From the September 1998 issue of Entrepreneur

How can the leaders of a family business reinvent the business or change it significantly without being disrespectful to the senior generation looking on . . . often in horror, dismay or anger? With great care--especially if the "family" part of the family business is to be preserved.

"One of the most difficult and gut-wrenching meetings I was ever part of was the one where my cousins and I sat down with my dad, uncle and aunt and laid out our plans to rebuild the company," says CFO Rick Ghio, one of five family members who make up the executive team of Anthony's Fish Grotto in San Diego. The decision to make major changes came after a great deal of research as to why the five restaurants were losing customers and experiencing declining sales. "We told them we believed in our hearts that Anthony's wouldn't survive if we continued along the path they had laid out for us.

"The changes we planned with the help of a restaurant consultant were extensive--how we would conduct business, what we expected from our managers, how the restaurants should look and what was on the menu. We told them we were trying to get back to Grandma Ghio's original vision of the restaurant . . . an underwater grotto with shimmering lights and vibrant colors. They shed many tears as we were laying out the plans, and it wasn't easy gaining their support. But eventually we did."


Patricia Schiff Estess writes family business histories and is the author of two books: Managing Alternative Work Arrangements (Crisp Publishing) and Money Advice for Your Successful Remarriage (Betterway Press).

In The Loop

How did they do it? Rick says the most important action the cousins took during this difficult process was keeping senior members of the family informed of the changes that were taking place and why--because in the restaurant business, the changes were particularly obvious. "When their friends came up to them and asked why rosé wine was no longer on the table," says Rick, "they had to answer honestly that rosé wine wasn't what most people drank anymore."

One of the hardest changes for Tod and Anthony Ghio (Grandma Ghio's sons, now in their 70s) to accept, says Jon Pflueger, executive chef at one of the restaurants and the husband of Grandma Ghio's great-granddaughter, Jody, was the elimination of some of the 30-year-old menu's key items. "But after eating here four or five times, Tod has become one of my biggest fans," Pflueger says. "I think he sees how the menu changes have been good for the dining room."

One reason the younger generation of Ghios hasn't alienated its elders is that it recognizes and appreciates the service, contributions and stewardship the older generation has provided the business and the family. "Ultimately, that's the definition of respect," says Tom Hubler, a family business consultant in Minneapolis.

Respect for elders comes easiest when the feeling is mutual, of course. "I know my father respects me and is thrilled I'm taking over the reins," says Lisa Wexler of Elaine Construction Co., a Newton, Massachusetts, company started by her grandfather and currently headed by her father, Kenneth. So it's no surprise that Wexler doesn't want her father to retire, which he says he's ready for. "I wind up begging him to stay a little longer," Wexler says of her dad. "I love working with him. Sure my `boss' can be frustrating, but he's someone I look up to and can learn from."

The Honor System

Looking to the business's elders for advice or historical perspective often creates an emeritus status for them. "I ask them for their advice not only because I want to keep them involved," says Pflueger, "but also because they have some terrific ideas."

Often, a retired leader will be willing to take on a project that others don't have time for. It may be compiling a family business history, setting up a family foundation, or canvassing similar businesses around the country to find out how they're handling a problem. Whatever the project, it takes on greater significance simply because an erstwhile leader is spearheading it.

Too often, recognition rituals of the past are forgotten. "But they're terribly important," says Hubler, who urges family businesses to honor senior members in traditional ways. "Especially as people get older, they need to know they're appreciated by the younger generation. Holding a reception in their honor or hanging their portraits in the office's vestibule or conference room confirms the importance of their contributions to employees and customers."

And make no mistake about the effect that respect and honor for elders has on your employees. "It adds to the esprit de corps within a company," says Hubler. "And when employees feel good about their company, their enthusiasm is communicated to customers, and customers have a higher degree of satisfaction with the product the company provides."

It's important to keep in mind, however, that respect for elders doesn't mean younger generations shouldn't make changes. Those executives in their 30s, 40s and 50s will be leading their family businesses into the new millennium--and, says Hubler, they need to use their gifts, talents and insights just as their elders did in their leadership days.

Contact Sources

Anthony's Fish Grotto, (619) 291-7254, http://www.gofishanthonys.com

Elaine Construction Co., (617) 332-8400, http://www.elaine.com

Hubler Family Business Consultants, (612) 375-0640, hubler@mm.com