What are the most important principles or strategies that help family and otherwise closely held businesses be sustainable and grow?
That is the core question BizTimes Media will pose to the panelists and speakers at the inaugural BizTimes Family & Closely Held Business Summit to be held on Thursday, June 4, at the Italian Community Center in Milwaukee.
The conference will be kicked off with a keynote speech from David Ransburg, an acclaimed consultant with The Family Business Consulting Group Inc. Ransburg has expertise in both business and psychology. He has developed strong relationship skills and has broad-based experience in executive assessment, coaching and group facilitation.
Ransburg has developed a system that allows family business owners to assess their companies’ “THREAD,” which is an acronym for the elements of Trust, Halted Harmful Conflict, Respectful Leadership, Epoxy, Alignment and Dialogue that is Constructive.
“Often, the factors that impact a family business’ success are out of the family’s control, such as broad economic forces, political events, illness and just plain luck. However, there are factors that are within the control of a family business,” Ransburg said. “Careful attention to those that matter most can better position a family business to succeed long-term.
“Fortunately, there is an ‘uncommon thread’ that helps connect these varied moving parts together. This thread is uncommon because it is rare. This thread is also unique because unlike other types of thread, it is incredibly strong. Attending to and strengthening this thread can be difficult and not every family can do it. But those that prevail will have the opportunity to reap the tremendous reward of sustained success.”
In advance of the conference, BizTimes asked the panelists to share their core principles for business survival.
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Co-owner of Sendik’s Food Markets
“1. A clear vision of where the business is headed that everyone (all family members) agrees to.
2. A clear definition of how you are going to operate (who – what family member – is responsible for what, and what are your guiding principles).
3. Agreement to meet regularly and often to discuss the two points above, with the main focus of moving the company forward.”
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Former owner of Baptista’s Bakery Inc.
“1. A family business is...a business first, a family second. There are many lives and families dependent upon the decisions made in any business. In order to truly take care of the employees and their families, and thus the business, you must leave the family matters at the door when you walk in every morning.
2. The business needs the right people in the right spots at all times. Everyone is treated the same in this respect...You must be qualified to hold a position. There is nothing more de-motivating to employees than family members being given positions they have not earned or are not qualified for. As family business leaders, we need to always ask first, ‘What is best for the business?’ Not, ‘What is best for the family?’
3. Creating a performance-driven culture that is values-based. I believe every person wants to be heard, recognized and treated fairly. By running a business congruent with the values by which I lead my life, the culture of the business becomes very ‘family-like.’ Working together (collaborating), celebrating our ‘wins,’ analyzing and problem-solving our ‘losses,’ listening, listening, listening so that people feel ‘heard,’ giving them the information they need to make good decisions, and rewarding them when our goals are met. Lots of communication in an environment of honesty, fairness and open-mindedness.”
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President, Hunzinger Construction Co.
“Two of my favorite quotes come to mind. They have served me well. Calvin Coolidge: ‘Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent.’ Winston Churchill: ‘Never, never, never give up!’”
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Executive vice president, Hydrite Chemical Co.
“We have an unwritten family motto: ‘What’s good for the business is good for the family.’ We believe strongly that if we place our efforts and focus on the business first, the family will reap the rewards in many ways, from financial, to community, to responsibility. If the business is strong and successful, the family can be as well. A poorly run family business often can tear apart the family at many levels. We developed a Honkamp Family Code of Ethics back in 1996. As a family, we collaborated on the document and believe that the principles stated back in 1996 still apply to our family today. It’s worked for us at Hydrite. I think this is something that all family businesses can and should make an attempt to develop and document. On the business side, and similar in nature to our Family Code of Ethics, we are rewriting what we call ‘The Hydrite Way.’ This document is the foundation as to how we think, conduct, develop and execute our business. It starts with our vision, and includes strategic objectives, our mission statement and our building blocks. We’ve decided that our building blocks are our foundation and include people, responsible growth, integrity, innovation and quality. Without these, we will struggle as an organization.”
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Amy Jablonka Nelson
Owner, Glenroy Inc.
“Communication would be at the top of the list. Nothing really moves forward without it, and it takes various forms, of course. Communicate respectfully to each other, especially in the family. Honor confidentiality, both about the business and about family things. Have fun and gather as a family outside of the business, which is especially important if you have some family working in the business and some not. After all, you’re still a family and family time outside of work should be made a priority. Then, don’t talk business during those times! We have a Family Council with us as owners that includes our spouses, too. It’s a great avenue to draw on our spouses’ values and thoughts, keep everyone informed, and help maintain interest in the business, which is important as time goes on and the family grows another generation. It’s also a great avenue for education about all sorts of related things.”
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President and CEO, C.G. Schmidt
“1. Treat employees as members of the family. Our family-owned company is essentially a service company. We provide professional construction services and if we treat our employees well, just as if they are part of our family, they will treat our clients well. If our employees are disgruntled, it can rub off on our clients, and we can’t allow that to happen. Finding good people can be challenging; if we are expecting to remain competitive, we need to attract and retain quality people.
2. Always do what’s right for the client. Because we are a closely held, family-owned company, we can take the long haul approach to client relationships. If something wasn’t constructed right by our own forces or one of our subcontractors, we’ll come back and fix it. We can’t allow our reputation to get tarnished by underserving our clients. Milwaukee is a small town and word gets around very quickly. Over the years, we’ve had the honor to build some really great projects and made many great friends in the process.
3. Never lose sight of our mission and values. C.G. Schmidt is a mission-based, values-driven firm. Our mission is to create exceptional facilities that improve the lives of others. We exist to fulfill this mission, and if we do that right, making money will be an outcome, but will never be the mission. By keeping everyone’s eye on our mission, we make better collective decisions that better serve our clients.”
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Owner, BCI Burke Co. LLC
“1. You are there to serve the company, not the other way around. Just because you own the place, or you have the same last name that is on the building or business letterhead, it does not mean that you get to do whatever you want or whatever benefits you the most. Always remember that.
2. Don’t be the problem! Be brutally honest regarding your own abilities and shortcomings. Your people look to you for leadership and direction. Clearly communicate both verbally and in writing what you stand for and your expectations. This helps to prevent surprises for you, your people, and most importantly, your customers. Be firm but fair. Walk your talk and always adhere to your own rules.
3. Focus on the little things and set high expectations. Find out how the company truly makes money and constantly inspect what you expect so that it carries out its promises every day. Keep it simple and constantly monitor expectations to make sure your team is not cutting corners but actually ‘blocking and tackling’ in order to be successful every day. This is not sexy, but it is the cornerstone of success and longevity, in my opinion. Company profitability and happy customers are the end goal”
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Principal, Jacsten Holdings
“1. People: qualifications and credibility. The success of any business, whether small or large, closely held or publicly traded, is primarily dependent on the quality of its people. Sustained success and growth is predicated on having the right people in the right places within an organization. Within the context of a family business, it is critical that family members within the organization have both the qualifications and the credibility to be in their roles, as opposed to it being on account of their name.
2. Objectivity and fairness. Nothing undermines a culture more than people feeling as though family members receive different treatment and are held to a different standard than non-family members. It is impossible to instill or maintain a culture of accountability and excellence within an organization when employees feel as though one set of criteria applies to the family and a separate set to everyone else.
3. Outside perspective. To prevent groupthink and foster an open, dynamic culture, as opposed to a culture of ‘this is the way we have always done it,’ family businesses must seek external input. An example of this is inclusion of non-family members on the management team or on the advisory board (or perhaps both). External perspective provides a source of alternative ways in which to both solve problems and drive growth. It helps prevent a stale and overly risk-averse culture and instead encourages rejuvenation of the business’ entrepreneurial spirit.”
President and chief executive officer, Cousins Submarines Inc.
“1. Don’t be afraid to peel the onion to look for ways you can do business better, even if your business is thriving, but especially if you’ve stalled out. Oftentimes, one of the greatest moments of pride for a family business is when it is handed from one generation to the next. But there are many challenges that can follow and much of it has to do with change.
2. Rely on an outside board of directors for advice and oversight. Oftentimes, the key decision-making in a family business is left to family members, and while there is comfort in this closeness, one is also cautioned not to be closed-minded. Having an outside board will help maintain objectivity and perspective. It will force the company to consider new ways of approaching the business and hold top leadership accountable for results.
3. Surround yourself with the best people you can find. Today, my leadership team is entirely different than when I became the president in 2008. At 36 years, Cousins was changing and we were (and still are) working through many legacy issues. I knew it was important for those closest to me to share my vision for the future of the company. The company was at a crossroads; we could continue to do business the same way and hope for different results, or we could examine every part of the organization and be intentional about the results we desired. This required new ways of thinking by a team that was willing to take calculated risks, all under the umbrella of setting up a new foundation to take us into the next 20 years. Today, my team has done just that, and we are seeing positive results from our approach.”