Scott Stevenson graduated from the University of Montana in 1994. His graduation date, he recalls, fell on a Thursday. The following Monday, he was home in Madison, Wis., working for his family's business, KleenMark, which was then headed by his father. The company does contract cleaning work for major facilities, including the headquarters of the Kohl's department store chain.
For the young man, the transition from school to work was abrupt. “I went from studying business theories to struggling with real problems,” Stevenson says.
One of his first tasks was to supervise a crew that was spending a weekend cleaning floors in a client's office building. Stevenson worked several hours getting the job started. Then he left to attend a wedding 100 miles away. On Monday morning, he was awakened at 6 a.m. by a call from the client, who was angry because the floors were a mess. The experience taught Stevenson a valuable lesson about his new career. “I took on four times the amount of work that the crew could really handle in one day,” he reflects.
Many family business consultants would say that KleenMark had made a mistake: throwing a young person onto the job too quickly. According to conventional family business wisdom, next-generation members should begin their careers with an entry-level job at an outside employer. By answering to a boss who is not a relative, consultants suggest, the young person develops skills and learns to meet standards. What's more, advisers say, outside experience enables prospective successors to prove to themselves —and to employees at their family's firm—that they can make it on their own, reducing the potential for self-doubt and career dissatisfaction later in life.
But many families like Stevenson's ignore the consultants. In some cases, the business simply needs the young hands; with a father ailing, the son must fill the spot. In other instances, families take in young people as a routine matter—without considering any alternatives.
Many successors who have worked exclusively for their family companies say the direct approach was the right one for them. “Because I was thrown into the water, I learned faster,” says Stevenson. “I was very fortunate to have the chance of playing a big role in a growing company.” Now 36, he is CEO of KleenMark, which has 600 employees and generates $13 million in annual revenue. “Our succession plan worked effectively, and I am pleased with my job now,” he says.
Ensuring a smooth transition
Several next-generation members who have spent their entire careers working for their families say they took steps to compensate for their lack of outside experience. One of the simplest moves for a young person may be to enroll in business courses. That way a rookie can learn something about topics like accounting and human resources. Many business schools offer executive courses designed for people who are working. A young person may be able to sign up for an introductory finance class that lasts for a week or a weekend.
Heather Chandler, general manager of Sealstrip Corp. in Boyertown, Pa., took business courses while working full-time for her family's packaging business. Sealstrip, which has 30 employees and annual sales of $4.3 million, has developed easy-open packaging features for popular products such as Aunt Jemima Homestyle Waffles and Keebler Vienna Fingers cookies. Heather's mother, JoAnne Forman, is president; her stepfather, Pat Forman, founded the company and is director of research and development.
Chandler, who is 36, joined the company in 1992 straight from college. During her first four years at work, she earned an MBA. She says it was enriching to attend business school while coping with real-world problems. “When I did my undergraduate work, I would take in information, but I did not understand how the ideas related to our business,” she says. “When I took the MBA, the classes meant a lot, and I think that the school became an excellent substitute for outside job experience.”
Her participation in these courses enabled her to bring a fresh perspective to Sealstrip. In one class, Chandler learned about corporate strategic planning. Sealstrip had never used a formal strategic plan, she says; planning sessions typically consisted of her parents kicking around ideas over the dinner table. Chandler soon began thinking about putting together a strategic-planning team for her company. Now every two years the company designs a strategic plan that provides a guideline for the business's future direction. Each plan includes about five growth strategies. This year, one goal is to improve the system for converting prospects into new customers and processing the paperwork involved.
Bonding with employees
One of the most difficult challenges for the young person entering the business is winning the support of non-family employees. Many employees resent the young heir. Some are pleased to see the newcomer stumble. But the young person must convert experienced staff into allies who will pass on their knowledge. As a 22-year-old straight out of college, Jeff Glaze joined Decorated Products, his family's business in Westfield, Mass. The company makes metal nameplates and decals, including those that appear on Frigidaire refrigerators and Cummins truck engines. In college, Glaze had taken classes in entrepreneurship and small-business issues. The education proved helpful, but it did not provide all the day-to-day knowledge the young man required.
Within two weeks after he joined his family company, one of the company's key foremen quit—perhaps because he believed the young man would be a competitor for promotions. Glaze's father told him to take over the foreman's job. The initial weeks were difficult, recalls Glaze, now 48 and CEO of the company, which employs 40 and generates $3 million in annual revenues. “I had to go up to experienced people and ask them for help,” says Glaze. “I had to win them over one at a time, and most people were helpful.”
The young man listened politely, relying on employees to make some decisions. Today, Glaze says, he still encourages employees' active participation. That is a change from the leadership style of his father, an old-school manager who made most decisions himself.
Katherine Grady, a senior associate with Lansberg, Gersick & Associates, a family business consulting firm in New Haven, Conn., suggests announcing to employees that the young person is joining the company for a year or two as an intern. After completing the internship, the next-generation member might go to business school. “When a family member joins the company, people may resent him and remember any mistakes he makes for years,” says Grady. “But if the young person is treated as a trainee, there may be less pressure. Then after going to business school, he can come back with greater authority and respect.”
Another approach Grady recommends involves rotating the trainee through different divisions of the company. The young person starts out, say, in the sales department for two or three years and then moves for a period to production. In each case, the family member begins on the bottom rung and moves up only after she demonstrates competence. “By rotating, you learn the business, and you have some time to prove yourself, instead of just moving in right away as sales director,” says Grady.
To ensure that family issues don't derail the training process, a non-family member should supervise the young person, suggests Grady. “Pick an experienced employee who can give constructive criticism, not just someone who is going to be a nice guy,” she says.
Heather Chandler of Sealstrip says she has made an effort to learn from unrelated employees who have outside experience. Recently, for example, the company hired a new engineering manager who had worked at three other companies. Chandler has been consulting with the engineer as she tries to develop a policy for compensating employees who must travel overnight for the company.
In some cases, informal advice may not be enough. Some parents appoint a mentor to counsel the next-generation member and offer objective advice. The mentor may be a board member or an experienced manager who is not a relative. Some families choose a senior executive from outside the company.
Setting goals
Members of the senior generation should establish a formal development plan for a new family employee, spelling out training programs and work experiences that will help the novice to grow, advises Henry Landes, president of the Delaware Valley Family Business Center in Sellersville, Pa. The apprenticeship period should include a lot of reading and studying best business practices, he says.
Landes suggests that next-generation members first take a job at an outside employer that can teach sound practices. But if the young people are not going to work outside, Landes says, the family should conduct an annual review of the next generation's progress and design specific goals for the following year. For example, a young person might be put in charge of installing a new compensation system. He could start by reading books on the subject, but he might need to hire an outside consultant to provide advice. “The idea is to learn from the consultant, so that the young person can take over the job and run the system a year from now,” says Landes.
For additional assistance, Landes suggests joining a peer group, a setting in which next-generation members can discuss common problems and learn from each other. Many colleges and family business advisory firms operate such groups. Landes runs a group that meets for half a day once a month. Most members are young people who have never worked outside their family's businesses. Speakers are invited to address the group, and participants swap information on how to handle personnel or production issues. Perhaps most important, group members act as a sounding board for members who discuss their problems.
“The group tells them the truth in a way that Mom or Dad won't,” says Landes. “People feel free to say that someone is aiming too high or too low.”
At groups run by Dean Fowler, a family business adviser in the Milwaukee area, members visit each other's businesses to see practices being implemented. Fowler says many participants are particularly concerned about competing in global markets.
Inexperienced young people should be especially careful to achieve independence in all aspects of their lives, says Fowler. “Don't live at home with your parents,” he recommends. “Have your own apartment, and pay your own rent. Do your own cooking. Don't get special benefits that other employees don't get. The more the family holds the young person to standards, the easier it is for the successor to become a competent adult.”
Moving directly into the family business can be especially hard for a successor who is joining the workplace after spending several years as a stay-at-home parent. A former stay-at-home mother recently faced problems when she joined her family company, where one sibling had already worked for 12 years and another for seven years, reports Rick Giombetti, president of Performance Dynamics Institute of Leadership, a management consultant in Hampden, Mass. “The experienced people felt that the new person was trying to influence the family business without knowing what she was talking about,” says Giombetti. “The experienced kids resented that she hasn't paid her dues.”
Giombetti is working with the family to solve their personal problems. He says the entire family must look objectively at everyone's competencies and set clear roles for each member. The young mother may need to swallow her ego and spend more time in an entry-level position that will enable her to learn about the business. “The family members have not fixed the problems yet, but they are beginning to examine the important issues,” says Giombetti. “The parents are trying to find a way that all the kids can move into the business and make a contribution.”