In the current Great Recession most people in business are having a tough time, but newly appointed family business successors may be facing the biggest challenges of all. Imagine an understudy who finally gets a chance to play the leading role—but discovers the scenery is collapsing. Our protagonist must carry on while holding up the backdrops, trying to act as if nothing is amiss.
Last July, David Thompson became CEO of Laminators Inc. in Hatfield, Pa. Along with his brothers, Thompson purchased his father’s interest in the company, which makes parts for outdoor signs and decorative wall systems. While he worked alongside his father, Thompson says, “Even though I was managing through risk, as a minority owner, I had a minority of the risk.” Now that the buck stops with him, Laminators is facing a foundering economy as well as new debt it took on to fund the buyout of his father. “That has created a lot more sleepless nights and anxiety,” Thompson acknowledges. (For more of Thompson’s story, see Dave Donelson’s article on page 51 of this issue.)
Elder family members who have weathered previous fiscal storms can offer fruitful suggestions to the new leader, notes family business adviser Fredda Herz Brown, a partner with Relative Solutions. “If you’re a young person in a business, it behooves you to use your advisers, and use your elders, really well,” she says. In some families, senior-generation leaders are delaying their retirement and managing the fiscal crunch alongside their successors.
Brown counsels family members to resist the urge to offer constant feedback—particularly of the negative variety—to business leaders. “They should be supporting them in the sense of understanding the position that they’re in and asking them what they need,” she says.
Thompson, for his part, is keeping the current situation in perspective. When he was named as Laminators’ president six years ago, he says, the company was having major problems with a key vendor that threatened its ability to fulfill customer orders. “What’s going on now is difficult, but the storms were raging a bit more when I first sat in the chair,” he says. “We managed our way through that, and we’re managing our way through this.”
Leading in a crisis requires both short-term and long-term strategic thinking. Family firms can make changes quickly, an important advantage when a shift is warranted. Just as in times of physical danger, those best equipped to survive are those who stay calm—and stick together.