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Bringing gender diversity to your board

Last month our sister publication Directors & Boards hosted a webinar entitled “Women on Boards: Teeing Up Talent for Your Board’s Future.” The program presented recent research studies linking gender diversity in the boardroom to improved financial performance, better decision making and an enhanced corporate image, among other advantages.

The webinar focused primarily on public company boards, but much of the discussion was also relevant to privately held family companies. Nancy E. Sheppard, founder and CEO of Women2Boards -- a referral service for women director candidates -- provided evidence demonstrating how the presence of female board members can help a company. Among the studies Sheppard cited were the following:

• A 2013 report from Credit Suisse on gender diversity and corporate performance, based on the performance of 2,360 companies globally, found that “companies with one or more women on the board have delivered higher average returns on equity, lower gearing, better average growth and higher price/book value multiples over the course of the last six years.”

• Aaron A. Dhir of York University’s Osgoode Hall Law School found that gender diversity on boards results in enhanced dialogue; better decision making, especially around the value of dissent; more effective risk mitigation and crisis management; higher-quality monitoring of and guidance to management; positive changes to the boardroom environment and culture; and more orderly and systematic board work.

• A 2015 analysis by MSCI Inc. found companies that invest in gender diversity at high levels are less likely to fall prey to fraud, corruption and governance-related controversies.

Family businesses have been making slow progress in this area. A report in the March/April 2015 issue of Family Business Magazine focusing on women directors noted, “Over the past three decades, an increasing number of business families have recognized that granting leadership opportunities to qualified women makes good business sense. But in most family companies with women directors, the women who serve on the board are members of the family that controls the company. Women independent directors are still a rarity.”

In our article, Susan Stautberg, CEO, co-founder and co-chair of WomenCorporateDirectors (a global membership organization for female directors), said, “Boards can’t afford to have directors who all think alike. They need men and women who will bring the best ideas to the table and offer the broad thinking companies need to deal with the challenges they face.”

In addition to Sheppard of Women2Boards, speakers who participated in Directors & Boards’ webinar were Jim Kristie, D&B’s editor; Jeffry Powell, executive vice president of Diligent Board Member Services; and Gabrielle Greene-Sulzberger, who is a director at Whole Foods and Stage Stores and a general partner in the private equity fund Rustic Canyon/Fontis Partners (and the wife of Arthur Sulzberger Jr., publisher and chairman of the family-controlled, publicly traded New York Times). A replay of the webinar is available, free of charge, here.

What ‘Consumer Reports’ missed in its ‘Made in America’ exposé

In its current issue (dated July 2015), Consumer Reports explains that the “Made in America” label often gets misused, and the standards for permissible use of the label are confusing. The article listed a number of U.S. companies whose products are not 100% made in America with all-American components.

The Consumer Reports article noted that nearly 80% of U.S. consumers say they would rather buy an American-made products than an important one, and 60% say they would be willing to pay 10% more for an item made in America.

We at Family Business Magazine thought Consumer Reports missed something: an appreciation of U.S. family businesses whose products are 100% made in America by American workers.

I wrote a letter to the editor of Consumer Reports, which you can read below.

A coalition of family business education programs across the country -- spearheaded by Ira Bryck, director of the UMass Amherst Family Business Center -- has developed a website,, to highlight family companies committed to making their products in the USA.

Here’s what I wrote to Consumer Reports:

To the Editor:

I read with interest your July 2015 article “Made in America.” You provided a public service by explaining that the Federal Trade Commission’s standards for acceptable use of the “Made in the USA” label are confusing, and that some manufacturers misuse the label.

Your article helpfully included a list of American companies whose products contain components made outside the country or assembled overseas.

At the same time, it is important to note that there are American family businesses that are committed to making their products here in the USA and employing American workers.

Family businesses face the same competitive issues as other companies, which is why many family firms have opted to use overseas labor or materials. However, one can indeed find family businesses whose products are truly “Made in America.” Here is a sampling:

• Just Born Candy, makers of Peeps, Mike and Ike and other brands:

• The Wiffle Ball Inc., producing equipment for the classic backyard game since 1953:

• K’nex, makers of the popular building toy:

• Thorlo Inc., sock makers:

• Annin Flagmakers, American flags made in America:


Barbara Spector

Editor-in-Chief & Associate Publisher

Family Business Magazine


Podcast discusses ‘Daughters in Charge’

I recently participated in the “Daughters in Charge” podcast, hosted by family business consultant Amy Katz, Ph.D.

Amy and I discussed trends related to women in family businesses. Among other topics, we talked about the various roles available to family business daughters, even if they don’t work for the family’s operating company.

Listen to the podcast here:

A nuanced view of family enterprise longevity

As I have noted before, leading scholars in the field of family enterprise have debunked the notion that selling a family business -- even one that has been in the family for many generations -- represents a “failure” or that sustaining a family business indefinitely is always a desirable goal.

A landmark study published in Family Business Review in 2012 -- known as the FFI/Goodman Study on Longevity in Family Firms -- assessed more than 100 business families from around the world and found that nearly 90% owned multiple businesses, and that over their history, these families had spun off an average of 1.5 companies. In other words, these successful business families do not hesitate to sell businesses when circumstances warrant doing so.

Current thinking in the field emphasizes that value is created by a family rather than a family business. Families who are continuing to invest together profitably and harmoniously after selling their operating company -- such as the Power family, featured on the cover of Family Business Magazine’s May/June 2014 issue, or the Agnew family, who appear on our May/June 2015 cover -- represent what family enterprise is all about.

Dave Power and his family sold J.D. Power and Associates to McGraw-Hill in 2005. Dan Agnew and his family merged their beverage distributorships with another family beverage company in 2008 and then sold the merged company in 2012. Both families capitalized on attractive opportunities and are continuing to work together to create wealth, engage in philanthropy, and develop governance structures to ensure long-term sustainability

In a recent edition of The Practitioner, an online publication of the Family Firm Institute, Patricia Angus notes that the myth of the family business as monolith (that a family controls only one business) has had dangerous implications for estate planning.

Angus, a consultant on philanthropy and family governance and an adjunct professor at Columbia Business School, writes: “Trust agreements often prohibit sale of a family business, or at least relieve the trustee of the duty to diversify so that the family business can be held in trust. Provisions forcing the retention of the business can be so inflexible that they can have adverse consequences for the family and enterprise…. A mandate, even if unspoken, to keep a business intact can become quite troublesome; a little flexibility can go a long way to help the family over the long run.”

In other words, think about your real long-term goal. Is it to perpetuate a particular operating company, no matter what the marketplace conditions may be, or to continue collaborating on ventures that provide income and satisfaction to family members? Think about your family’s future entrepreneurs, and make sure you aren’t tying their hands.

Meeting shareholders’ liquidity needs

Cargill, the largest U.S. privately owned company, celebrates its 150th anniversary this year, and in recognition of the occasion the Financial Times recently profiled the giant agricultural commodities trader. (Disclosure: I was one of the people quoted in the article.)

The FT report noted that at two pivotal points in the Cargill’s history, the company -- controlled by about 100 members of the Cargill and MacMillan families, descendants of the founder -- found a way to grant liquidity to shareholders who needed it.

In 1992, Cargill created an employee stock ownership plan. Family members sold an ownership stake of 17% to the plan for $700 million. And in 2011 -- when the company’s largest shareholder, the Margaret A. Cargill Foundation, wanted to cash in its shares -- Cargill spun off its 64% stake in Mosaic, a publicly traded fertilizer company, the FT report said.

Benjamin Oehler, the former CEO of Waycrosse, the Cargill/MacMillan family office, told the FT that the Mosaic transaction would be sufficient “to meet the liquidity needs of the family, I would think, for another generation.”

Though it had annual revenues of more than $100 billion, Cargill needed to find liquidity for its shareholders. If you own a later-generation family company with owners who don’t work for the business, the liquidity issue will most likely arise for you, as well. After the third generation, family members’ lifestyles can be widely divergent. Some owners might require cash to fund a child’s education or to start a business of their own.

When family shareholders’ liquidity needs are not met -- if they are unable to extract cash from what is likely their main investment, the family business -- family conflict is apt to follow; in a worst-case scenario, unhappy owners could file suit or force a sale of the business.

There are ways to find cash for family owners (even if you don’t have a multibillion-dollar asset to spin off, as Cargill did). An adviser can help you evaluate the pros and cons of each alternative.

Former Family Business Magazine columnist Jim Barrett often referred to family shareholders with no means of cashing in their investment in the business as “prisoners.” Even a family that is committed to long-term ownership of its business, like the Cargill/MacMillans, must find a way to set its prisoners free.

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