Creating clarity for family members and introducing good corporate governance are just some of the pieces of advice local business leaders shared during BizTimes Media’s annual Family & Closely Held Business Summit.
The event, held Wednesday at the Brookfield Conference Center, featured a panel discussion including Craig Bald, president and CEO at New Berlin-based ITU AbsorbTech; Craig Jorgensen, president and CEO at Pewaukee-based VJS Construction Services; Peter Olesen, president at Racine-based O&H Danish Bakery; and Katie Poehling Seymour, CEO and president of Madison-based First Supply.
The event also featured a keynote conversation with Jane Blain Gilbertson, the executive chair and sole owner of Janesville-based Blain’s Farm & Fleet.
Here’s are some key takeaways from these family business leaders:
Honor the family legacy
Olesen is a member of the fourth generation helping run his family’s bakery. When he graduated from college, he spent three years away from O&H Danish Bakery working as a consultant. He returned to the family business in 2012 and started discussing the best way to position the bakery for future success with his father.
“My father, for a long time, would say he wanted our business to be a business run by a family, rather than just a family business,” said Olesen.
This meant putting the right procedures and governance in place. About a year ago, the company started its own family council. This gives family members and shareholders a place to convene and stay up to date on the business. Olesen said the group has “deep discussions” about the structure of O&H Danish Bakery.
As the company looks to grow, Olesen hopes to honor the bakery’s past while charging its future.
“There’s the core of who we are, scratch baking, things like that. That doesn’t change, but the world’s changing,” said Olesen. “Life’s changing. You have to change it, hopefully in a fun, exciting way that attracts talent.”
Set clear guidelines
Jorgensen is another fourth-generation family business leader. He didn’t know he wanted to be a contractor until the son of his father’s partner passed away unexpectedly in a car crash.
“I realized at that time that there’s an interesting business that my dad’s involved in and I don’t know much about it,” said Jorgensen. “Someone needs to take it over.”
He quickly switched gears from playing college basketball to entering a construction program. In 2000, he took over as president of VJS Construction. The company has grown from doing $4 million to completing $300 million of work annually.
Now, Jorgensen has three of his own kids working at VJS Construction. A rule he has in place for his sons is to require them to earn a promotion at least twice. This means they’ll slowly take on more responsibilities while learning different parts of the business.
Jorgensen is still running VJS Construction with his brother, Dave. To make sure they are getting the best advice and continually learning, each of the brothers has joined a peer group related to their segment of the industry. Dave is more focused on real estate and investments while Craig is more focused on construction.
“I’m sitting in the same rooms as presidents and CEOs, and we are bouncing back and forth with best ideas and lessons learned,” said Jorgensen.
Preparation is key
While he was the only non-family member on Wednesday’s panel, Bald often catches himself saying he’s part of the Leef family, the founders of ITU AbsorbTech.
Bald has been with the company for more than 15 years. About a decade ago, the Leef family realized there would not be a fourth generation to take over the company.
As discussions began surrounding selecting the next leader, several preparations needed to be made.
Bald helped the Leef family create a declaration of authority, something ITU AbsorbTech never had. This document outlines exactly what power and authority the company’s next leader would have as a non-family member.
Once preparation work was completed, Bald submitted his resume to apply for CEO as part of a search process.
“If I put my CFO hat back on, we spent a tremendous amount of money to find me,” said Bald. “However, I, as well as the family, think it was a very worthwhile exercise to go through a big learning experience.”
He explained putting all these procedures in writing so they would be in place when the current generation is gone was the right choice.
“The third and fourth generation feel like they made the right decision rather than taking the path of least resistance,” he said. “We truly are evolving by getting that information.”
Create clarity
Poehling Seymour is part of the fifth generation leading her family’s business, although she did not initially believe she would end up joining First Supply.
She spent five years outside the business working as a tax attorney. When her father asked her to join First Supply, she initially said ‘no.’ Her interest was piqued when she was given the opportunity to integrate an acquisition into the business. She’s now been working at First Supply for more than a decade.
There are 86 people scattered across four generations who are shareholders of First Supply. Poehling Seymour says governance is key to providing each family member with clarity and keeping the business running smoothly.
The company has a family assembly in which each branch of the family has a person representing them. The council is governed by a family constitution that’s been put together over the last decade. There are also specified agreements for family shareholders.
“It really reflects our values and what we hope to accomplish as a family,” said Poehling Seymour. “We have really tried to create a lot of clarity in the process.”
Family shareholders are also able to take advantage of a kind of internship program that allows them to spend 11 weeks learning the ins and outs of the business.
