Bringing Children into the Company
Excerpts from Sustaining the Family Business
It isn't easy to change the way you manage your business when a child joins the family firm. But the reality of it is that change is necessary in order to develop a company culture that can be passed from generation to generation. Many family business founders -- especially those who worked their way up from humble beginnings -- feel the only way to learn how a business works is from the ground up. They may resent their children enjoying advantages they didn't enjoy, or think that the only way to earn the privilege of inheriting a family business is the hard way. These founders believe that their children should start at the bottom of the business ladder like any other employee, receiving no special favors, no privileged access to the higher realms of power in the company, and no "fast-track" or accelerated promotions.
You might expect me to agree with these hard-liners. But in fact I don't. I also don't believe that family members should waltz out of college straight into top management jobs. I take a more middle-of-the-road approach.
If a family business is to survive a change in leadership, the business's employees must respect the work of any family members who may eventually be their bosses. For this reason, as John Ward suggests persuasively in Keeping the Family Business Healthy, it helps to establish a few rules governing entry into the business by family members. These rules should stipulate appropriate educational requirements (at minimum a college degree for most businesses), some outside work experience, and a responsible attitude toward their work from the moment the family member joins the company. Working for the family business should never be regarded as the easy road or as a layover before they make up their minds about what they really want to do.
Most experts agree that outside work experience is helpful to family members joining their family business; I think it's essential. Work experience gives future leaders background in dealing with the world outside the family business and helps them gauge their ability to function in a nonprivileged environment. They can learn how to get along with people in the workplace -- their subordinates, peers, and supervisors -- and see that they can do good work and fit in on their own terms, without special advantages. They can test themselves and learn how to behave on the job without the added pressure of being the boss's kid. This will build their self-esteem and make them more confident and effective when they do join the family business. They will also come aboard with a more objective, informed view of the business that can only contribute to their success. And rather than entering the firm at the bottom, they can move laterally from their last job outside the firm. If it later becomes necessary for them to learn a particular step performed at a lower level, they can easily learn that process as part of the job they are performing.
FREE TO CHOSE. From the beginning, Elaine and I made it clear to our children that they were free to follow any career they wished. We would welcome them into the family business if they chose to join us, but they should do so only if they decided that working at ScrubaDub would be the most rewarding course they could follow. All three worked at the car washes while they were teenagers, so they had a pretty good idea of what a career at ScrubaDub would entail. Our daughter, Carol, became a teacher and went on to get her master's degree in education. Our oldest son, Bob, was sure he would make a fine dentist until some science course changed his mind. Our youngest son decided early to come into the family business and never wavered in his intention.
Bob was the first to come aboard. He was in graduate school working on an MBA when a key management position opened up at ScrubaDub. Bob felt that he could handle the job and complete his graduate degree at night. He and I discussed how other employees would feel about his coming right out of college and into a management position and decided that they would not be pleased. As a solution, I agreed to hold the position open if he would agree to go to work for some other car washes first. Excited by the prospect, Bob set off traveling around the country, working for several car wash companies that we agreed were the best in our industry. He even journeyed to Germany and worked for an industry leader there.
At the time (the early 1980s), most car washes, including ScrubaDub, used electromechanical switches to turn equipment -- chemicals, hoses, brushes, drying systems -- off and on as the car proceeded down the tunnel. Bob noticed that a few companies were trying to adapt low-voltage computer-controlled devices to work in place of the electromechanical switches. Computer technology was in its infancy, and no one had developed a control system that would work in the extremes of wet and dry, hot and cold that characterize the car wash environment. When Bob joined the business, he set to work with a local engineering company to develop the first control system for our industry. His knowledge and expertise in low-voltage controls eventually led to the elimination of all switching devices and allowed us to turn detergent, waxes, and water on and off automatically for each car. Besides being more efficient and cutting down on waste (we used 40 percent more of these resources than we do today), this innovation saved the company thousands of dollars in utility costs each year. Our employees embraced Bob, clearly indicating they felt he had earned his place as a key executive in our company.
Our younger son, Dan, shared a similar experience. After college, Dan took a sales job for a wholesale distributing company that supplies the car wash industry. He spent a year calling on car washes up and down the eastern seaboard. Over and over, he observed lapses in both market positioning and customer service. He decided that a more professional, aggressive approach to marketing and the training of employees could set ScrubaDub apart. When he joined the company, he had already developed several ideas for improving both our marketing and our employee-training program. Shortly after coming aboard, Dan set out to market our differentiation by creating a brochure that named ten ways in which ScrubaDub was better than our competition. For example, we used custom-made car wash detergent manufactured according to our specifications, because it was common in the industry for suppliers to reduce the concentration of their detergents in order to lower their prices and beat the competition. Dan marketed this fact by explaining in the brochure that we use a secret formula containing a blend of eight solutions. This secret formula is so effective, Dan wrote, it creates a glow on your car. In the brochure, Dan also promoted the fact that our detergent is environmentally safe, that the water we use comes from our own wells, and that we soften and heat the water for a spotless wash and reclaim it for undercarriage washes. The brochure went on to explain about our robotic washing machines, selected from the best manufacturers around the world and made to our specifications. It was also Dan's idea for us to offer a "bumper to bumper" guarantee that allows the customer to go through the car wash as often as they wish for total satisfaction. He dreamed up the idea of giving customers a free wash on their birthdays. These and other marketing innovations helped us expand our image and brand identity, achieve greater market share, and move into double-digit growth.
Dan also created a program that took all new employees through three phases of classroom training using the latest teaching devices. Before that time, we had always trained new employees on the job.
Marshall B. Paisner is chairman of the board at ScrubaDub Auto Wash Centers Inc., one of the world's largest car-wash chains, an enterprise he founded in 1965. He is active in many family business organizations and forums.
Reprinted with permission from Sustaining the Family Business: An Insider's Guide to Managing Across Generations by Marshall B. Paisner.
Copyright 1999, by Marshall B. Paisner.
Published by Perseus Books, a member of the Perseus Books Group.
Adapted by permission of the author and Perseus Books.
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Available on May 12, 1999, from bookstores nationwide, online
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