Despite playing a major part in our economy and our society, many private business owners who long to see their businesses “carried on” by their children and grandchildren are discouraged by these statistics. It is estimated that only 30 percent pass to the second generation and only 15 percent to the third. The reasons for these outcomes are varied but include:

1. The first-generation owner was an entrepreneur who developed an innovative product or service. After early success, not enough attention was paid to the need to continually improve and to respond to competition and a changing marketplace.
2. The founder had the energy and passion for the business but had not transmitted the enthusiasm and emotional ownership to the next generation.
3. Family needs, including “making each family member happy,” took precedence over business needs, and — over time — the business became uncompetitive, unfocused, unproductive and undercapitalized.
4. Family members didn’t know how to communicate, confront issues and/or manage conflict. Problems festered and people left or acted out the problems through the business.
5. The business was run like a family — ad hoc, random, informal and without good business practices.
6. Home and work roles conflicted. People reacted to one another according to their family roles, not business roles.

These challenges, and others, are difficult but not impossible to overcome. Family members must be able not only to work together to make their businesses successful but to promote positive family feelings. Families that succeed in business together share several common characteristics worth noting. For example, they come together as adults and overcome the emotional baggage that sometimes accumulates during the “growing up” years. They shift away from a “parent-child” way of relating to one another and move to an “adult-adult” orientation. Parents move away from needing to be “in charge,” which allows the family to connect on a more level playing field.

Successful families develop the skills, trust and mutual respect necessary to openly confront and deal with sensitive issues without becoming defensive. Solving difficult and complex business problems requires open communication so the issues can be identified and every potential solution explored. Sometimes these problems are associated with a family member who tends to inhibit candid discussions. Successful families have developed constructive methods of handling the most difficult topics.

Families that are successful in business together work on effective interpersonal boundaries and are aware of the limitations of influencing anyone else’s behavior. They don’t try to “fix” others. They realize you cannot control other people and events; you can control only your reaction to them. For example, parents must realize they can offer counsel and support but must ultimately leave it up to others to make choices and experience the consequences.

Flourishing families recognize when a conflict is escalating and have ways of making sure a situation doesn’t spin out of control. All too often, conflicts escalate as events are misinterpreted and responses are given in the heat of the moment. These types of responses are hard to take back and overcome. Ultimatums are dangerous. Successful families are able to circumvent such situations to avoid long-term damage to the family and the business.

Most important, these families value and commit resources to spending time together, celebrating the family and nurturing the relationships that bind them together. Family gatherings receive a high priority. Setting time aside to reconnect, have fun and just enjoy one another’s company are of utmost importance.

Together, these factors all combine to keep a family positively connected through time, and able to thrive through the difficulties and perils they are sure to encounter. And, to be fair, few families manage to practice these things every time. Nevertheless, successful families have a special compass that keeps them headed in the right direction and brings them back on course when things get off track.

Company Name: Zildjian Cymbal Co.

Founded: 1623

Family Name: Zildjian

Product or Service: Cymbal manufacturing

Location: Norwell, Mass.

Website: www.zildjian.com

Founded 14 generations ago in Constantinople by alchemist Avedis I, who discovered an extremely musical alloy that created powerful, durable cymbals. The sultan named him “Zildjian,” Armenian for “cymbalsmith.” The family emigrated to the U.S. in 1929. Avedis Zildjian III established ties with the hot, new jazz drummers of the 30s and 40s. His son Armand (1921 – 2002) modernized the manufacturing process and factory. Today, Armand’s daughters Craigie (CEO) and Debbie (vice president) run the company.

Note: A family business is dominated or controlled by members of a single family (or single family lineage).

Oldest and Largest U.S. Family Businesses:

• Cargill, Inc., Cargill/MacMillan family, founded 1865, commodities trading, Minneapolis, 97,000 employees

• Levi Strauss, Haas family, founded 1853, apparel, San Francisco, 40,000 employees

• Bacardi, Bacardi family, founded 1862, rum, 7,000 employees

• Crane & Co., Crane family, founded 1801, paper manufacturing, 1,200 employees

Source: Family Business Magazine

Jimbo is the fair-haired child. He gets away with everything and makes things look easy. School. Sports. Even friends. He earned a college degree in management in four years, and has worked for a local bank for a year. Word is he’s doing well there, but the problem is that he’s expressed an interest in working for my parents’ business. I say “problem” because it’s caused a ton of tension. Jesse and Tommy say there’s not enough room in the business for Jimbo. Jimbo says they should make room for a guy with his talent, education and work ethic. He also says it’s not fair that they get to work for Dad and he doesn’t. Besides, Dad says the business isn’t doing well anyway.

If you asked me, I think Tommy and Jesse are intimidated, worried about what their future might be like if Jimbo joins the business. Most people would say Jimbo is the most capable of running it in the future. And I think Dad and Mom are looking for answers, given that they’ve been pretty stressed about the business for quite some time.

Question: What is the future of this family? This business? Should Jimbo be shut out by his siblings? Maybe Jimbo should be encouraged to work elsewhere because he’s the most capable of succeeding on his own. Or maybe the business should hire Jimbo because he is smart, educated and talented. Jesse and Tommy will just have to move over and, if Jimbo proves to be the most competent, so be it? What’s the answer?

Some years ago, David Bork – pioneer in family business consulting – suggested that for family businesses to succeed (that is, both the family and the business succeed), there needs to be clarity on key issues. One is employment of family members. He helped a multigenerational family business develop its hiring policy. Here is a portion of it. It might spur some thinking about how to manage your own family business.

General Conditions

1.   Family members must meet the same criteria for hiring as nonfamily applicants.

2.   Family members are expected to meet the same level of performance required of nonfamily employees. Like nonfamily employees, they will be subject to performance reviews and to the same rules on firing.

3.   As a general principle, family members will be supervised by nonfamily members.

4.   Family members under age 30 are eligible for temporary employment, with “temporary” defined as less than one year. To be re-employed after temporary employment, a family member must meet the requirements of Condition 7 below.

5.   No family member may be employed in a permanent, entry-level position (that is, a position that requires no previous experience or training).

6.   Compensation will be at “fair market value” for the position held.

7.   Family members seeking permanent employment must have at least five years of work experience outside this company. One of those jobs must have been held for at least three years with the same employer, during which time there must have been at least two promotions. It is our view that if a family member is not a valued employee elsewhere, then it is not likely he or she will be happy or useful here.
Applying for a Position
Family members must make their interest known in writing to the president/chief executive. When a position becomes available, only family members who have properly expressed an interest in advance, in writing, will be informed of the opportunity. They may then complete the normal application forms and submit the application for appropriate processing and consideration.