Educating the next generation
The future of family-owned enterprises depends on the continuation of an engaged shareholder base
It's a mantra that we in family businesses hear all the time: In order to survive for the long haul, there needs to be a focus on maintaining an active and engaged shareholder base.
But there’s no clear roadmap for achieving that “active and engaged” status. What kinds of topics do family members need to brush up on, and when? Obviously, a 10-year-old shouldn’t command the same expectations as their 30-something cousin.
We on the Schmid Family Council have been wrestling with this idea for the past few years. With over 100 shareholders of Crescent Electric Supply Company across seven family branches, keeping everybody informed and on the same page gets more challenging every year.
We knew a broad-based education initiative was needed, but the specifics were hard to nail down. In our minds, there were several key impediments standing in our way:
· Each family branch has a different age at which members are able to access full information on their ownership and company financials.
· Some education topics are relevant only to those with significant business experience.
· There isn’t a clear roadmap for getting up to speed on company history, current operations and the responsibilities of a shareholder.
What if there were a curriculum designed to help family members gradually learn more about their family and company as they grew up?
After much deliberation, we came up with an idea: SchmidU
Education materials would be designed according to four distinct age groups:
· Littles (5-12 yrs.)
· Tweenagers (12-18 yrs.)
· Adulting (18-21 yrs.)
· Saying “I do” and preparing for Littles (21+ yrs.)
There’s still plenty of work to be done building out the educational materials for each stage, but with this structure in place, we’re confident that we can prepare younger family members to take the reins once they’re old enough.
An On-Ramp to Become an Active and Engaged Shareholder
Big family gatherings have been a strength of our family for a long time, thanks to the focus that prior generations have put on spending quality time with one another. I’ve heard several third-generation Schmids talk about how the “secret sauce” of the family’s cohesiveness is how much fun we have together.
But while enjoying each other’s company is something the Schmids do well, preparing younger family members to learn and contribute to the company has been a harder nut to crack. Family branches have differing opinions on what age to share full company details with younger members, and how much of that detail to share.
On the family council, we’ve walked the tightrope of respecting each branch’s opinion on these matters, while also pushing for standard practices across the family. After we gave it some thought, it seemed to make more sense to standardize information sharing by age group, rather than by branch.
Here are the high-level goals for each age group:
Littles (5-12 yrs.)
Our main goal for the Littles is to spend time with their cousins. I have great memories of hanging out during family reunions with cousins who live on the other side of the country. Looking back, that built the foundation for the strong relationships we enjoy today on the council and elsewhere.
We’re working on building out content within our new website, Schmidspace, that caters specifically to this group. Once they’re at the older end of this cohort, we encourage parents to start teaching them about family history.
Tweenagers (12-18 yrs.)
Once you hit middle school, it’s time to take your learning to the next level. Tweenagers are empowered to organize their own gatherings and activities during family reunions. Back when the fourth generation was largely in this age group, we held several 4G-only gatherings where cousins could get to know each other without the rest of the family present.
This is also a good time to gain a high-level understanding of what Crescent Electric does. Financial statements can wait, but things like how our founder, Titus Schmid, came to start the company, what it sells and where it does business today, and potential career opportunities at Crescent are good to learn about now.
Adulting (18-21 yrs.)
Ah, the challenges and joys of adulting. This is a tough group to set a standard curriculum for, since life experience and maturity levels can vary widely at this stage.
However, this is a crucial age to gain a firm grasp on the duties and privileges that come with being a shareholder. If a family member hardly knows anything about Crescent by the time they’re 22, the chances of them being an active and engaged shareholder long-term drop dramatically.
Learning more about the business can be daunting. Some need to learn business basics at this point, while others are pursuing finance degrees. Our goal here is to create resources that allow those starting from square one to gain a high-level understanding of how the company and family operate together, while also empowering those who want to dig into the details.
Participating on the family council is highly encouraged at this point, and all talents are welcome. We have various talented cousins who have designed logos and others who spearhead philanthropy efforts. The idea is that, as long as you have a desire to contribute, there’s a place for you, no matter your background.
Shareholder responsibilities are also essential to learn here. Privileges can include ownership stakes and distributions, but they come with responsibilities like attending shareholder meetings.
Saying “I do” and preparing for Littles (21+ yrs)
Part of the “secret sauce” of close family ties is welcoming in-laws with open arms. Each family reunion, we make a point to introduce each new in-law and officially welcome them into the Schmid clan.
But it can be a whirlwind to join such a large family, and we’ve heard several in-laws report feeling overwhelmed initially. That’s something we’re trying to address with SchmidU.
Our vision is to develop a set of materials specifically for in-laws that help them learn about family structures (branches, council, etc.) and encouraging them to get involved. Currently, our three family board members are all in-laws, so we’ve seen firsthand the fantastic contributions they can make.
Once a couple is considering having kids, it’s time to start thinking about estate planning, taxes and the like. Then, once their children are ready to start the Littles education program, the cycle repeats.
Perfect is the enemy of good
We’re not expecting to get everything right with this new initiative. There will be education gaps to fill, and plenty of work to be done getting the family on board with the program.
But we’re confident that the spirit of SchmidU is in the right place. The idea isn’t to replace parents as the main educators of their kids — rather, we hope that the life stage groupings will provide parents with a roadmap that guides their children’s shareholder education as they grow up.
The future of Crescent as a family-owned enterprise depends on the continuation of an active and engaged shareholder base, and we’re confident that this structure can keep the good thing going.
Charlie Rhomberg is a freelance writer and a fourth-generation member of Crescent Electric Supply.