A Tale of Two Families

There are two stories I often find myself telling in conversations to emphasize that multi-generational success in a family business requires intention and is a process that begins early ... because while the actual transfer of the operating and ownership agreements might be done in short period of time, developing the next generation to lead takes a lifetime.

I grew up in a family business in Scranton Pa. I had 2 friends, also from family businesses. Both were second generation, and both became involved in the businesses started by their fathers.

The father of one friend passed away suddenly when the son was in his late 20’s.  Shortly afterwards the son threw a party for the business that cost over $35,000 just for the music … in 1980 dollars. Most people pause hearing that, trying to get their mind around all the implications.

I can only speculate about the meaning of this for the son. Was it a celebration of a life well lived by the father, or, on the other side of the spectrum, that the son was now able to run the business his own way?

What was father and son’s relationship toward the business and each other? Did they have different leadership styles – each effective but held competitively rather than collaboratively?

I expect the family did not have the experience of openly discussing a vision and their values (what’s important to them) as a family business. To their defense, though, this process is more learned than intuitive. Too frequently, talking about the family in the context of the business is entrusted to a second priority, after achieving viability and profitability of the business itself.

The second family, with the help of a consultant, developed a number of policies for family members working in the business. The first policy helped the next generation understand the family values and culture, and it emphasized the family’s commitment to a family business.

If a family member had an interest in the family 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 the family and the business. They learned about the values, vision and goals of the business, and the saw the family in the context the business. They saw how next-generation leaders contributed, and they became part of the discussion of the family’s legacy.

A second policy was, if a family member wanted a management role in the family business they were required to work somewhere else in the industry, and get a raise and promotion, before applying to work in the family business. A third policy was that family members were 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. I thought it would be helpful to demonstrate a statement of purpose and values. S.C. Johnson, A Family Company, prepared their statement, This We Believe, in 1927.  They continue to bring them into their conversation with their family members, employees, product and service providers, and customers today. Click on the link to see them: This We Believe.