Multi-generational businesses

I was talking recently with a principal of a business that is now in the hands of the third and fourth generations. I asked her what some of the success factors were in keeping the business thriving while maintaining harmony in the families. Here are some of her responses.

1. Sometimes one family faction needs to buy out another family faction that disagrees with the direction of the business.

2. Family members should work extensively outside the family business before taking a job in the business. This gives them a better perspective and helps them bring fresh ideas to the business.

3. Shares should be held only by blood relatives. This prevents issues that would result from divorce.

4. Boards should be comprised of family members and outside directors.

5. Family members should be vetted for top executive positions with the same due diligence as if hiring from outside. This may mean hiring a consultant for unbiased opinions. It also means batteries of personality and aptitude testing to assure maximum competence for the job.

These are sound ideas that has helped this company grow and thrive for about 100 years.