How Family Businesses Work
by jack cashill
All happy families are alike, but every unhappy family is unhappy in its own way. Russian novelist Leo Tolstoy was not writing about family business in these, the opening lines of Anna Karenina, but he might as well have been.
Even in the most harmonious of family businesses, one can easily see the fault lines. The more generations involved, the more family members, the more numerous are the pressure points. Once enough pressure accumulates, even a slight disturbance can cause a rift -- not only in the business but also in the family, one that may never fully mend. Divided families will rarely succeed as a business and may not even succeed as a family.
Each of families profiled in this article can attest to the stresses unique to a family business. They have succeeded by finding strategies to address them, even if that strategy is circumvention. Says Bob Hawley of The Steamboat Arabia Museum, "Some stumps are too hard to chop and too green to burn, so the smart farmer just plows around them." But even the decision to avoid confrontation, Hawley suggests, has to be a conscious one.
In the six families profiled, and in other families observed, one finds a few clear patterns of convergence, many of them voiced as consciously as the one Bob Hawley voices above. Still, there is nothing textbook about them.
"It's an art," Dave Falke, proprietor of the Clock Shop, says about running a family business, an art guided not by rules of science, but by rules of thumb. What follows are some of the more commonly observed among these home spun rules:
"Dad," says son Greg Hawley of his father, Bob, "is the glue that holds the whole thing together." "The whole thing" is the now renowned Arabia Steamboat Museum. Before the museum, Bob had worked with sons, David and Greg, in the family heating and cooling business. The retrieval of the steamboat Arabia and the opening of the museum would test those relationships as well as the family's relationships with its indispensable partners, Jerry Mackey and Dave Luttrell.
A recent Reader's Digest article describes Bob Hawley as an "expert mechanic and a businessman of steady habits." To be sure, these talents helped the Hawleys and their partners excavate the Arabia and open a world class museum for less than just the cost overruns at the 18th & Vine Project.
Perhaps Hawley's greatest talent, though, is the subtle one son Greg alludes to his quiet statesmanship. Hawley helped steer four independent men and their extended families through fully uncharted waters in the most harrowing financial and emotional adventures of any of their careers and land them safely on shore. "The project," says Bob, "has to be more important than the personalities."
Joe Brandemeyer has more kids working in his family business than the average Amish patriarch. At one time or another, all eight of his children worked for this business, Medi-Flex, an enterprise that began 15 years ago as a leveraged buy out from Marion Labs and that has emerged as the leading producer of aseptic skin prepping materials in America.
Becky, now 41, was Vice President of Sales and Marketing before taking a sabbatical and cutting back to half time. Mark, 40, is the Vice President of Sales. Robert, 38, works in maintenance in the company's El Paso plant. Lynn, 36, worked in sales before choosing to stay home with her children. Bill, 32, "no, wait a minute, 33," is a product manager in the marketing department. John, 31, heads up CIS, Customer Information Service. Keisha, 27, no longer works for the firm, but her husband, George Meeter, "about 35," has worked for Medi-Flex for four years and will soon be taking over as Business Manager for industrial sales. And finally Matt, 24, now a senior at Avila, spent two years working in telemarketing for the firm.
Joe Brandemeyer grew up in a home split by divorce. As a boy, he "always dreamed of working in a family business." Although he never did realize that dream with his own dad, Joe has more than compensated at Medi-Flex.
The potential for discord in a family this size demands a firm hand at the helm. And at Medi-Flex there is no doubt whose hand that is, however gracefully Joe Brandemeyer wields it. As is true in many family businesses, he has no second in command.
Aaron Woodward had always thought of the man he calls "Dad" as kind of a softie. When home from the road, Bill Basie, better known as "Count," tended to kick back and let "Ma" Basie run the show.
In 1983, when Aaron went to work for Count Basie Enterprise full time, he saw an altogether different man. Ma Basie may have kept the books, but the Count ruled the band management side of the business "with an iron fist."
Although he never forgot who was boss, Woodward and his adopted father got along well. For one thing, according to Woodward, Basie was a "genius in inter-personal relations." Adds Woodward, "He was absolutely the best there was in managing the men."
For another thing, and this is one of the essential virtues of a family business, Count Basie needed someone on the business side of the band he could trust without qualification. And his son proved to be the man.
In fact, as a young boy, Woodward had actually told Ma Basie that he was going to become an
accountant so he could help her manage the books. True to his word, he graduated from college with an accounting degree and went to work for Citibank in New York in an intensive management training program. From Citibank Woodward moved on and up to the City University of New York as a budget officer.
Woodward just so happened to follow one of the rules of family business as postulated by R.D. Kerley, a rule that Kerley learned the hard way. In fact, there hasn't been much about Kerley's ascent that has been easy.
Kerley came alone by train into Kansas City in the late 50's, "fresh out of high school." He had with him just one black suitcase, which he still owns, and $20.00 in his pocket, long since spent. Back then, the Arkansas native had far more ambition than he had either resources or connections, but ambition would prove a powerful weapon.
Soon after arrival, Kerley took a job at a small, downtown "carbon paper, typewriter ribbon" shop run by a man named B.J. Hotz. There was a lot to like about Hotz even beyond their mutual lack of a first name. Hotz taught Kerley well, and within a few years Kerley was ready to buy the business. This Kerley did when he was barely old enough to drink.
The precocious Kerley married young and brought his new bride, Joann, into the fledgling enterprise. Within two years, the hard-working Kerleys had paid off the 5 year pay plan and were on their own.
Joann continued to work around the arrival of daughter Cindy and son Russ. Cindy, the older of the two, has been working at the business since the age of 5. R.D. laughs when he recalls her telling him and Joann, "Move over, you guys, because I'm taking over." Cindy made this ringing declaration at age 7. Today, she is the CFO of the company now known as Hotz Business Solutions.
Son Russ, after a brief detour to the Jones' Store, worked his way through the ranks at Hotz and is now Manager of Employee Relations. Yet despite the fact that the family business has prospered -- Hotz now has outlets in six cities and more than 100 employees -- Kerley believes that "my children should have worked elsewhere before coming in."
elsewhere certainly helped the Count Basie Enterprise. In the early 1980's the band was damaged by the double dealing of its accountant and nearly devastated by the unexpected death of Ma Basie. It was then that Basie reached out to his son, Aaron. Woodward's outside work in banking and budget management gave him the insight to resolve the problems within and right the course of the band.
Upon the Count's death a year after his wife's, Woodward stepped forward to run the corporation as president and "to protect my sister," the Basies' retarded daughter, Diane. The band is still going strong, sixteen years after Basie's death. Indeed, it will play Kansas City in early June, the town where it all started for Count Basie and a town to which Woodward might like to return. My job, says Woodward solemnly, "is to sustain the legacy of William James Basie." It is hard to imagine a non-family member doing this quite so attentively
Emmett O'Rear had a "grand plan" for his three daughters almost as ambitious as the one King Lear had for his three. So remembers daughter Shelly. He would create a family business in which he could work with his girls, then in their 20's, and their husbands. If this sounds a little too ambitious, it was.
The business he set his heart on was a cider mill, just west of Louisburg, Kansas. Shelly and new husband, Tom Schierman, proved an easy recruit, then just hanging out at the University of Missouri. Daughter Linda and Husband Dan Bosworth were a tougher sell. The couple already had several small children with more on the way, and Dan had a good job with Ford in Michigan. But they too yielded to the patriarchal siren song. In time, third daughter Laurel and her husband Bob Gilge adapted their itinerant, mid-70s lifestyle to the needs of the fledgling cider mill and spent a few seasons there as well.
The grand plan did not quite go as planned. As happens in many a family business, there were too many distinctive personalities in too small an enterprise and too little business to sustain them. As Shelly Schierman smilingly understates it, "Our styles were just so different."
In time, Dan and Linda motored back back to Michigan and Bob and Laurel just hit the road. As to Emmett, he moved to Florida and yielded daily control to the Schiermans who, without any prior training, realized they had a certain talent for running the cider mill.
Still, there was one major hitch. When O'Rear had incorporated the cider mill, he had given each of the three daughters 15%. The Schiermans were left to run the mill without managing control. Still, they persisted and convinced O'Rear to sell them the 36% they needed to manage effectively. With operational control, they were able to turn the Louisburg Cider Mill into a $2 million plus business and a local landmark. Their annual Cider Fest draws tens of thousands of patrons every fall.
All three of the Schierman's daughters -- Alexis 21, Clea 18, and Lilli 17 -- have worked in the Cider Mill when schools permits. And Tom Schierman, though VP-Sales by title, has fully emerged as the patriarch of his own family business. Still, as the Schiermans are quick to acknowledge, they will not lean on the girls, nor any husbands-to-be, to continue the enterprise.
As Emmet O'Rear learned through trial and error, the parent has to step away from the business at some point and let the next generation take sway.
Dave Falke, the fifth generation proprietor of the Clock Shop in Brookside, laughingly tells the story of how he quit the business "for four days" while still in his early 20's because his father, Eldon Falke, refused to accept Visa or Mastercard. He returned only when Eldon yielded. On another occasion, he aroused paternal ire by ordering a new-fangled push button phone, a phone the old man grudgingly came to appreciate.
Today, Dave finds himself being pushed by his young son-in-law, Chris Hutson, who works full time with him in the shop. It was Chris, for instance, who finally persuaded Dave to buy a computer and get on the web. "ClockShopusa.com," beams Dave with a pride like that of a new father's.
Dave Falke restores clocks. In fact, he supervised clock restoration at Union Station. Growing up as he did, "with clock wheels and pinion gears," he has as keen a knowledge of clocks as any man in America. Yet his and his dad's quirky resistance to new technology derives less from their affection for old crafts than from than a proprietor's instinctive wariness about change.
Joe Brandemeyer admits to a similar instinct "I've had to adjust, pull back," he confesses, "give the kids more say." R.D. Kerley feels much the same way. "Old codgers like me," he chuckles, "need to listen to the young."
It's not always easy. Eldon Falke, semi-retired since 1993, still gets the itch to "complain about a few things" whenever he steps into the Clock Shop. "It's not so bad any more," laughs Dave, "when Dad first retired he'd let us have it for an hour or two."
In successful family businesses, the younger generation respects their elders, but does not fear them. "My kids," R.D. Kerley says proudly, "are not at all bashful about feedback." In an industry like Kerley's, where technology changes almost daily, listening to the young is critical. To be sure, one would have a real tough go of it today selling carbon paper and typewriter ribbons.
The prosperous multi-generational business tends to structure itself along traditional lines: a strong patriarch, an enduring marriage, respectful children, often lots of them, and a nurturing, understanding matriarch.
These husbands talk about their wives, and these children talk about their mothers, as if they were all talking about the same person -- a patient, hard working, resourceful, and financially savvy woman of the sort who could have come to Kansas City in a Conestoga wagon.
Joann Kerley has worked with R.D. for forty years and is still the Vice President of Hotz. Jean Brandemeyer remains active in the business and attends all senior management meetings. Ma Basie served as secretary for the band until the day she died. Mildred Falke, Dave's mom, kept the books for the Clock Shop for years. Flo Hawley set the standards for work ethic and production for her sons and her husband and still does. And Tom Schierman says of wife Shelly what all the other husbands seem to imply, "I wouldn't do it without her."
How these multi-generational businesses will survive the changing role of women in the workplace, not to mention the erosion of the traditional marriage, remains to be seen.
In the family business of modest size, all family members have to pull their own weight. If they do not, they aggravate the non-family staff, especially those with a stake in the business's success. In a well run shop, unrelated employees tend to appreciate the family atmosphere. Indeed, they feel like part of the family. But there are unique sensitivities in these relationships, and they aggravate quickly when things go awry or insufficient attention is paid.
An inbalance in effort or reward may annoy non-family members, but it can absolutely madden siblings. Any parent who has had to divide a cupcake between children or apportion kitchen duties can imagine how volatile a sibling rivalry can be when what's at stake are cash and careers.
With more than 130 employees, Joe Brandemeyer has a better opportunity than most to find a niche for each child. Son Robert, for instance, whose academic progress was hindered by learning disabilities, has acquitted himself well working maintenance in the company's El Paso plant. Still, with so many children in the business, Brandemeyer has the toughest time of all keeping each child appropriately engaged.
"There are a lot of emotional things you have to deal with," says Brandemeyer. But as with the other family heads, he would have it no other way. "I consider it a great blessing that I get to work with my kids every day."
"My greatest joy," says Shelly Schierman, "has been our ability to include the children throughout the years." Adds R. D. Kerley, "I wake up every morning feeling good about having my kids in the business."
And for these reasons and more, family businesses will last as long as there are families. God bless them all.