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Getting Management Help From the Next Generation

In order to roll with the times, family business leaders must rely on people other than themselves-their successors.
June 1, 1999

Anyone who thinks a 60-year-old can't run a successful family business has been seriously out of touch for the past 30 years. Rupert Murdoch of publishing fame, Howard Rubenstein, public relations guru, and Lillian Vernon, direct-mail specialist, are just a few entrepreneurs who disprove any age-challenged theory associated with family business empires.

But, with few exceptions, by the age of 60 or 70, most people slow down, says Colette Lombard Hoover, a family business consultant with accounting and consulting firm Crowe Chizek and Co. LLP in Oak Brook, Illinois. "They're not thrilled about having to recreate a business they've successfully run for decades [in order to keep up with the times], although it may need to be regenerated," she explains. "If the business is continuing to make money, they see no reason to expend the energy."

And that's only half of it. If growth means possibly incurring financial risk, it's even more frightening to older entrepreneurs, says Tom Hubler, a family-business consultant in Minneapolis.

That's where successors come in. Anywhere from 30 to 50 years of age, successors are usually ready and eager to make their mark on the family business. This is a prime time for them to take over the reins, says Lombard Hoover, especially if they've invested themselves up until this point in learning about their family's business and industry.

Letting Go

So what can successors do that the senior generation can't--or won't?

That's certainly what happened when the two oldest Fox children, Greg, 33, and Peter, 30, were informally handed the reins (or maybe, in this case, the handlebars) of Fox Racing Inc. by their father, Geoff, five years ago. The Morgan Hill, California, company Geoff started in 1974 began with manufacturing shock absorbers for motorcycles, and then apparel for the bikers. But under the young Fox brothers, who grew up in the business, the company has expanded its product lines to include mountain bike apparel and sweatshirts, t-shirts and socks.

"My brother and I bring to the table a passion for the product, and we're willing to take a lot more risks than my dad was," says Peter, the company's vice president of marketing and design. "It helps that we're closer to the age of our customers, who are between 15 and 30. We know what they like."

"When we instituted the policy of cross-training, for example, employees were astonished," says Gumpert deMooy. " `We can't do that,' many of them said. I had to say, `Who's we? We're we now. We can do it.' Once they overcame that attitude, they began to appreciate the changes. It was empowering for everyone."

Many people who were instrumental in helping the founder or the senior generation grow the business may still be there when the successor takes over, playing key--or perhaps not so key--positions in the company. Sometimes these people leave when the senior family member retires because they find it too difficult to switch loyalties. Other times they are gently nudged out with the offer of a tempting severance package. While successors may want to keep several of these employees because they're good workers as well as close family friends, they often have to make the difficult decision to let some of the older employees go for the good of the company.

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).

Making Changes Wisely

But change is difficult in a family business because employees tied to the previous generation (related or not) resist change. It's almost considered an affront to the family to change the direction, process or personnel that worked so well for the new leader's older relative. To make it easier for successors to carry out changes the senior generation couldn't or didn't want to institute, the family business consultants we spoke with had these suggestions:

Ed Hoover adds, "They also have to redefine their relationship as business partners, not just relatives, and decide who's going to have control over what and who's going to make decisions. Family rules don't work here because in a family, people operate under the presumption of equality. It's quite different in a business setting."

Contact Sources

Crowe Chizek and Co. LLP, (630) 575-4233,

Fox Racing Inc., 18400 Sutter Blvd., Morgan Hill, CA 95037, (888) FOX-RACE

Hubler Family Business Consultants, (612) 375-0640,