Starting ‘the other talk’ with your kids
In bygone days, many kids first learned about sex from classmates on the playground because their parents were too uncomfortable to broach the subject of “the birds and the bees.” Today, most parents recognize that “the talk” is an essential responsibility of parenthood -- and that “the talk” is not just one conversation but, in fact a series of discussions that begin simply when the children are young and become more detailed as the kids mature.
While sex is no longer a taboo topic, parents remain skittish about initiating “the other talk” -- a conversation about money. Even those parents who acknowledge the importance of an early start never seem to get around to it. In a recent study by Merrill Lynch’s Private Banking & Investment Group, for example, 39% of respondents asserted that it’s never too early to begin talking to children about responsible financial behavior, and 11% said these discussions should begin when the kids are ages ten to 13. Yet only 14% of these study participants said they actually raised the issue when their kids were nine or younger (see FB, July/August 2014).
Experts say that frequent, open and wide-ranging discussions about values, work, entrepreneurship, legacy and wealth help the younger generation develop a healthy attitude toward money -- and that the kids can hold up their end of the conversation. In the January/February 2015 issue of Family Business Magazine, Jeff Savlov, a family business/family wealth adviser trained as a therapist and psychoanalyst, explains that even elementary-school kids are able to participate in meaningful conversations on these topics.
Our January/February issue also features an interview with Scenic Root, a perceptive young lady who at age 13 is an old hand at having frank conversations about the advantages and disadvantages of growing up with wealth. Scenic -- a fifth-generation descendant of C.J. Root, whose company created the original Coca-Cola bottle -- has had in-depth discussions about the connection between business and family with her father, Preston, since she was a small child.
Whether you broach these subjects with your kids or you don’t, they are watching family members’ relationship to money, to the business and to the family legacy, and their future habits will be based in large part on these observations. Opening a dialogue with them is likely to be a revelatory experience.
Every 5 years, a reason to celebrate
During this first full work week of 2015, I’d like to remind you that sometime within the next five years, your family business will be celebrating a milestone anniversary.
If the upcoming anniversary is a big one -- the 50th, 75th, 100th, 125th or 150th -- you probably already have begun to think about how you will mark the occasion. But don’t forget that the smaller milestones are worth celebrating, too. Even if your town’s mayor won’t issue a proclamation on your company’s 35th or 45th or 70th anniversary, you still have an opportunity to promote it to your customers, your employees and -- perhaps most important -- your family members.
At our Transitions West 2014 conference in November, a panel of family business owners discussed how to make the most of these special moments in your company’s history. Luconda Dager spoke about the 100th anniversary of her family business, Velvet Ice Cream. Sam Gault recalled how his company, Gault Energy & Stone, planned its 150th anniversary celebration. And Jamie Richardson of White Castle discussed the 90th anniversary of the family-owned burger chain. Families whose companies are younger than these can incorporate some of the panelists’ suggestions:
• Promote your anniversary on social media. Post old photos and ads. The public loves looking at historic images.
• Your employees are your brand ambassadors. Host an employee event to acknowledge the role they have played in helping your business reach this occasion. Ask for their suggestions for how to get the word out.
• Bring your family together to discuss the founder’s values, entrepreneurship and hard work. Participate in a community-service project in celebration of the milestone (e.g., if it’s your 30th anniversary, donate 30 items).
Brainstorming about how to celebrate your company’s longevity is likely to bring to the surface feelings of pride and gratitude, in addition to clever promotional ideas. Don’t overlook this great reason to throw a party!
Entitlement gone nuts
Accomplished, talented next-generation members must battle the stereotype that all family business successors are good-for-nothings who owe their jobs to nepotism. Heather Cho’s recent tantrum has made their lives more difficult.
Cho, also known as Cho Hyun-ah, is the daughter of Cho Yang-ho, chairman of the conglomerate that owns Korean Air. Until recently, she was a vice president in charge of cabin service at the airline. On December 5, she reportedly became irate when a flight attendant on a Korean Air jet headed from New York to Incheon, South Korea, served her macadamia nuts in a way she found substandard. She demanded information from a purser about the policy on serving nuts; his answer didn’t suit her, and she ordered the plane, which had started to taxi to the runway, to return to the gate so she could boot him off the flight.
Cho threw her hissy fit with no thought given to the roughly 250 passengers who would be inconvenienced. This insensitivity was compounded by the initial, tone-deaf official explanation of her behavior given by the company. According to the Financial Times, Korean Air said “it was ‘natural’ for the executive responsible for cabin services to inspect operations and point out problems, adding that the chief flight attendant neglected procedure and regulations.”
Not surprisingly, the incident drew howls from the press and the public. In South Korea, the criticism took a political tone because of growing resentment of the conglomerates -- known as chaebol -- whose controlling families wield great political influence, allegedly commit fraud and other crimes with impunity and run their businesses like fiefdoms. A New York Times article noted that Cho Yang-ho’s three children all held executive positions in the Hanjin Group, the conglomerate that includes Korean Air. The Times report said the Cho family owns only about 10% of the airline but controls its operations through a network of cross-shareholdings.
The FT article quoted Oh Byung-yoon of the country’s Progressive party, who said, “Ms. Cho’s order of a forceful return could be a threat to passengers’ safety by disabling the pilot.” According to Bloomberg, an editorial in South Korea’s Dong-A Ilbo newspaper said her actions exemplified the “sense of privilege” felt by chaebol families.
Heather Cho is no brash young upstart -- she is 40 and had been with the company for 15 years. She was experienced enough to understand the difference between appropriate and inappropriate ways to criticize an employee (and that one shouldn’t inconvenience hundreds of customers). On December 9, Korean Air announced that she had resigned her post in the company after a board meeting was called to discuss the incident.
Cho’s behavior was so obnoxious that she would have been mocked even if she were not a family executive. But because she is the boss’s daughter, the reaction was more personal. Senior-generation members can use her story to teach their children about the perils of entitlement and the dangers of going nuts while on the job.
A parent by any other name …
I was interested to read recently in the Wall Street Journal about a parenting trend. According to the Journal report, children in an increasing number of families have stopped using “Mom” and “Dad” and are instead calling parents by their first names.
Psychologists interviewed by the Journal don’t think this is a good idea. Madeline Levine, a Marin County, Calif., therapist, “views the shift as fallout from an era of overly permissive parenting,” the article said. John Duffy, a clinical psychologist from the Chicago suburbs, said children use a parent’s first name to test the balance of power and control in the family, as they might try out a swear word at the dinner table.
In family businesses, children who call parents by their first names aren’t testing their limits; they’re usually adhering to a company rule. Many family companies require next-generation employees to call the senior generation by the same name that the employees do to signal the separation of family and business roles during working hours, and to demonstrate to the rest of the staff that family members aren’t receiving special treatment. (These policies also work in reverse; parents vow not to use pet names for their children in the office.)
What’s in a name? In both cases above, the main issue isn’t what the younger generation calls its elders; it’s the quality of the relationship. Some teenagers call their parents “Ray” and “Debra” not out of disrespect, but because that’s what the parents prefer to be called. Some next-generation family business members who are judicious about avoiding “Mom,” “Dad,” “Grandpa” and “Uncle Joe” in the office nonetheless may act as if other company policies don’t apply to them.
I never worked in my family’s business -- my parents sold it while I was in college -- and I never considered calling my folks anything but “Mom” and “Dad.” But when my mother’s faculties started to decline and my brother and I began making decisions on her behalf, I started referring to her by her first name (though I continued to address her directly as “Mom”). To me, the shift was profound.
As is true in so many cases when it comes to families and family businesses, the main points to consider are: (1) What is the family culture? and (2) Is the family culture promoting healthy relationships and a thriving business?
In September, Dan Nosowitz -- great-grandson of the founder of the Madewell clothing company -- wrote an article for BuzzFeed describing his reaction upon seeing a sign for the long-dormant family business on a clothing store in New York’s SoHo neighborhood.
“It was, I thought, forgotten family history, the factories having shut down shortly after I was born in the ’80s,” Nosowitz wrote.
Nosowitz would learn that Millard “Mickey” Drexler, J. Crew’s CEO, had acquired Madewell’s logo and trademark in 2004. Although the revived brand features the date of the company’s inception -- 1937 -- in its marketing materials, “Madewell as it stands today has almost nothing at all to do with the company founded by my great-grandfather almost 80 years ago,” Nosowitz proclaimed. The original Madewell sold workwear and later expanded into children’s and women’s clothes, all designed and manufactured in the U.S. The relaunched brand’s clothes are made in China and are geared toward young female fashionistas. The new Madewell has 77 stores in the U.S.
During the course of his reporting, Nosowitz found that clothing designer David Mullen bought the Madewell logo and trademark for $125,000 in January 2003 from a relative of Nosowitz’s who was by then the sole owner. In April 2004, Mullen transferred the trademark to Drexler, who leased it to J. Crew for $1 a year.
No matter what Nosowitz and his family think about what Madewell is doing today, they can’t do much to change it. Business owners who plan to sell their companies must understand that they will no longer control what the new owners do with the company’s brand, employees, products and reputation.
There’s only one way the former owners can reclaim the right make a course correction: by buying the company back. That’s what Laurence “Laurie” Eiseman and his late brother, Robert, did in 1999, when they teamed up with two executives and some other investors to repurchase the Florence Eiseman Company, the legendary maker of children’s wear founded by their mother. The family had sold the business in 1989, only to see quality decline and the company approach bankruptcy under its new owners. As Family Business Magazine reported in 2003, the Eiseman brothers and their partners rescued the brand. Recently, the company launched new lines that, while updated, retain the spirit of the classic styles.
Nosowitz’s family does not seem to be contemplating such a step. Although the new Madewell’s claims of authenticity and connection to the past are dishonest, Dan Nosowitz writes, he doubts his ancestors would care. “They manufactured in the U.S. because at the time it was cheaper to do so, and because it was easier,” the author notes. “They weren’t noble; companies back then didn’t construct a façade of nobility and purpose….. We look at the past through glasses that bring into focus only what we want, and need, to see; they distort everything else.”