Family Business

What’s the best way to bring a family member into the business? This book excerpt looks at some of the right and wrong ways to do things.

Evan, the 24 year old son of a successful second generation businessman, arose early on a September morning, preparing to have breakfast with his father and mother before going to the office. He had graduated from Wharton just a few months before, and traveled throughout Europe during the summer. Today, he would be going into the family business. His job and salary as yet undefined. As a youngster he would occasionally visit the office, tour the plant and meet some of his dad’s employees. Now, as an adult with the family name, he was about to take advantage of those things that come with being the new generation in a family business. As he entered the dining room where his mom and dad were waiting for him, Evan was taken back by his dad’s first words, “Evan, go back upstairs and put on a suit, shirt and tie. You are not on campus now, and wearing your shirttail out is not considered proper attire in our company’s employee manual.”

Somewhat startled by his father’s authoritarian tone, Evan held back his feeling that it was just good luck and fine products that made the company so special for over 60 years. “One more thing,” his farther admonished, “don’t drive the Porsche to the plant today. Use my old Honda instead.” With that, Evan left the room thinking, “It’s not going to be easy working for my dad.” “Worse,” he thought, “dad’s brother is a partner in the Company, and his son, Danny, is in charge of sales.”

After changing his clothes, Evan returned to the dining room, where his father asked him the following questions, “Evan, do you know how your grandfather and grandmother started this company? Do you know who our longest serving employees are and where they work? Have you read the Company Handbook on what we are about, who we are, and what our feelings and attitudes are toward our managers and other employees? Do you know who our top 20 customers are or how many good customers we lost in the last 5 years?” Evan could barely drink his coffee. “How am I supposed to know the answers to those questions? I just got here!” Evan’s mother interrupted and said, “Your father doesn’t really think you know all those answers…but some you should. You need to pay attention to the culture of our family business which some day will be yours. It was never too early to learn. You’re lucky that you don’t have to look for a job in this terrible market. You must think of this as an opportunity to contribute to the continued growth of the family business. We have 300 employees who depend upon your dad, his brother and your cousins to keep the flame going.”

“Evan,” his dad said, “when we get to the office, I will take you around to introduce and reintroduce to as many people as possible, and then I want you to spend time with my brother and his son, Danny. I’m thinking of having you start in sales. You need to learn about our customers. Also, as a family member, you should be there every morning at 7:30 although everyone else starts at 8:30.” As they left the house, Evan turned to his dad and said, “We never discussed how much money I’ll make. What’s my starting salary?” His father said, “We’ll worry about that later. Your mom and I will discuss it along with my partner, your uncle. We’ll make you an offer you can’t refuse! By the way, Evan, when we are at work, I’m not your dad, I’m the President.”

OBSERVATIONS

It is always difficult to look at relationships in ones own family business and see what might have been said or done differently. Emotional reactions to family members create conflicts which are not easily forgotten. And, it may run counter to producing the behavior needed to maintain harmonious relationships in the office or at the family dinner table.

What are some things that could have been done differently:

Evan, knowing he planned to go into the family business, might have worked on projects relating to the business while at Wharton. He might have discussed his untested ideas with his father and a dialogue would have begun on a higher level before he entered the firm. Also, Evan should have been aware, as any new employee on his or her first day at work, not to dress so casually.

It was also obvious that knowing Evan would be coming into the business, the father did not do enough over the years to prepare his son and explain the culture and dynamics that his parents created in building the business. While Evan’s father was trying to set a business-like attitude toward work, his authoritarian tone in dealing with his son on his important first day was too strong. The promise that “some day this business will be yours” made by Evan’s mother, could be froth with problems. His uncle and cousins may have a different point of view. The mother was somewhat demeaning when she said, “You’re lucky that you don’t have to look for a job in this terrible market.” As a Wharton School graduate, most likely Evan would believe there would be opportunities elsewhere.

The father was correct in establishing standards for his son, including that it’s appropriate for him to come to work before other employees. He was also correct when he told Evan to leave his Porsche at home.

Finally, it was necessary to determine Evan’s position and salary before his first day at work. The fact that his salary and his place in the company would be discussed with his uncle and his mother would make him uneasy. However, he may have to live with the fact that in many family businesses there is not always a pure linear business relationship from child to parent. In many cases, the family business is a complex set of reporting relationships.

Knowing how to master those lines as a family member, a non-family manager or employee is one of the keys to maintaining and growing a successful family business.

Norman Goldberg has had over 30 years management experiences at high level positions with companies such as Fortunoff, Bloomingdales, Cablevision, Christian Dior, Diane Von Furstenberg, Cosmetique and others. He has been deeply involved with family run businesses and is a guest lecturer at The Arthur M. Blank Center for Entrepreneurship at Babson College. Mr. Goldberg has served as an advisor to family companies in the retail, insurance, cosmetic, jewelry and other industries. Mr. Goldberg is teaching a course at Hofstra University entitled “How to Maintain and Grow a Successful Family Business.”