Family Matters

Mixing business with family brings with it a whole slew of issues—some good, some bad, some tricky

PHOTO: THINKSTOCKPHOTOS

If you’ve watched the television sitcom Arrested Development, you’ve seen how a family company can run amok. Patriarch George Bluth makes a series of bad decisions, landing in prison and leaving son Michael to pick up the pieces. Despite Michael’s recurring urge to let the company—and the entire Bluth clan—fall apart, he never does, showing that the bonds of blood can trump all else. This fictional show aside, we know family businesses are unique. They represent all industries and range in size from mom-and-pop shops to some of the biggest corporations in the world (we’re looking at you, Ford and Wal-Mart). A 2012 study from the Harvard Business Review found that family businesses fare much better financially during economic slow periods because they are future-focused, planning ahead for such downturns during the good times to ensure resilience. But the tough part for many families who work together is keeping the two worlds separate—“It’s not personal, it’s business.”

 

Family-owned businesses account for: 

64%

 

35%

of the U.S. GDP

 

of Fortune 500 companies

DATA: Intuit.com study

 

How many generations removed from the founder are current U.S. family business owners? 

DATA: A 2013 Deloitte survey of 222 family business owners and executives 

 

Percentage of family businesses that transfer to a second generation

DATA: The Family Business Center at UW–Madison

 

Sound Off

Bob Pertzborn gives us the skinny on what it’s like working with family

Company: H.J. Pertzborn Plumbing & Fire Protection Corp.   
Founded: 1928 by Henry Joseph and Gertrude Pertzborn
Current leadership: Bob Pertzborn, president since 1989
Generations removed from founder: Three    

Does leading a business with a long family history affect your work? 
We’ve had loyal customers for three generations. We try to give great service and always be there for our customers.

Did you always want to head the family business some day?
I learned my trade first, and then it was just kind of a progression of things.

How does your business plan for the next generation?
We have succession planning in place, so it has evolved from just picking somebody. We specialize in different departments. Because this is a skilled trade, it was important to me that my sons first learned the skills.

What are some of the issues that you face in family business that other businesses don’t?
You have to be able to distinguish between family and business. You have to leave the business with the business. If I go over and visit my grandkids, it’s not a business meeting. It’s not business 24/7.

Is it tough to balance being family and being co-workers?
It’s not too challenging. It’s the culture and the ways things are.

As the company expands and more outside of the family employees are added, is it hard to keep the family identity?
It’s important to keep the family identity. You can’t run a business this size without other employees. The key is having good, loyal employees that become like family.

 

Call in the Experts

When you do business with family, things can get complicated. That’s where the Family Business Center at UW–Madison comes in. Companies owned and operated by relatives—be it siblings, cousins, a parent and child, an aunt and nephew—must navigate a precarious balance of communication, conflict resolution, planning for succession and developing the next generation of leaders, says Dr. Deb Houden, director of the Family Business Center. “The family businesses that tend to last, that go through the generations, are the ones that really try to work on the complexities of being in a family business. They really want to prepare the next generation. They care deeply for their employees and the community,” Houden says. Through her work at the center, there’s another thing Houden’s noticed: Family businesses are integral to a thriving local economy. “They’re pillars of the community.”

 

Grace Edquist is associate/web editor of Madison Magazine.

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