When a family owns a business, its members can contribute in many different ways: Usually only one runs the business, but others work there or participate as shareholders. The family owners of Nucraft, an office furniture manufacturer based in Grand Rapids, Mich., have worked hard to navigate the tricky boundaries between employee and owner—and to help those involved in other family businesses do the same.
More than a decade ago, Tim Schad, 65, chairman and CEO, stepped away from day-to-day operations, handing the reins to a non-family president. Today his older son, Matt, 40, is the company’s director of marketing and business development and contemplating his next steps in the organization. Tim’s younger son, Brandon, 37, worked for Nucraft for several years as the West Coast regional sales manager but decided he would rather remain a part owner of the company while working elsewhere.
“The family cares deeply about the business, and I think we always will,” says Tim. “It doesn’t matter if we’re working in it full-time or not.”
Nucraft, which makes custom wooden office furniture such as conference tables, was founded in 1944 by George Schad Sr., Tim Schad’s grandfather. Unlike some family businesses, Nucraft has stayed in the same industry since its inception. “The primary thing that has changed is which product categories we’re in: at first, small accessory products; then over time the company has evolved into larger, more sophisticated products,” says Michael Fedrigo, Nucraft’s vice president of operations. “The segments that we focus on today are high-quality, fine wood products with a high level of customization.”
Nucraft has 240 employees and is projected to generate more than $50 million in sales this year. Today the company ownership is split among Tim Schad, his wife and his two sons, though Tim owns the voting stock. Its board of directors consists of Tim, his sons Matt and Brandon, and three outside directors.
Tim recalls that when he was growing up, Nucraft was “a huge part of my life.” His father was working for the company when Tim was born, then took a few years’ break and ran a furniture company in Bogotá, Colombia. He returned to the company when Tim was still young and eventually ran the business.
After graduating from Dartmouth College, Tim returned to Grand Rapids. He took a job at Steelcase, an office furniture company that does not compete directly with Nucraft, to learn about the industry and gain some outside work experience. From there he went to General Motors, where he stayed for seven years; he earned an MBA from Harvard Business School and was a member of GM’s financial staff in New York.
In 1979, GM wanted him to start a series of two-year stints at different overseas and domestic locations. “We looked at that and said it’s not the way we want to raise our family,” Tim recalls. Instead, he joined Nucraft, which at the time had 30 employees and $2 million in annual sales, as vice president of finance and marketing.
Tim spent his first two years at Nucraft traveling extensively to meet with customers, sales representatives and dealers. He realized that the company needed to invest in new products and new factories in order to grow. For example, the market for conference room furniture promised to be a long-term, sustainable niche. However, customers wanted 10-foot conference tables, and the company’s old factories had elevators that were only 8 feet by 8 feet.
Tim helped the company plan financing for a new factory outside Grand Rapids, which it moved into in 1985. That year, Tim took over as CEO. He ran the company until 1997, when he brought in Robert Bockheim as a non-family president and chief operating officer.
“Tim totally turned the business over to me that day I started,” Bockheim says. As CEO, Tim focused on strategic and financial results, but he “took a big risk,” Bockheim says, and allowed Bockheim to run the company as he saw fit.
“This was easy because Bob was an excellent leader and made great business decisions. Our visions of the appropriate company culture were very similar,” Tim says.
This allowed Tim to explore other career options. In 2000, he began five years as vice president of finance and administration at Grand Valley State University, which was going through a leadership transition with the simultaneous departure of several key executives.
Nucraft has had its ups and downs, including a sharp decline in business spending during the recent recession.
When faced with having to lay off staff, Nucraft asked for volunteers to take buyouts. “We put it out there for a week and got enough volunteers that we didn’t have to do any forced layoffs,” Bockheim says. The company rebounded, exceeding its 2008 revenues in 2011.
Although Nucraft has grown, its culture is still shaped by its relatively small size and the values of the Schad family. “There’s only a couple of decision-makers here who need to buy into doing a capital project, as opposed to at a larger company where you might have to go through three or four layers,” Fedrigo says. “Our teams at the first level of the organization feel empowered to make changes and suggest improvements and implement change.”
The company is very open about its finances, as well. Bockheim says that the first time he saw Tim Schad put up an overhead with the company’s financials at a meeting of all the company’s employees, he “couldn’t believe Tim did it”—he had never seen this done. The sharing has created “a huge amount of trust” with employees, Bockheim says.
When your family owns a business, “you’re always involved,” says Brandon Schad. “I remember alarms going off in the middle of the night. The whole family wakes up, and Dad has to go over and do a walkthrough with the local police [to find out if an intruder had entered the building].”
Despite—or perhaps because of—the constant presence of the company in the kids’ lives, Matt Schad recalls that he “had no intention of working in the family business” when he was growing up, although he worked on the factory floor during high school.
He went to college and law school, then worked as a lawyer for six years, including three years at the Justice Department in Washington. He also joined Nucraft’s board of directors.
In 2004 Matt and his wife decided that coming back to Grand Rapids would give them the work/life balance they wanted. Matt joined Nucraft’s marketing department, focusing on product development. He has since worked in operations as well as business development.
Brandon also worked for Nucraft when he was growing up. He went to college in Montana, then joined the ski patrol in Vail, Colo. After that, he worked for Nucraft as a sales representative in Minneapolis and later managed sales on the West Coast.
It’s always tricky to be a family member—even a part-owner of a company—but not the person in charge. Bockheim says both Matt and Brandon Schad adapted well to that role. “Both the boys respect the fact that that they needed to be employees first, owners second. I listen to them as I would any board member or owner. But in our normal course of business, they are treated like and work as employees,” Bockheim comments. “Rarely does anyone go to Matt on the basis of him being an owner. Matt’s commitment to professional management makes that happen.”
Ultimately, the call of the mountains proved too strong for Brandon. He moved back to Vail and for more than a year has been once again a member of the ski patrol.
“Before I had the opportunity to work for the company, I was going down the path of doing what I really enjoyed doing,” Brandon says.
The Schads’ family meetings have been instrumental in making such transitions work.
Every 18 months or so, Tim, his two sons and their wives meet to learn about business, discuss the direction of the family firm and socialize. “When we can, we try and get away from Grand Rapids,” says Matt. These meetings are facilitated by Joe Schmieder, a principal consultant in the Family Business Consulting Group, who has worked with the company over the years.
In some families, a decision like Brandon’s to leave the company “would be a huge emotional problem,” says Tim. “With us, we talked about it, we listened to his reasons. He feels it’s a career that’s more fulfilling for him, and we support his decision.”
For Brandon, the family’s understanding has been extremely helpful.
“I dreamed that I could actually be an owner but still go down another career path,” says Brandon. “I truly enjoy being a shareholder and owner of the company.”
Another recent topic at family meetings has been succession plans. “Tim has been chairman for some period of time, and there is no family president,” Schmieder says. “The collaborative discussion about leadership succession, who’s going to take over next, is important.”
For now, Matt is finishing an executive MBA program at Notre Dame, and company leaders are looking for his next growth step.
“I’ve continued to take on more and more responsibility in the company,” says Matt. It is possible he may ultimately step into Bockheim’s position. “But what I tell people is I want what’s best for the company, and if that means me running the company then I’m all for it. But we’ve also had a very, very successful non-family-member president for the last 15 years.”
Tim is happy with how Matt’s career is progressing. “He certainly has the talent, and I think he will continue to have the interest, and that makes me very happy,” Tim says.
The company faces challenges in the future, including deciding whether—and how—to diversify its business to protect against downturns. “People want custom products faster,” Fedrigo says. “To the extent that we can continue to come up with new designs that the market wants, at better prices and faster, we’re going to continue to have success.”
Schad family members have made connections with other business owners in their area. Tim Schad joined YPO in the mid-1980s and has served on other businesses’ boards.
Eight years ago, Tim helped found the Family Business Alliance, a joint venture of local family businesses, the Grand Rapids Chamber of Commerce and Grand Valley State University. The Family Business Alliance presents seminars about family business issues and provides professionals to advise local family businesses.
The alliance has also formed next-generation groups in which about eight young people who work in, but don’t run, their family’s business meet with an executive from an unrelated family business as the facilitator. In the meetings, they talk through their experiences and challenges.
“It’s a powerful tool,” Tim says.
The groups grew out of mentoring Tim was doing with a couple of young men who worked in family businesses. He thought they would like to meet each other, and once they did, they asked if some of their friends in similar situations could join as well.
“It’s really hard when you’re young and you’re working in the company and your parents are still the ones in charge,” Tim says. Even if a non-family member is running the company—or if it’s another relative and not a parent —“trying to figure out what your role is and how you should act” can be a challenge.
“You’re not just another employee, but on the other hand, people need to see you do your job and be an employee,” Tim says.
The alliance started forming the groups about three years ago, and it is now forming the 12th group. More than 100 young people are involved.
Although the Family Business Alliance’s activities are helpful to the Schads, the family’s involvement is also a way for them to help other businesses grow.
“The business is a platform for them to give back to the family business community,” Schmieder says.
Margaret Steen is a freelance writer based in Los Altos, Calif.
Copyright 2013 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permssion from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.