Family conversations—via text, email, Skype or phone?
When it’s time to herd your kids into the car, do you (a) knock on their bedroom doors and tell them to come downstairs, (b) stand at the bottom of the stairs and yell, or (c) send them a text message? A feature in the Wall Street Journal last month examined a household practice that is not all that new, and most likely growing -- families who communicate with each other by texting from room to room.
Many families find smartphone communication to be the most efficient way of sending routine reminders. But the Journal report cautioned that some topics are best handled face-to-face. For example, the article noted, parents who receive sassy messages from their children should put down the electronic devices and discuss the inappropriate backtalk in person. The report also warned that a message intended to stay within the family can cause embarrassment if forwarded to classmates.
The Journal article focused on nuclear families -- parents with their preteen or teen children, all living in the same household. But the advice is just as relevant to large business families spread throughout the globe. What is the best way to send your message so that it’s received in the spirit you intended? Is your communication platform secure? What topics must be handled face-to-face, or at least ear-to-ear?
We will be addressing this topic at our Transitions West 2015 conference, which is being held November 4-6 in Newport Beach, Calif. A session entitled “Effective Cross-Generational Communication Strategies” will focus on bridging individual family members’ different communication styles and preferences.
The past few decades have brought great new variety in the ways that family members can share their feelings, ask questions -- and, yes, hurt each other. It may take some effort to make sure that technology is used exclusively to facilitate good communication, and not to intensify miscommunication.
The hot baby boomer trend: Selling the family business
Because the baby boomer generational cohort is so large, everything they have done throughout their lives has become a trend, and the world has had no choice but to pay attention. In the past, these trends have included listening to rock music and having a midlife crisis. Today, as the boomers reach their 60s, they are starting a new fad: retiring. And in many cases, “retiring” means “selling the family business.”
I recently interviewed Barbara Roberts, entrepreneur-in-residence at Columbia Business School and co-author of “The Owner’s Journey,” a white paper issued jointly by Columbia and U.S. Trust that examines business owners’ exit-planning activities. Roberts told me the impetus for her report was that “so many baby boom businesses were coming up for some kind of transfer or sale, and no one had really studied this phenomenon.”
The boomers who opt to sell their companies have been faring well. “Just as corporate mergers and acquisitions are booming, the market for family-owned businesses has been sizzling,” a recent Wall Street Journal article noted. “For more than a year, sellers have enjoyed the upper hand in negotiating price and other terms, bankers who specialize in such deals said.”
Citing research by Pitchbook, a company that provides data for private equity and venture capital markets, the Journal report said the number of companies that sold for $25 million to $100 million increased from 592 in the first quarter of 2012 to 782 in the second quarter of 2015. (This figure includes family-owned as well as non-family-owned businesses.)
The tide may be shifting, however. The Journal article said private equity firms have started to offer lower multiples of earnings, and selling prices could drop even further if interest rates rise. The article said advisers are telling their clients to consider selling before the market turns.
If those business owners haven’t already started their exit planning, they might be less than fully satisfied with the result. Roberts said her research subjects “told me that the process took much longer than they had ever envisioned, was much more complicated [and] had much more twists and turns. Some of them told me that they wished that they had had financial people come in earlier, on a consulting basis, to help them identify the two or three things they could do that could have added value even further.”
The difference between your business and Amazon
In a lengthy, widely quoted article last month, the New York Times described the stressful working conditions endured by white-collar employees at Amazon. The newspaper interviewed more than 100 current and former “Amazonians” who described a pressure-filled environment where colleagues are expected to rat on each other, supervisors frequently castigate their team members, and everyone is assumed to be always on call.
Former Amazon employee Jason Merkoski told the Times, “The joke in the office was that when it came to work/life balance, work came first, life came second and trying to find the balance came last.”
The article told of a Dickensian atmosphere that included “marathon conference calls on Easter Sunday and Thanksgiving, criticism from bosses for spotty Internet access on vacation, and hours spent working at home most nights or weekends.”
Taking care of a critically ill family member -- or being critically ill oneself -- is not considered a valid excuse for missing work at Amazon, according to the Times report. The article told of one employee who received a negative performance review after returning from cancer treatment and another who was sent on a business trip the day after undergoing surgery following a miscarriage.
And each year, according to the Times, Amazon engages in “cullings” of the staff -- rituals in which managers rank their subordinates; those at the bottom of the list are targeted for dismissal. The report noted that this “rank and yank” strategy was once famously practiced by companies like General Electric but has since fallen out of favor.
Given all the hardships allegedly endured by Amazonians quoted in the Times, it’s no wonder the salary analysis firm PayScale found in a 2013 study that the median employee tenure at Amazon is just one year, the shortest among Fortune 500 companies.
If you’re a family business owner, you might well be congratulating yourself on your more humane approach to human resource management. Family companies are known for treating their employees “like family,” for encouraging teamwork, and for recognizing that there are times when family must come first, especially when a loved one’s health is involved. And family firms are also known for inspiring employee loyalty; many boast of having staff members who have been with the company for decades, and even multigenerational employee families.
But despite the litany of complaints about Amazon’s personnel policies and practices as described in the Times, there are two areas where family businesses might consider emulating the giant online seller:
1. Amazon reveres innovation and encourages employees to develop new and better ways of doing things. Too many family companies, by contrast, don’t start thinking about innovation until their markets are being threatened.
2. If the Times’ report is accurate, Amazon is much too quick to cut employees loose, and Amazonians’ jobs are put in jeopardy for the wrong reasons (e.g., because they are enduring a family crisis). But the use of metrics to assess staff performance is a good idea, especially if the statistics are discussed with employees in an effort to encourage them to improve. Are you keeping Joe around because he excels at his job, or because his father worked for your father? Is Sally in a management position because she deserves to be there, or because she’s your cousin?
Hire wisely, train your people well, treat associates fairly and with compassion, and give them the resources they need to succeed. If you do, you’ll have a team full of strong contributors rather than, shall we say, drones.
The dangers of ‘cultural fit’
Last month Knowledge@Wharton, an online newsletter from the University of Pennsylvania’s Wharton School, published an article with a provocative title: “Is Cultural Fit a Qualification for Hiring or a Disguise for Bias?”
“The biggest problem is that while we invoke cultural fit as a reason to hire someone, it is far more common to use it to not hire someone,” Katherine Klein, a professor of management at Wharton, told the publication.
Culture, of course, tends to be put front and center in family companies. Business families and their employees talk about the “family feeling” in the workplace. And family ownership groups -- often on the recommendation of their advisers -- develop a set of family values as a way of uniting family shareholders and creating a framework for making business decisions.
For many families, “culture” involves their faith. It is common to incorporate a statement of religious principles into family values statements. While some families develop separate sets of values for the business and for the family, others proudly weave religious ideals into their business values. The danger of doing this is that it can lead to excluding talented employees who don’t share the owners’ faith.
The Knowledge@Wharton article asserts that while cultural fit has “a legitimate role in the workplace,” it shouldn’t “eclipse the importance of diversity.” The article cited a study by Katherine W. Phillips, Katie A. Liljenquist and Margaret A Neale, published in Personality and Social Psychology Bulletin, that found heterogeneous groups process information more carefully than homogeneous groups do.
Wharton management professor Sigal Barsade offered this suggestion: “The only way that culture in the workplace is effective is if there are sets of values that help the company achieve its strategy.” Hiring managers might seek out, for example, candidates who are results-oriented, innovative, ethical, customer-focused or team players. But in practice, the Knowledge@Wharton article lamented, “discussions around cultural fit can also involve certain euphemisms for what amounts to justifying prejudice or, at least, bias.”
The late family business adviser Léon Danco, a revered pioneer in the field, addressed this issue way back in the Summer 1996 issue of Family Business Magazine with another provocatively titled article, “Religious Extremism Can Hurt the Bottom Line.”
Danco cautioned in his 1996 article: “Some may be able to get away with hiring only ‘their kind’ -- companies do it despite antidiscrimination statutes -- but often at the price of cutting off the company from valuable talent or resources. Same goes for limiting a company’s choice of directors to members of a single faith; you may feel most comfortable with people who share your religious beliefs, but will they bring to the table the diversity of viewpoint, the strategic perspective, and specific business skills you need?”
What these management experts are suggesting is this: It’s important for the business to support the family’s values -- but it’s also important for the family to support good business values.
Recognizing your impact on your community
Last month, after engaging Goldman Sachs to help them assess the issue, the Wanek family announced that they had decided against selling their business, Ashley Furniture. A Wall Street Journal report on their decision illustrates the impact that a family business can have on the community. In the Waneks’ case, that impact is huge.
As the Journal reported, Ashley Furniture has its headquarters in Arcadia, Wis., which has a population of just 3,000. Ashley is “by far the biggest employer” in Arcadia, the article noted. (The company also has plants and distribution centers in other Mississippi, Pennsylvania, North Carolina and California, in addition to importing furniture from Asia.)
So connected is the town to the Waneks and their business that a statue of the company founder and chairman, Ron Wanek, stands Arcadia National Park, the Journal noted. Ron Wanek’s son, Todd, is Ashley Furniture’s CEO.
When Ron and Todd Wanek announced -- at a meeting held at the local high school -- that their family would be holding on to Ashley Furniture, a standing ovation erupted, the Journal article said.
Even if your company is based in a metropolis like Chicago rather than a small town like Arcadia, there are people who rely on your business for their livelihoods -- not only your employees, but also those who work for your suppliers. The good news is that these people are rooting for you to keep your business in your family.
The downside is that community members will notice any signs that you might be looking to sell or that a generational transition might go awry. Your children’s ill-advised Facebook posts or other misbehavior, your public arguments with your spouse or a reduction in your contributions to local charities could be seen as red flags.
In a bigger hometown, your family won’t stand out as much. But every business family should be aware of the positive as well as the negative aspects of their community ties. The bottom line is that communities want -- and need -- their family businesses to succeed.