I'm the boss
Mary Welch
February 1, 2007
Dr. Joe Astrachan still shakes his head at the memory. The father, who founded his company, was about to formally pass on the helm of his company to his son. The heir apparent was all set to be grateful, humble and inclusive of his other siblings, none of whom were as involved in the company as he was. The father, however, named another son.
Shocked, the heir apparent asked his father why. "Listen, son," the father said. "I know you're the best one to run my company but I'm retiring so I can relax and stay at home. Your mother wanted your brother to run the company and I'm not spending the rest of my life with her complaining about my choice. Sorry."
Astrachan swears the story is true. "That man worked hard all his life and he wanted to live it out in peace and quiet," says Astrachan, director of the Cox Family Enterprise Center at Kennesaw State College. "And he deserved it. But it wasn't in the best interests of the company."
The lesson learned: "When it comes to a family-owned and run business, family dynamics and politics play a strong role," Astrachan says. "Family businesses are a curious thing. You never know what's going to happen until it happens."
In fact, Astrachan says that sometimes the most capable sibling isn't necessarily the best CEO. " You sometimes don't want the best "textbook" leader," he says. "You want someone who will work tirelessly for the best interests of the family and the business."
Atlanta has a number of businesses where siblings are in charge or at least taking on major roles while working with their father. Among them are the Portman Cos., Pike Family Nursery, H.J.Russell & Co., Chick-fil-A and Aflac.
Some businesses, such as auto dealerships and real estate, tend to lend themselves to several siblings running the business because they can each take a part or project and run with it.
Take Michael Russell, president of H.J. Russell's Real Estate Development division. He believes part of their second-generation success is that each of his siblings was able to do their own thing – business-wise. His brother, Jerome, is the company's CEO. His sister, Donata R. Major, is vice chairman of Concessions International LLC, a family owned company that is one of the largest airport food and beverage concession firms in the country. Their father, Herman J. Russell, founded the construction company and now serves as chairman.
"Our company has benefited certainly from the diversity of our business units," Michael says. " It has allowed all of us room to grow. That's important. Not every company where family members are in it has that option."
Jerome adds, "The most important thing is to have a discussion, preferably on the front end, as to what the roles are going to be. You need to have a clear understanding. Like in our company, I handle the overall company and the construction side while Michael has the real estate development part. Second, you need to be able to have the lines of ocmmunications always open. I always make Michael aware of what's going on and he lets me know what's going on with his side. You don't want to be blindsided, especially by your family.""There's a lot of trust invovled with working with your family but it's also gets back to how you were raised," he adds. "If you were raised with a sense of trust and coopeartion, it helps a lot."
So who's really in charge?
Admittedly, it's harder when there is one business and one CEO. In fact, deciding who should run the business is one of the biggest obstacles facing today's family businesses. Need proof? It is estimated that less than 40 percent of all family owned businesses have a success plan, according to the Raymond Institute/Mass Mutual 2003 American Family Business Survey.
"Really, the founder of the company – or the family members that's going to pass it to the next generation – really needs to get a realistic look at his or her family and decide who is the most capable and also to decide whether or not they're capable or running the company and working together," Astrachan says. "If you think there's going to be a lot of intra-familial fighting, then you might want to take the company in a different direction away from the family, like selling it."< /p>
The days of the oldest son taking over still play a role, but not always. Take Linda van Reese, the youngest of five children who took over the helm of the Original HoneyBaked Ham Co. after her father's retirement.
Truth be told, fathers don't necessarily assume their kids want the business. "My father always talked about us kids finding our own way and following our passion," says Kimbrough (Beau) King, Jr., president of Kim King Associates, and the only son of real estate developer the late Kim King. "And then he would sort of say that if real estate made me happy it would make him happy if I'd join the business."
To King, entering the business was a natural. "I grew up in the business and he would talk about it all the time," he says. "I was working elsewhere but when he got cancer, I wanted to work with him and for the business."
"You can't demand respect and you can't expect respect to be given to you just because of your role or your title or who your Daddy is. It must be earned." – Michael Russell, president of H.J. Russell & Co.'s Real Estate Development
After King's death, Beau took over. What was a bit of a surprise was that his sister, Abby, 28, would also join the business. Abby was pursuing a career involving languages when her father became ill. He asked her to join his company, which she did. She found her passion was residential real estate.
And the two found a way to work together. "We have a great relationship," Beau says. "We've had our ups and downs and our challenges. But clearly I was the president and there was never any question about roles. She's been able to step up, and she's still in a learning mode, but she's helping out with the business. But it's taken a little bit of adjustment that I'm the boss, not her brother at the office. But it's a family business and the roles are intertwined. Even when we're off the clock, we're talking business. It's hard to go to a family function. I'll ask Abby about some numbers and sHe'll go, "Beau, it's Christmas." But I need to know."
For her part, Abby acknowledges the benefits of working with her brother. "I know him and he knows me," she says. "He knows how far he can push me. I think there are a lot of benefits working for a family business. There's no politicking here. we're all straightforward and want to get the job done. Of course, Dad and Beau have different styles of leadership. But I also know he's older with more experience so there's no stress on me because I know he's always going to be a step ahead."
Astrachan says that a clear understand of the roles, such as who is in charge, is essential for siblings to be successful. "There really can only be one person in charge and everyone has to understand that," he says. "And that goes for spouses too. You have to lay down the law and say this is our organization and that's it."
Finding balance
Clearly the Kings have made it work. But for others, it may take professional assistance to create the right balance so that the family business – and the family – can remain intact and healthy. "It takes a real maturity and selflessness to run a family business," says Astrachan. "The family members have to decide if it's worth it and then find a way to put aside their egos and their past family history to make it work. You can't have the "Mom always liked you best" scenario playing out ever time a business decision has to be made."
Jerome Russell says he and his siblings didn't have any adjustments to make. "We went into our roles pretty easily. It didn't change the dynamics of us working together or as siblings." However, he acknowledges that all three "pretty much grew up in the business. "It's not as if we came from different backgrounds and work experiences," he says. "We've been working together since we were young in the business."
"My father always talked about us kids finding our own way and following our passion. And then he would sort of say that if real estate made me happy it would make him happy if I'd join the business.- Beau King, Jr., president, Kim King Associates
Astrachan believes that family counseling to help overcome past sibling resentments and history is a good idea. "You also need help in how to have an open and honest conversation with each other," he says. "Siblings don't always do that even without a family business to deal with. Sometimes the starting point is to find a way not for the kids to kill each other."
He also believes counseling will help offset feelings regardless of how the business is doing. " Success happens," he says. "There can be more jealousies if the business takes off even more than with the first generation. And, you have to make sure there is no blame if the business doesn't succeed as expected."
Often Astrachan suggests an assessment of the individual's strengths and how they can be applied to the family business. "I recommend working with counselors because it brings in an outside perspective and, with the counselor, everyone starts out on an even platform," he says. "The key is to have someone who can recognize the family dynamics that are at play and then work to change them for the betterment of the company."
Russell agrees that an "honest appraisal" of each sibling's talents and interests are in the best interests of the company and the family. "It's important to know how he or she feels about the job and to know what each individual's talents are and what he or she is bringing to the company."< /p>
Counseling works
Chick-fil-A is a believer in family/company counseling. Ron Braun, a marriage and family therapist, has worked with three generations of Cathys to ensure the smooth transition and running of the private company.
Along with founder and CEO Truett Cathy, his son, Dan, is president and son, Bubba, is senior vice president. Currently there are at least 10 grandchildren interested in joining the family business or like Bubba's son Andrew, already are involved in it.
In an interview with QSR Magazine, Dan Cathy discussed why is family is so actively recruiting and training family members. "The odds are stacked against us," he said. "We want to make sure we do everything we can to ensure the continuity of the business."
Among their actions was to have one-on-one sessions with a facilitator to identify the succession challenges facing their company. From those sessions came a master plan for generational transfer that is now in place. He also meets with each of the 10 oldest grandchildren a couple times a year to discuss their careers and plans.
On top of that, they hold "generational meetings" to ensure dialogue between the cousins, siblings and parents. The idea is to get things out in the open before jealousies and resentments and small disagreements cause major problems.
The Cathy grandchildren are all given an even shot at becoming involved with the company because they all have to follow a procedure for getting into the family business and assuming leadership roles. There are no favorites. Not only does each grandchild know that it is up to him or her to succeed just like everyone else, but it sends a message to non-family members as well.
For example, each grandchild is encouraged to work in a Chick-fil-A store as a teenager, and then get to know employees at company functions. Each grandchild must work at least two years outside Chick-fil-A to get a taste of the outside business world. Then they must operate a Chick-fil-A store, complete with a personal financial commitment. After that, it is possible to move into the corporate operations of the company.
"Such a foundation communicates to other operators that there is not going to be preferential treatment," Braun told GSR Magazine.
Jerome Russell believes that it is not only essential for each sibling to have "room to grow personally and within the company" but that they must be "humble" in the role they have. "You must be respectful of your fellow workers and siblings," he says. "You can't demand respect and you can't expect respect to be given to you just because of your role or your title or who your Daddy is. It must be earned."
John Davis, faculty chair of Harvard's Families in Business program told QSR Magazine, how important it is for children to earn their place in the family business as well as the all-important respect that Russell referenced.
Says Davis, "Owning a family business is not a birthright."
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