my friend threw a party for the business that cost over $35,000 just for the music— and that was back in 1980.
I can only speculate about the meaning behind my childhood friend’s extravagant spending. Was it a celebration to honor his father and an appreciation for a life well-lived, or was it a party thrown in honor of himself, to celebrate his sudden promotion and ability to now run the business his own way?
The answer to this question largely depends on what the father-son dynamic was both in and outside of the business. Did they have different leadership styles – each effective but held competitively rather than collaboratively? Was one more focused on tradition while the other was fixated on the future? Were they ever really able to listen to each other? Was each of their expectations for the business made clear?
I suspect the family members did not openly discuss what each of their visions and values (what’s important to them) were for the business, but in their defense, this process is more learned than intuitive. Too frequently, families are so focused on achieving viability and profitability for the business itself, that the discussion of the family as a unit within the context of the business becomes secondary.
Then there is my other friend. This family, with the help of a consultant, developed a number of policies for family members working in the business. The first policy was one that helped the next generation understand the family’s values and culture while emphasizing their commitment to the business.
If a family member was interested in working for the business, it was required of them, starting as early as 15 years of age, to attend the annual family business retreat. There, they saw who the leaders were, and watched decisions being made about both the family and the business. They learned about values, vision and goals, and witnessed how the family operated within the context of the business. The retreats provided a way for next-generation leaders to contribute to the dialogue and add to the family’s legacy.
A second policy was that if a family member wanted a management role in the business, they were required to work somewhere else in the industry first and get a raise and promotion. Only then were they eligible to apply to work in the family business. A third policy stressed that even though this was a family business, nepotism did not exist. Family members were only hired according to need, and were given raises and promotions based on merit comparable to their industry standards. This family business is now in its 5th generation.
A significant factor in the success of any family business is good communication based on shared values. The mission statement prepared by S.C. Johnson, A Family Company, published in 1927 and called “This We Believe” best demonstrates a clear expression of purpose and values. Today, they continue to incorporate these principles into their conversations with family members, employees, product and service providers and customers. Click on the link for a chance to see the detailed mission statement. This We Believe.