CWB May 2000

 

One Big, Happy Family?

First-generation owners of family businesses are well-intentioned. But if the kids aren't truly interested, the best intentions in the world are meaningless.

By Anthony G. Noel

 

The long-surviving family business. It is one of those institutions we practically take for granted. Parents miss much of their offspring's growing-up years, toiling day in and day out to create the ultimate gift - a humming business to one day pass on to the children.

The long days become months; the months, years. When enough years have passed and parents believe the children are ready, the reins are passed and the process begins anew, each generation contributing its innovations before handing the reins to those with more stamina.

At least, such is the myth.

Because for every successful family business that has more or less gracefully made the generational transition, there is another where things have gone less smoothly, usually for one of two reasons:

One: The kids really weren't interested to begin with, but were given no choice.

Two: The kids wanted the mantle of ownership and the prestige that came with it - but not the hard work.

I have seen both examples in action (perhaps "inaction" is more accurate). And I have seen the price. Too often, it is a price that the companies in question, in the end, cannot afford.

Despite our society's reverence for family businesses, nepotism - the practice of rewarding people simply because they are relatives - is the darker side of this outwardly hunky-dory business model.

Nepotism saps companies' most valuable asset, the energy of their people. After all, where is the incentive for a production worker who knows that there is only so far he or she can go before hitting the impenetrable wall of family privilege?

I once worked with a company where the owner's son was soon to take the reins of the operation. One afternoon he confided to me that he wanted no part of woodworking. He wanted to be an electrical engineer.

After flashing momentarily on Monty Python ("I didn't want to be a haircutter... I wanted to be a LUMBERJACK!!"), I asked him why he was going to school for furniture design and manufacturing. He rolled his eyes, nodded toward the sound of his father's voice bellowing orders in a distant corner of the shop, and walked away.

Then there is the other example, where the next generation has been salivating over the prospect of running the show. The only problem: when it is time to get out of the B'Mer and get down to business, they are invisible or, at best, without a clue. And these same companies wonder why their non-related workers are put off!

Now, I know that many, many woodworking businesses are family operations. I also know that it is the owners' right to run these businesses in any direction they want. Except, I submit, for one direction: into the ground.

No first-generation owner who toils away would ever picture the demise of his painstakingly-built business shortly after handing it over to the kids. That is not the dream. The dream is for the business to survive, generation after generation.

A number of things can cloud that future, not the least of which is a parent's natural tendency to assume that his or her kids are ready (not to mention willing and able) for the task at hand. Too often, they are not.

As we have said, it may be that they are not interested. Or maybe they have unrealistic expectations of long afternoons on the golf course, while the business magically runs itself in their absence. (Yeah, right!)

It is for these reasons that the founder(s) must put in place a system to ensure that the best people are the ones who advance, whether they are relatives or not. Promotions must be based on merit, not birthright.

This can be hard to do, especially if one has toiled for most of his or her life with the picture of proudly handing the reins to Junior upon retirement. But it helps to remember that you have built a business, not a gift to be carelessly squandered. And like it or not, if you can't honestly say that Junior is the best person for the job when it is time for you to quit, "squandering" is the perfect word for what you will be doing.

Vibrant businesses foster an atmosphere of competitiveness. I have seen many family operations where owners' sons or daughters truly were the best people to take the reins. But in every case, they have had the fire of success burning in their bellies, an insatiable desire to always do better. They were willing to do whatever was necessary to help the business not merely survive, but grow and prosper.

Without exception, they have had a strong sense of duty to their employees, and that has engendered a mutual dedication to the company on the employees' part.

So before you hand over the business to your children, look yourself in the eye and ask if you really know what they want. If not, you had better find out. The answer may surprise you. Your kids may not really want the business, or may want it for all the wrong reasons.

If that is the case, don't be disappointed. The best thing a parent can do is give their kids the freedom to find their true calling. Meanwhile, you have created something that can still go on, and you may be surprised to find your shop brimming with dedicated, talented people who are more than ready to continue your legacy.

 

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