Click on the picture above to learn the highlights of last Friday’s presentation by Peter M. Johnson on family business governance at the Institute for Family Business at University of the Pacific in Stockton, California.
Peter M. Johnson, Director of the Institute for Family Business at University of the Pacific in Stockton, shares in this interview the value for Family Business to join networking and educational programs, like the ones offered by the Institution he leads, to learn what to do when you don’t know what to do in your family business. Ready to learn and mingle?
How does the Institute for Family Business support family businesses?
With all of our family business, wherever they are we support them through several different ways. First, we offer about five (and as many as ten a year) different programs in different locations. These programs are offered to family members and non-family members who are key employees. With the idea that attending this program with key non-family members or their consultant, everybody is on the same page. They hear the same message and it is easier to start creating a strategy around what a group heard in a program. They will get information for an expert in the field who will speak about challenges as a current or former family business owner, consultant, or a panel.
The other benefit of the program is that it allows family to talk to each other. One of the biggest challenges that I have seen over the years is that families always think they are alone. They think that they have unique challenges and that they are a messed up family and other family businesses are much more professional than they are. So, it is an opportunity for families to get to know each other and learn from each other.
We also have a very large resource library of videos from previous programs, books, articles, consultant information, and a wide variety of family business resources that we can refer our members to. For example if someone inquiries about non-family employee conversations, succession planning or would like a consultant, we have resources that we can refer them to. We will also connect them with other members who for example may be thinking of starting an independent board of directors. They have not done it before, are not sure what the structure would look like, and want to know what the pros and cons are. They will want to know if there is another family who they can speak with that has been through this journey and can provide their experiences.
Is the Institute for Family Business at the University of the Pacificthe only one of its kind in the Bay Area?
Yes.
Why do you think that there are not more institutions supporting family business in the Bay Area?
That is a great question and I think that there are a couple of reasons for it. First, with some families they don’t realize that they are a family business. Some think of a family business as a mom and pop out of their home or small grocery store on the corner. They don’t really think of big family business like Levi-Strauss, Ford, or Wal-Mart. So a lot of families don’t think of themselves as a family business.
The second problem is that many families don’t want to admit that they need help. Generally, the family has a patriarch in charge and they tend to think they don’t need help and there are no issues. They are blinder to some of the problems and will gloss over the issues.
The third problem is that you have to know where to find family businesses. We know that 80% – 90% of businesses in the United States are family owned or controlled. But getting people to recognize that they are a family business and promoting the concept to them is difficult. One thing that I hear people say when they come to our programs is that they didn’t realize that this was available. It is kind of tough because until a family is in crisis, like a succession issue, family members tend to gloss over the resources that might be available to them.
Do you think this type of organization is important for next generation family members of family businesses?
Yes and actually what we see is that Next Generation is more likely to call. They recognize that their family is having issues and the senior generation is blind to the challenges and want to know what they can do. The Next Generation largely sees the value in these programs and is more likely to speak up and say that they are a family business. They recognize that the family is a part of the business and that they are having challenges that go beyond the traditional business challenges. It is critical, especially if the goal is for the Next Generation to take over, for them to develop their leadership skills.
Do you offer leadership development programs for the next generation?
We do. As a matter of fact our programs are not just for one generation, type of business, or industry. We offer informational programs that go into different topics that can be related to any business. So the next generation and senior generation both get something out of the programs.
What is your typical member profile?
There is a wide range. For example, we may have a winery that has 4 or 5 family members and 10 full-time employees. We also have some that have 80 or 100 full-time employees. Almost all of our members are multi-generational and occasionally we will get some from the same generation. They tend to be two –generation with the parents in the business.
Educational and Networking events are a great opportunity not only to learn from the presenter but also from other participants. What is your experience with this kind of events?
After her father suffered a stroke, Kathleen Thurmond had to jump into managing her family business, without previous experience in the business. In this interview, Kathleen share tips on how to survive and thrive – successfully selling the family business 12 years later, despite having no succession planning, experience, or guidance with running the business.
If you are in a sink-or-swim situation with your family business, relax it can be done… here is how.
How did you become involved in your family business?
My father had a stroke and it prevented him from being able to do anything with the business. We had an outside person running it day to day. My father was overseeing it and then he had a stroke that created a much bigger problem. At this point, my mother asked me to step in along with one of my brothers.
How was it for you to jump into the family business without warning and running it without guidance from your father?
It was exhilarating and terrifying at the same time. I had just come from being a director of an AIDS hospice program and I had 35 employees. But it was very different from stepping into a uniform supply industrial organization. There were two unions and 50 employees. I had to deal with people who had been there a long time and knew a whole lot more than I did about the business. The fortunate part is when you don’t know very much, you are not as afraid as you might be if you really knew more.
What was your background before joining the company?
I had about 18 years in the fields of non-profit and social work. I have a Master Degree in Social Work, which I got after three years in journalism and I was writing and in to photography prior to that.
With my social work career, I often ended up in management. I was an assistant director in a hospital for 8 years and then went on to run an AIDS program. I was also always politically active in whatever I did because I am an activist at heart. I was on the AIDS commission for LA (Los Angeles) and president of a Long Beach AIDS consortium.
When you joined the family business with your brother, what was your position?
For six months, we shared a Vice President role. Each of us having the same title but he was living in San Francisco at the time. The business was in Long Beach and he never intended to stay. He worked in the business when he was younger in the production area and routing – delivering clothes. He knew the business from that perspective but he was a masseuse and had no desire to either leave San Francisco or to be a part of the business.
When did you start running the business by yourself?
In six months, I was in charge.
What would be your advice for other next gen that do not have a succession plan and all the sudden find themselves in the same situation-?
My first piece of advice would be to do the planning so that the family knows what to do in the event of death or illness of the founder. If you don’t do that then, learn everything you can about the business. Take every industry specific and leadership classes. Immerse yourself in education.
I joined a group of 12 men who were owners of companies like mine. We met every other month and talked about the business. We met at each other’s business so that we could and critique each other. We would give advice and talk about the latest innovations in the industry. That was a big help.
I always attended the trade shows, national conferences, and equipment shows. You learn so much when you talk to other people and see the equipment that someone talks to you about over the phone. In industrial laundry, there are washers, dryers, sort systems, and boilers so it was just like a whole other world for me.
Did you create a team of people to help you?
There were managers when I came in. The difficulty was they were hired primarily by my father. He was more of an authoritative figure, which is usually the case with founders. My management style was more collaborate and inclusive. I think it was important to be that way because in order for them to accept me as a leader, I had to also accept them, their expertise, and knowledge about the industry. I think that made for a much easier transition then if I were to go in and pretend I knew everything and I really didn’t.
Over time some people, I let go of or they let go of me because the style was different. It didn’t sit well with some people who had been there for years. There was also new energy, new people that was coming in who were from the industry and others who were experienced managers from other industries.
After 12 years of running the company, the decision was made to sell it. How did it feel to sell the family business? Why was the decision made to sell it?
When I was about two-thirds of the way through that 12-year process, I got my MBA while running the company. One of things that a professor said to me was what is your exit strategy. Although I didn’t want to hear that at the time, it really planted the seed that I needed to be thinking about it.
I was also very active in my industry and the only woman on my national trade board. I met the big guys Aramark, G & K, Cintas and UniFirst. They began to know me and also began a 5-year project with EPA on environmental management and wastewater treatment. We developed best management practices for the industry. All those things exposed my relatively small company to the larger guys.
They began to call me and at first I didn’t want to talk to them at all. It scared me. I thought I am never going to sell and will be with this company forever. Then, I remembered what my professor said and I began to talk with them. It was then a gradual process and it began to make sense. I sat down one day and really contemplate – did I want to stay here forever? The answer was no.
Selling is all about timing. Of course I am not clairvoyant. I didn’t know the economy was going to crash in a few years but the reality was I sold at the perfect time. It was when the bigger guys were paying a lot for companies my size. More than they paid a couple of years later. Thank goodness I did that because my mother, who is still alive at 93, is comfortable.
Emotionally, what is easy for you to sell it?
I knew deep down that it was the right thing. At the same time, I was letting go of a profession that I thought I would be in for the rest of my life. I was letting go of my dad’s dream. He died shortly after I began to run the company. My mom was helpful and said that if you feel like it is the right time to sell, then let’s do it. It was nice to have her support.
You are the President of the National Association of Women Business Owners-San Francisco. What is the most rewarding aspect of this position?
I wrote an introductory message for our monthly newsletter and a woman called me and said that what you wrote in the newsletter made me feel like you were speaking directly to me. That is what I love. I love mentoring women. I feel like I am here in the world and we as women are to lift each other up. Support each other in our businesses. Champion each other in what we hope to do and really to encourage each other to prosper in the world of business. It is not easy but it is much better for women now. With only 15% of women on corporate boards and 4% of women are Fortune 500 CEO’s, we still have a lot of work to do. It is inspiring to me when I see other women collaborating and working together to boost each other.
Kathleen is a natural leader with a strong “make it happened“ attitude. That is her greatest asset in dealing with having to take charge of the business with no experience or guidance. What about you? Have you ever dealt with a situation like that? How did you manage it?
Christin Cardone McClave es propietaria de tercera generación de Cardone Industries; la compañía privada de re-fabricación de autopartes más grande del mundo, y empresaria. En esta entrevista, comparte la razón por la que decidió no trabajar en la empresa familiar, cómo lidió con el hecho de que su marido trabajara para su padre durante 19 años,y cómo se sintió cuando casi venden la compañía.
Comenzó a trabajar para la empresa de su familia a los 12 años. ¿Cómo influyó ese hecho en su vida?
Me inculcó una fuerte ética laboral. Pude trabajar en diferentes sectores de la empresa y gané experiencia en ventas, mercadeo, servicio al cliente, finanzas, control de calidad y fabricación. Me especialicé en negocios en la Universidad y después de la Universidad decidí que en verdad quería trabajar fuera de la empresa familiar. Cuando tenía 20 años conseguí una pasantía en Johnson & Johnson. Después de la pasantía, me ofrecieron trabajar para Johnson & Johnson.
Usted pasó casi toda su carrera trabajando en Johnson & Johnson y los últimos años manejando su propia compañía, Unifi Coaching. Siento curiosidad acerca de por qué usted decidió no trabajar para su empresa familiar.
Simplemente sabía que no quería estar preso en la empresa de mi familia. Sentí una necesidad interna de salir y ver si podría lograrlo en el “mundo real”. He logrado mucha seguridad trabajando en Johnson & Johnson y comenzando mi propia empresa de coaching. Lo otro que aprendí fue que si alguna vez regreso a la empresa familiar sería una decisión muy bien pensada. Creo que es importante que las personas que están en su propia empresa familiar lo escojan por ellas mismas. Yo sentía muy adentro de mí que necesitaba ir a trabajar a algún otro sitio y probarme a mí misma que podría lograrlo en una compañía que integrara la lista Fortune 500. Sabía que siempre podría regresara la empresa familiar y ser respetada. Ahora cuento con la experiencia y la capacidad de trabajar fuera de la empresa familiar. Realmente he disfrutado de las consultorías y de estar en el Comité del Consejo Directivo.
¿Usted cree que agrega más valor a su empresa familiar teniendo experiencia externa?
Sí, sin lugar a dudas. Considero que sumo más valor. Puedo ver las cosas desde una perspectiva diferente que cuando trabajas en una empresa familiar por tanto tiempo, lo que a menudo sucede en una empresa familiar. Tienen muchos empleados de toda la vida, empleados muy leales y maravillosos que no necesariamente tienen mucha experiencia externa. Aunque se trata de personas muy capaces, simplemente aportar un punto de vista diferentees algo que pongo sobre la mesa cada vez que trabajo en un proyecto o en el consejo directivo.
Su marido ha estado trabajando para la empresa familiar durante 19 años. Cuénteme un poco acerca de esto.
Ese es otro de los motivos por los que decidí no entrar en la empresa familiar. Con mi marido trabajando allí, pensamos que era demasiado para ambos estar allí. Nos conocimos después de que ya hubiera estado trabajando en Cardone durante algunos años. Él tenía una trayectoria comprobada y cuando nos casamos realmente aportó un buen equilibrio a nuestra familia desde el punto de vista técnico. Nuestra familia tiende a gravitar entre ventas y mercadeo, mientras que mi marido tiene título en Ingeniería y un MBA en Finanzas. Tiene un excelente temperamento, es creativo y un gran apoyo, lo que es un muy buen componente para una empresa familiar.
¿Entonces, en general, ha sido una experiencia positiva?
Sí, creo que lo ha sido pero él dejó la compañíaa fines de enero. Sintió que era tiempo de hacer algo más. Hay muchos desafíos y creo que ha llegado a una instancia en que le gustaría trabajar donde no tuviera que lidiar con todos los problemas extra.
Quiere ingresar a una industria completamente diferente. Quiera hacer algo en la industria de los deportes, lo que es muy diferente de lo que ha estado haciendo los últimos 19 años. Su coach lo ayudó a desarrollar sus valores y a comprender cuáles son sus pasiones. Eso realmente lo ayudó a ver que es tiempo de avanzar y hacer algo que realmente lo apasione. Él deja una marca muy positiva y es definitivamente uno de los máximos líderes de la compañía. Será triste para la empresa perderlo, pero creo que todos lo entienden, incluyendo mi familia.
¿Considera que ha debido escoger entre apoyar a su marido y apoyar a su padre o a su hermano? ¿Puede darles algún consejo a otras mujeres en su situación?
Hacemos un ejercicio; también hago mucho de esto en mi coaching, cambiar sombreros, que es “usar” un sombrero diferente, luego tu sombrero normal. Cuando tenemos una conversación con mi marido a veces nos ponemos el sombrero de la empresa familiar. A veces son los sombreros de la mamá y la esposa; a veces, es el sombrero de mi padre. Tratamos de ver las cosas desde diferentes perspectivas. Diría que sabes realmente que veo tu perspectiva, pero si me coloco el sombrero de mi papá puedo ver que esta es una situación muy frustrante para él. Tratamos de hablar en esos términos porque así la emoción queda fuera del tema. Podemos observarlo desde diferentes perspectivas y nos ayuda a dar un paso atrás y no dejar que nos afecte emocionalmente.
Su familia ha atravesado recientemente el proceso de una posible venta de la empresa que finalmente no sucedió. ¿Por qué la familia tomó la decisión de vender?
Toda empresa familiar en algún momento debe lidiar con esta cuestión. Nuestra empresa tiene más de 5500 empleados en diferentes países. Es un modelo de negocios muy complejo. Con los desafíos con los que nos enfrentábamos con los costos locales de la mano de obra, problemas de fabricación, inversiones, decidimos que necesitábamos inversión externa para ayudarnos a crecer. Además, mi padre está a comienzos de sus 60s. Comenzó la empresa cuando tenía 21 con mi abuelo.
Mi padre es bastante inflexible cuando dice que no trabajará para una empresa pública. Es muy vehemente acerca de mantener a la empresa privada y tener propiedad mayoritaria. Parecía como si la mejor opción fuera venderla a una compañía que realmente pudiera hacer crecer el negocio. Sin embargo, estos últimos años han sido duros para muchos negocios diferentes y también para nosotros. Atravesamos todo el proceso de venta y al final no funcionó. Nos estamos reagrupando, tratando de averiguar cuáles son los siguientes pasos, pero por ahora volvimos al modo empresa familiar.
¿Qué consejo puede darles a otras familias que atraviesan el proceso de vender la empresa familiar?
Creo que es muy importante para cada familia observarse a sí misma. Todo depende de cuántas unidades familiares estén involucradas. Nosotros tenemos cuatro unidades familiares: mis padres, luego mis 2 hermanos y yo, y todos estamos casados. Creo que es un proceso verdaderamente emocional. Como mi padre es el accionista mayoritario, él toma la decisión final. Y, claro, porque es su bebé.
Fue un torbellino sumamente emocional para él atravesar todo el proceso. También fue emocional para mí. Pensaba, ¿debería haber trabajado en la empresa familiar? ¿Debería haber ayudado más? ¿Podríamos haber hecho todo de manera diferente? ¿Cómo podría haber apoyado más a mi padre? ¿Deberíamos mantener juntos el negocio familiar?Observamos a estas otras compañías de4ta, 5ta y hasta 6tageneración que han logrado salir adelante.Es impresionante la manera en que han podido extender su empresa familiar hasta ese nivel.
Es una oportunidad maravillosa, pero al mismo tiempo también mucho estrés. Es como una espada de doble filo. Tener una empresa familiar tiene beneficios excepcionales. Hay experiencias de trabajo maravillosas. El otro lado es que se sentía como que llevaba un peso enorme sobre los hombros. A medida que tu empresa crece hay muchos aspectos para considerar. Tienes más de 5000 empleados que dependen de ti, deudas de la empresa, cuestiones de planificación patrimonial. Tener un coach me ha ayudado mucho a hablar y a poder trabajar en ello, a mirar mi vida y poder adueñarme de ella. Hay vida más allá de la empresa familiar, incluso si la vendemos.
Christin McClave, 3rd Generation of Cardone Industries
Christin Cardone McClave is a third-generation owner of Cardone Industries; the world’s largest privately help auto parts remanufacturing company, and an entrepreneur. In this interview, she shares why she later decided not to work in the family business, how she dealt with her husband working for her father for 19 years, and how she felt when they almost sold the company.
You started working for your families business at the age of 12. How did that influenced your life?
It instilled a strong work ethic. I was able to work in different parts of the business and get experience with sales, marketing, customer service, finance, quality control and manufacturing. I majored in business in college and after college I decided that I really wanted to work outside the family business. When I was 20 I got an internship at Johnson & Johnson. After my internship, I received a job offer to work for Johnson & Johnson.
You spent most of your career working at Johnson & Johnson and the last few years running your own company, Unifi Coaching. I’m curious as to why you decided not to work for your family business.
I just knew I didn’t want to be stuck in my family business. I had an internal drive to go outside and see if I could make it in the “real world”. I’ve gained so much self-confidence with working at Johnson & Johnson and starting my own coaching practice. The other thing that I learned was that if I ever go back in the family business it would be a well thought out choice. I think it’s important for people who are in their family business to choose it for themselves. I just knew in my heart that I needed to go work somewhere else and prove to myself that I could make it in a Fortune 500 company. I knew I could always come back to the family business and be respected. Now I have the experience and the ability to perform outside of the family business. I have really enjoyed consulting and being on a board committee.
You feel you add more value to your family business when you have outside experience?
Yes, absolutely. I think I bring more value. I am able to see things from a different perspective then when you are working in a business for so long, which often happens in a family business. They have many lifetime employees, very loyal and wonderful employees that may not necessarily have much outside experience. Although they are very capable people, just providing a different point of view is something that I bring to the table each time I’m working on a project or on the board.
Your husband has been working for the family business for 19 years. Tell me a little bit about that.
That is also another reason why I chose not to go into the family business. With my husband working there, we felt it was too much for both of us to be there. We met after he had already been working at Cardone for a few years. He had a proven track record and once we got married it really provided a nice balance in our family on a technical side. Our family tends to gravitate to sales and marketing while my husband has an Engineering degree and an MBA in Finance. He has a really good temperament, is creative, and very supportive which is a great component to have in a family business.
So overall it has been a positive experience?
Yes, I think it has been but he left the company at the end of January. He just felt like it was time for him to do something else. There are a lot of challenges and I think he’s gotten to the place where he’d like to work where he wouldn’t have to deal with all the extra issues. He’s not complaining about it – he’s basically said that it was time for him to move on and do something else.
He wants to do something in sports business, which is very different from what he has been doing for the past 19 years. His coach helped him work out his values and figure out where his passions are. That really helped him see that its time for him to move on and do something that he’s really passionate about. He is leaving on a really positive note and is definitely one of the top leaders of the company. It will be sad for the company to lose him but I think everyone understands, including my family.
Do you find that you have to choose between supporting your husband and supporting your father or brother? Can you give any advice to other women in your situation?
We do an exercise; I also do a lot of this in my coaching, changing hats, which is “wearing” a hat that is different, then your normal hat. When having a conversation with my husband sometimes we have on the family business shareholder hat. Sometimes it is the mom and wife hats; sometimes it’s my parent’s hat. We try to look at things in different perspectives. I’ll say you know I really see your perspective but if I put my dads hat on I can see how this is a really frustrating situation for him. We try to really talk in those terms because then it takes the emotion out the topic. We’re able to look at it through multiple perspectives and it helps us step back and not let it affect us emotionally.
Your family has recently gone through the process of a possible sale of the business that didn’t happen in the end. Why did the family make the decision to sell?
Every family business at some point has to deal with this question. Our business has 5500 employees in multiple countries. It is a very complex business model. With the challenges we were coming up against with local costs of labor, manufacturing issues, investments, we decided that we needed outside investment to help us grow. Also, my father is in his early 60’s. He started the business when he was 21 with my grandfather.
My father is pretty adamant when he says he will not work for a publically held company. He’s very passionate about keeping the company private and having majority ownership. It felt like the best option was to sell it to a company that could really grow the business. However, these last few years have been tough on a lot of different businesses and for us as well. We went through the whole selling process and in the end it didn’t work out. We’re regrouping, trying to figure out what the next steps are but for now we are back in family business mode.
What advice can you give to other families going through the process of selling the family business?
I think it’s really important for each family to look at themselves. It all depends on how many family units you have involved. We have four family units my parents, then my 2 siblings and I and everybody’s married. I think it is a really emotional process. Because my father is the majority shareholder, he gets to make the final decision. And of course because it’s his baby.
It was a very emotional rollercoaster for him going through the process. It was also emotional for me. I’ve thought should I have worked in the family business? Should I have helped out more? Could we have done things differently? How could I have been more supportive to my dad? Should we keep the family business together? We do look at these other 4th, 5th, and even 6th generation companies that have made it work. It is very impressive how they have been able to extend their family business to that level.
It’s a wonderful opportunity but at the same time a lot of stress too. It’s like a double-edged sword. There are wonderful benefits of having a family business. There are wonderful work experiences. The other side is that it felt like there was a huge weight on my shoulders. As your business gets bigger and bigger there’s a lot of facets to weigh. You’ve got over 5000 employees that count on you, certain debt on the business, estate-planning questions. Having a coach has really helped me talk and work through it, look at my life, and own it. There is life beyond the family business, even if we do sell it.
