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.
Magazine Contributor
6 min read

This story appears in the June 1999 issue of Entrepreneur. Subscribe »

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?

  • Successors may be able to more clearly see upcoming trends. This is especially true of those who've been groomed for leadership and have held management roles in the company. They often look at the future with a fresh lens and broader perspective than the senior generation, says Edwin Hoover, Colette's husband, who is also a family business consultant with Crowe Chizek. When you align that insight with the energy it takes to make changes, you then have leaders in a strong position to grow the business.

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."

  • They're not shackled by a "it didn't work before so it won't work now" mentality. Janice Gumpert deMooy, 40, and her brother, Paul, 43, faced a formidable challenge when they tried to regain control of Frank Gumpert Printing in Gaithersburg, Maryland, two years ago. The two had pursued their own careers away from the family business--she in human resources and he with the Justice Department--so their initial changes to the company came more from common sense than any profound understanding of the printing industry. But the changes had to be made.

"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."

  • They can make business decisions linked to loyalty--but not strangled by it.

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:

  • Go slowly. The changes that will professionalize the business (such as delegating responsibility, working in teams, conducting performance reviews and instituting different compensation plans) are going to meet with resistance from the old-timers who were used to a kind of benign dictatorship. The goal is to retain the strengths of the company's culture, such as employee loyalty, while implementing needed changes.
  • Work with siblings and family peers in your own generation. "Unless the siblings can develop a common vision of what the business means to them, conflict will break out quickly and needed changes will be sabotaged," says Lombard Hoover.

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."

  • Utilize the experience of your board of directors or advisors. Successors aren't experienced in the dynamics of change, but individual members of their boards may be. Seek out their counsel and feedback to help make the changes more palatable and easier for the company, its customers and employees, and the senior generation.

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,

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