New Alliance Tackling Issues of Family-Run Businesses

Salt Lake City—By some estimates, a third of all businesses are family businesses. While the natural relationships and camaraderie often found in families can help drive a company to success, the dynamic can sometimes pose unique problems.

A group of local family business leaders gathered to talk about some of their struggles and challenges—and the lessons learned along the way—at a panel event from the Family-Owned Business Alliance, sponsored by Zions Bank.

“You have to run it as a business. It has to be a business first,” said Natalie Kaddas, CEO of Kaddas Enterprises. That advice was echoed by other panelists multiple times during the course of the panel.

There are a lot of benefits to starting or being a part of a family business—at Cuisine Unlimited, for example, founder Maxine Turner said there was an attitude of cooperation towards the company’s success that hadn’t been there in the same way before starting the business. Catering is an industry that often requires working early mornings, late nights, weekends and holidays, Turner said, and it was nice to be able to depend on family at the most inconvenient times.

“If something is forgotten, it’s family that gets that call first. We call them the firemen,” she said. “There’s a lot of growth, as well. I’ve gotten to see my sons and husband every single day.”

It can often be easier to share a vision for the company with people who already share a set of familial values and similar backgrounds, too, said Jeff Miller, general manager of Mark Miller Subaru.

“I think it’s easier to pass on decisions if it’s coming from family,” he said. “I think it’s a lot easier to pass down family values instead of having to pass values onto a stranger.”

But making unpopular decisions, particularly about personnel, can be easier if a manager doesn’t have to see the employee they reprimanded or fired at Thanksgiving dinner. Learning how to have the kind of conversations managers and employees dislike having in general with family members can be tough, but it’s vital to succeed as a business, panelists said.

“They’re uncomfortable but you get so much done,” said Jason Olsen, founder of Prestman Auto. “I think a lot of people tend to shy away from those conversations and just hope things will get better, but that’s when something starts to fester, and with a family business, you can’t just leave the business—you’re still family.”

Letting bad behavior slide with a family member who works at a business can also inadvertently cause non-related employees to start doing that infraction, as well as lead to resentment about preferential treatment, he said, but dealing with it builds confidence and loyalty with those employees.

When working in a family business that has grown to employ more not-family than family, panelists said it is important to not give positions to family members just because they are family members, both for employee morale and for the strength of the business.

The progeny of Les Olson number more than 400, but just 28 of them currently work at the Les Olson Company. Troy Olson, president of the Les Olson Company, said any family members are allowed to apply and interview for any open position, same as anyone. The policy helps foster a feeling of equality among the workforce, he said.

“The other 225 people know it’s business first and they’re part of the family,” Olson said.

Organizing the company’s leadership should also be done on the basis of merit, not blood, panelists said. Miller said his father had created a succession plan when Miller was just a kid, but made alternate plans should Miller not have an interest or aptitude in the business. As it was, Miller started on the sales floor and worked his way up, climbing through nearly every position along the way.

“I can walk through the dealership and know I’ve done almost all of the jobs there,” Miller said.

But even though he worked his way to the top and got bachelor’s and master’s degrees in addition, Miller said he had a much harder task to earn the respect of those who thought he was going to lead them simply by virtue of his last name.

“[Family members] really have that obligation to show excellence,” he said. “You have to think about how others are going to view you. … I think it’s up to the person in the role to confound those expectations.”

It can be difficult to keep family members happy when one person gets promoted over another, as well. Turner said she had no expectations of her catering company becoming a family business until her two sons approached her and her husband about taking over. She said they told their sons they would consider it on the condition that the sons learned every aspect of the business from the ground up. Ten years later, the company’s management board, which included Turner, determined the elder of the sons was more suited to run the company, causing some family contention. The decision and the younger brother’s subsequent decision to seek other ventures led to some contention within the business, as well, since the younger brother had been a more public face to the other employees, she said. The elder brother made a concentrated effort to meet and build relationships with every employee, said Turner, and the younger brother found another entrepreneurial venture for which he was perfectly suited.

“The relationship between brothers and between mother and son can now be rekindled because they’re both productive,” she said. “Be very sure if a family member is leaving [the company] that those who reported to that family member have confidence in the other family members and feel comfortable with the other family members.”

Succession can be difficult enough in a non-family business, or when there is a plan in place, but can make for a very rocky transition if there is no plan at all, said panelists. Within the succession plan, too, should be provisions about business equity or power based on how much various descendants worked within the company, rather than splitting it “equally” among children regardless of their time in the company.

“I think as a parent, you want to be fair, but fair and equal aren’t the same thing,” Kaddas said.

The panel was the first event through the Family-Owned Business Alliance, and more events will follow. Travis Millward, third-generation owner of the Millward Agency and founder of the Alliance, said he hopes these kinds of discussions will help owners who can often feel alone in the sometimes-thorny combination of business and emotional problems. This inaugural event was somewhat larger, with several dozen people in attendance, but Millward said businesses in the Alliance will be placed in smaller groups of eight to 10 people for more personalized discussions.

“It’s going to be a confidential, deep-dive discussion into what’s working, what’s not,” he said.