About five years ago, in the twilight of their lives, a husband and wife of 48 years decided to divorce. As the two struggled to continue working together in a company they co-owned for decades, the recession hit, throwing the $15 million family manufacturing business into chaos. Sales dropped and the product they produced became increasingly obsolete. After years of priding himself on the company's communal atmosphere and annual picnics, the man-we'll call him Pete Johnson, as he wanted to remain anonymous-was forced to lay off about a third of his 120 employees.
Nearing 75, Johnson was at an age where he was starting to step away from his business. But he found himself having to step back in-perhaps more than he ever had. He started spending more time at the office, working closely with his ex-wife, and amid the arguments and the economic turmoil, the couple realized something: They had two sons, one who headed up operations and one who ran sales and marketing, and they weren't comfortable relinquishing control to either of them. They weren't convinced either son had the skills to run the entire operation.
"My mother and father were united on one thing. They wanted to keep control of their own economic destiny," says Johnson's
elder son, the sales manager.
In the midst of all the turmoil, Johnson did what a lot of people who run a family business have done: He hired an outside consultant. The consultant recommended an outside person be hired to take on one son's operational duties. He also suggested an insider be promoted to head up sales and marketing. Johnson followed the advice and within eight months the operations person was fired. The sales head resigned last month.
"Both were gone because the sons wanted them gone," the elder son says. "And in a family business, you better shoot the sons in the head and bury them in the parking lot. Otherwise, (this kind of strategy) is probably not going to work."
He pauses and reconsiders. "In this case, probably the simplest way of saying it is that family dynamics and economic circumstances doomed this idea, even if it was a good one."
When a family hires an outsider to come in, it's usually because the status quo isn't working, says Marilyn Belleghem, a family business consultant in Ontario, Canada. But how well that person will work out depends on whether family members accept the outsider or view him as an invader-reacting to him the way white blood cells react to a foreign substance in the bloodstream.
Belleghem has seen family businesses hire a bookkeeper or sales person and relieve an enormous amount of stress among family members. Employees become more productive and families can't believe they didn't hire someone sooner. Then there are family businesses that can't differentiate between a bookkeeper who pays the bills and someone who is going to take control of the company's finances. The owner of the firm may become stern, holding too tight a rein on the new employee, double-checking his work.
"The ability to delegate and trust can be very difficult for someone who's always done everything on their own," Belleghem says.
Sometimes the "outsiders" in a business are closer than you might think. Luke Napoli's parents started a mobile shredding business in South Jersey in 1991 and by 2003 it had grown to the point where they wanted to sell it and take the profit. But by that point, the marriage had deteriorated to where they wanted to get divorced.
Napoli says they often fought about money because his father created the business and his mother came in later and ran the books. She was more conservative about spending and his father viewed her as some back-office person trying to tell him how to run his company, Napoli says.