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ALL IN THE FAMILY

Dec 1, 1999 12:00 AM


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If you closed your eyes and threw a rock in any direction at a quick-print gathering, chances are you'll hit someone who works in their family's business. This action is not advised, of course, as you may be hit yourself--with a lawsuit.

The point is, family-owned companies almost seem to be a natural occurrence in the quick-print world, much like weather. But like the weather, working with your relatives day in and day out can be unpredictable.

"When you're working with your family, you're dealing with emotions, positioning and issues of expectation," says Mike Henning, owner of Henning Family Business Consultants (Effingham, IL), which typically counsels family owned companies in the $5 million to $50 million range in a variety of industries. "The intensity is much greater than in a public corporation. The business is going to keep you unless you make a really serious mistake, so everyone has to weather the storm."

That's indeed a challenge when working alongside those who raised you or with whom you grew up. You love your family, but it's not always easy to love them as an employee or business partner. What do you do, for instance, if your newest hire is a family member who does not know anything about the business? Or if your brother knows what his responsibilities are, yet spends his time trying to do your job?

Granted, not everyone will have difficulties in dealing with their family in a work environment. american printer's own homespun research for this article accrued a largely favorable prognosis from quick printers who work with relatives. "When my son started in the business, I feared it would cause a strain in our relationship or a strain between him and his brother," shares Nancy Middleton, owner of The Printing Place, Inc. (Milford, OH). "Thankfully, we get along remarkably well together--better than I ever expected."

Tom Gardner and his brother Joe had been employed by the same company but hadn't actually worked with one another before buying a small copy shop in 1981. Since then, the Curry Printing and Copy Center (Worchester, MA) has added a third brother, Peter, and Tom's son to its employee roster of 32.

"It has worked very well," relates Tom Gardner, the oldest of the brothers and also president of the firm. "There's obviously a certain level of trust among family. A family member might also be more motivated to get a job done because he knows there may be greater rewards in the long term."

Part of successful shared leadership is to make sure there aren't special exceptions for family. According to Ross W. Nager, executive director of the Arthur Andersen Center for Family Business (Houston), family enterprises sometimes defy the laws of business, which can lead to problems for the company as a whole. He says many family firms, for example, don't respect the employee application process when hiring kin. The Arthur Andersen exec stresses that family members should only be employed in open positions--don't create one simply because Junior is in need of a job. Relatives also should be placed only in positions for which they're qualified.

"The rules are really just common sense, although unfortunately they're broken rather often," Nager says. "When hiring, make sure the candidate has the appropriate education, experience and personal attributes for the job. People who are given the responsibility of running the business need to be qualified for that role, whether they're family or not."

Agrees Debra Thompson, president of consulting firm TG & Associates (Tucson, AZ), "Every decision made should fall under your mission statement and future vision. Owners need to stay on track with their mission, whether family is involved or not."

As the last sibling to enter into the business, Peter Gardner was as an employee for six years before he was able to partner with his brothers on a second Curry Printing location. Tom Gardner's son, a manager of the second office, started in the company as a delivery person-originally only to help out after college one summer before he got a "real" job.

"Treat family members as you would treat other employees," advises the Curry Printing president. "Expect the same amount of work and give the same amount of respect as you would to other employees." He admits to setting higher standards for his son than for other employees so he would not be accused of a bias.

Middleton of The Printing Place relates a similar experience with her son, Dwayne Cox. "I've been told by other employees that I'm harder on him than on them when something goes wrong," she says. "I wasn't even aware of that."

Ironically, when Cox joined The Printing Place six years ago, another employee who assumed Cox would receive special treatment gave him a hard time for being the owner's son. At the time, Middleton had let her typesetter go and Cox had just injured his back. Because her son was employed in a physically demanding position at another company, Middleton decided that might be a good time for him to become involved in her firm. The Printing Place's services included mailing, color copying and specialty advertising items. Cox had no background in printing.

Middleton made sure her son's lack of experience would not detract from her business, however. She put him on a computer and sent him to seminars. When Cox became proficient in one area, she pushed him in other directions. In the bindery, he learned how to cut and fold pieces. He then learned how to do repairs on most of the equipment. He also took a class on press work that was given by PrintImage International (Chicago) and A.B. Dick.

"I had one press operator at the time and no one else to do the work if he took a vacation," Middleton explains. "So Dwayne occasionally helped the press operator. Now, he's proficient in almost every operation in the shop, other than perhaps the accounting functions."

Cox is acquiring expertise in that area, as well. About three years ago, he began taking night classes in business management at a community college.

Responsibilities between mother and son are still clearly delineated, though. Cox does most of the desktop publishing and oversees all production. His mother manages the business, such as marketing, accounting and sales.

Thompson of TG & Associates stresses that all businesses need a clear organizational chart with jobdescriptions for every employee. While she acknowledges that quick-print firms frequently require employees to undertake multiple responsibilities, each should still have a clear, defined role that details priorities.

Now, the print shop has an organizational chart that specifically outlines that Joe Gardner has all production people reporting to him, while Tom oversees the administrative and sales people, as well as the satellite offices. And thankfully, the brothers found it easy to decide on those responsibilities. Based on their personalities and what they enjoyed doing, Joe was a natural choice to manage the production center, while Peter had an outgoing personality suited for sales. Tom himself preferred taking on tasks that allowed him to travel out of the office.

"The most important thing I've learned in running this business is to consider personalities so that you don't put someone in a position that they're completely uncomfortable in," shares Jennifer Pataky, president of Quick Copies of Asheville (NC).

Pataky took over the business from her father George. At the time her father was considering retirement, Jennifer worked in the quick-copy and bindery shop with one of her sisters. They knew what responsibilities each wanted in their father's business, and their desires and personalities helped carve out their roles.

"My sister didn't want the headaches of running the business, whereas that's something I've always wanted to do," Jennifer says. "I'm a very dominant person, so I pretty much took over. My sister was willing to let me, because that gave her the freedom to leave at the hours she wanted to. It worked out wonderfully that way."

Until, that is, Jennifer actually bought the business from their father. She admits her sister then had a problem with the arrangement. Pataky's goals for the company would have required her sister to learn computer work and digital printing, things the latter wasn't interested in. "Plus, I would be the boss and the person handling the managerial functions," relays Jennifer. Her sister eventually found a better job elsewhere while they were in the process of negotiating their roles. Pataky has since hired a part-time employee to help in the business, whose jobs include producing specification books for architects and copying depositions for lawyers.

"Anyone who has the entrepreneurial spirit is going to be a strong-willed, opinionated person," comments Dennis Smith, partner of PaperGraphics Printing (Temple, TX), a $2 million quick commercial printer that does predominantly digital printing. "Communications is key, whether in work or in your home life. That may be the biggest challenge of any business."

For Dennis Smith and his younger brother Doug, open communications help iron out any minor problems that crop up. "My dad, my brother and I have always been willing to share our opinions at all times," Dennis observes. "If my dad does something that makes me angry, I'll walk into his office and tell him about it right away."

It's the right thing to do, according to consultants. Most problems in family businesses arise from a lack of communications, says Nager of Arthur Andersen. TG & Associates' Thompson believes that business owners often aren't sure of how to bring up problems. She adds that such openness becomes more difficult with family because defenses get in the way.

"Families need to look at this as a business and keep the personal issues out of it," says Thompson. "Business owners need to deal with issues as soon as they come up."

For the Smiths, at least, running a family business may well be a way of life that they've had years to master. Patriarch Elwood Smith founded PaperGraphics--then Speedy Swifty--with his wife in the early 1970s. Before then, he had worked with his father, who worked with his own wife. And Elwood's sons Dennis and Doug have taken over PaperGraphics, now involving their wives in the company.

Dennis, who worked in the business for nearly seven years before Doug joined the firm, handles sales and general management. Doug started in the bindery department and worked his way up to production manager. He now manages the entire production staff and is in charge of equipment maintenance, delivery and ordering paper. Elwood has delegated daily responsibility to his sons and only becomes involved in financial decisions, such as equipment purchases.

While their roles are pretty much understood, Dennis admits that he and his brother--and occasionally their father--still run into some territorial issues in daily operations. He has, in the past, addressed production mistakes with employees directly, later to be told by Doug that Doug should have been allowed the responsibility of dealing with his department's problems. The brothers have worked it out so that any production problems that Dennis sees are now reported to his brother, who then handles the issue with the employee in question.

"Our disagreements have never been so large that we can't resolve them," comments Dennis. "As far as the big picture of where our business is going, I don't think there are really any differences of opinion among us."

Other family business owners may not be able to claim the same. But to keep personal issues out of business affairs, consultant Thompson suggests making sure criticisms, and the tone in which they're voiced, are in keeping with the way comments would be given to non-family employees. Regular employee reviews of family members are helpful, she says, along with jointly developing a plan to resolve the problem.

"My brother and I try to remember that we are business owners and deal with each other on a professional level," says Amy Rein of the Mansfield (OH) and Ashland Print Centers. "If we're having difficulties, we get together on the weekend or in the evening, and talk. You need to keep the lines of communication open."

The Mansfield and Ashland Print Centers specialize in two-color work, such as newsletters, brochures and letterheads. Rein and brother, co-owner Pat Falkowsky, work in separate locations, which helps minimize their potential for conflict. "I don't know that Pat and I could work together in the same facility day in and day out," admits Rein, who manages the Mansfield Print Center. "This system gives us some autonomy."

Henning of Henning Family Business Consultants advises setting down policies beforehand of how relatives will work together. According to him, this code of conduct should spell out the decisionmaking process, how family members will resolve a conflict that they can't seem to get past and how they will deal as a unit with people outside of the business.

The consultant adds that relatives working together should exercise a policy of open disclosure, and share details of their salaries and compensation packages. "It's almost like a marriage, and you have to get used to it," he states. "Relatives who are business partners also need to discuss whether their children and spouses will come into the business, and if so, what the criteria will be."

Tom Gardner says that while he and Joe didn't initially lay down specific rules of conduct, they did agree that their wives wouldn't come into the business. He explains that the brothers foresaw potential decisionmaking stalemates if their wives later entered into the business as partners.

Nager suggests arranging quarterly or monthly family meetings to help facilitate communications on these and other issues, such as estate planning, succession and future services. According to him, each meeting should involve all family members involved in the business, including silent partners, and have an agenda that everyone had input in developing.

Mansfield Print Center co-owner Rein and her brother meet once a month to talk about their two print shops, discussing future purchases and projects they'd like to launch. They even use their parents, who are essentially retired from the business, as a sounding board.

Regular family meetings are particularly important when it comes to succession issues. Even Dennis Smith, who has only positive things to say about working with his brother and father at PaperGraphics, says he would have liked to have known long ago his father's plans for the business. "That's one thing that wasn't communicated for years here," he relates. "The owner, who was our father in our case, should communicate with the siblings about future intentions--are you going to sell it, will it, gift it or work until you're 100? What are your intentions?"

The Printing Place's Middleton confesses that though she and her son Dwayne know the business will eventually be his, they haven't officially discussed the details of succession. "We really need to do that," she acknowledges, "and we haven't gotten to that point mainly because I don't know how to do it." At 52, the owner would ideally like to retire at 60. She notes that her son has brought up the topic, asking how the two will work out the details and stressing that they need to write down the process.

Having a timeline is helpful, says consultant Henning. "Parents and children should develop the plan themselves and follow it like a curriculum," he advises. "It's an evolving process. You figure out how the father, for example, serves the company, then identify how his responsibilities will be handed off one at a time to one person or team of people. Chances are the whole process will take three to five years."

But succession perhaps becomes doubly difficult when there is more than one child wanting to take over the business. How, then, do you decide who becomes boss?

"Families are socialistic," says Nager. "Parents love their kids equally and everyone is treated equally. A business, on the other hand, is capitalistic. The best survive, and it's the best employee who becomes CEO. The two systems don't mesh well together."

Nager notes that co-CEOs are relatively rare in the non-family business world. While related co-CEOs have operated successfully, he stresses that this should not be a default approach to succession. "Succession should not be: 'I love my kids equally; therefore, they'll run the business equally,'" he insists. "If the children don't get along, it won't work. If they don't have complementary skill sets, don't communicate well with each other, or if either or both of them tend to be jealous or competitive with one another, it's not going to work."

Instead, Nager again stresses making sure the candidate for CEO has the proper qualifications and motivation for running the business--even if that person is not a relative.

While this notion sounds like the complete antithesis of the traditional family business, Nager points out that a 1997 survey of American family businesses by the Arthur Andersen Center for Family Business found that more than 12 percent of family businesses surveyed have employed a non-family member in the CEO position. Half of those rated the experience as very or extremely successful, according to the survey.

The Arthur Andersen executive points out that a non-family CEO can also be a temporary solution to the succession problem. If, for example, a quick-print business owner dies suddenly and neither his wife nor children are able to undertake the responsibility of running the company, a non-family member can run the business until the kids are grown.

However you define your family quick-print business, and whoever runs it, expect the forecast to call for cloudy skies at times. But there can be a silver lining: "My father and I butted heads daily when I first came into the business," recalls PaperGraphics' Dennis Smith. "But in hindsight, it worked out pretty well. My father was getting settled down into his business, and I was younger and full of energy. Because of my goals, I probably pushed him farther in the business than he would have otherwise gone. And because of his age and experience, he probably held me back from growing the business too quickly."