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A Fourth Generation Leader who Mastered the Art of Embracing Tradition and Change

Amy Schuman
Amy Schuman

Successful long-lived family businesses find a way to preserve their historic values and traditions while, at the same time, renewing themselves and responding to opportunities in an ever-changing world. Firms that are too rooted in the past become ossified, out-of-date, and outmoded. However, those that shun past success as irrelevant to present realities squander a treasure trove of values and accomplishments. It’s an art to combine the ‘secret sauce’ of historic success with the imperative to respond decisively and passionately to emerging opportunities and challenges.

Baird GraphicThis fine art was exemplified by John W. Baird, who passed away in December, 2013, at age 98.

Mr. Baird took over as president in 1963, following his father, Warner G. Baird, who guided the company in helping Chicago rebuild after the Great Fire of 1871. The firm was founded in 1855.

As president of Baird & Warner, Mr. Baird was deeply involved in civic affairs and the preservation of open spaces and landmarks. In the 1960’s, he was a leader in the effort to end housing discrimination in Chicago, and, as president of the then-Metropolitan Housing and Planning council, testified in favor of ‘open occupancy’, housing made available without consideration of race, ethnicity, religion, etc.

His son, Steve Baird, currently the fifth generation company president, commented, “At the time it would have been considered a very negative thing to the company because it was going against the tradition.”

However, what was ground breaking and ‘non-traditional’ at the time, now serves as a model of civic involvement and integrity for the company, the family, and the city of Chicago. And in fact, was part of the ‘secret-sauce’ that enabled this Chicago institution to survive and thrive up to this day.

There is much more to learn from the example of John W. Baird, who serves as an inspiration to others seeking success in leading their long-lived family firms. A quick web search will yield many links to articles, obituaries and tributes that are full of useful lessons – worthy of further reading and exploration.

*This article is drawn from obituaries and articles that appeared in The Chicago Sun Times, The Chicago Tribune, and online at INMAN NEWS.


Siblings to Cousins: Ownership Goals for Growth, Risk, Profitability and Liquidity

Amy Schuman
Amy Schuman

In the transition from siblings to cousins, families are often called to define the ownership role for the very first time. In earlier stages, a relatively small family allows for more direct involvement of family owners in business operations and tends to put issues of ownership on the back burner.

It is at the cousin stage when ownership goes – frequently for the first time – to a significant number of family members with no direct involvement with the business. It is common for cousin owners to have minimal natural contact points with the business they now own. The majority of cousin owners do not have careers in the business, and some likely live a great distance from business operations.   There is much to understand about the ownership role  – and some excellent resources exist for further reading (see below). In this post, I’d like to focus on the opportunities contained within an ownership goal setting process.

Owners need to know enough about their assets to be able to set educated goals for their performance. What level of return is reasonable to expect? How much risk would be needed to achieve different levels of return, and what is our risk tolerance as an ownership group? What is a realistic expectation for growth of our enterprise at this point in time? What returns should we expect in terms of asset appreciation and liquidity?

A few of my clients have dubbed this goal-setting process “GRPL”, based on John Ward’s suggested four ownership goals of Growth, Risk, Profitability and Liquidity (see article referenced below).

Realistic family ownership goals will vary widely according to factors such as industry of business – age of business – location of business – and many others. But grappling with the GRPL goals allows a large, potentially dispersed ownership group to have a focus for their learning and involvement in their business as owners. In fact, ownership education can provide a clear mandate for the Family Council, which tends to coordinate shareholder education.  Ensuring the ownership group develops the knowledge they need to articulate clear and achievable ownership goals is an investment in the ownership, management, and family circles of the family business system.

In my experience, Boards of Directors welcome the ownership goal setting process with enthusiasm. Written and agreed-upon goals from owners makes the Board’s task easier, especially as independent directors join the effort. They know owners’ expectations, and can conduct themselves in the boardroom accordingly.

Some management teams may initially have reservations about the owners setting these goals.  As the management team is so intimately involved in every aspect of the business, they may question ownership’s ability to set realistic, informed goals for asset performance. However, if management has a role in educating owners about their industry and the company’s competitive position in the market, they usually becomes enthusiastic supporters of the process. Instead of having to worry or wonder if their decisions and actions are aligned with ownership’s expectations, management can now more easily evaluation their actions against stated ownership objectives. I’ve had CEO’s tell me that they sleep better at night, knowing more clearly the owners’ shared goals for the enterprise they have been entrusted to lead.

There is much more to explore in this regard. Hopefully this post has whetted your appetite to learn more. Please feel free to share your questions or experiences with ownership goal setting here, and to explore the resources below.

“What do Owners Do?”, John L. Ward, Families in Business Magazine, June/July, 2003

Family Business Ownership: How to Be an Effective Shareholder, January, 2011,  John L. Ward, Craig E. Aronoff, Stephen L. McClure, Palgrave/MacMillan

“Why Family Business Owners need a Job Description”, Jennifer Pendergast, Family Business Advisor, June 2010


Siblings to Cousins: Fear not the Larger Group

Amy Schuman
Amy Schuman

Many families are daunted by the task of transitioning from a relatively small sibling stage to a larger and more complex cousin stage.

However, there are advantages to the larger cousin group that may not be readily apparent, for example:

  • First, the cousin relationship is usually less intense and history-filled than the sibling relationship. There is more distance and healthier boundaries between cousins than between sisters and brothers. This can make conflict resolution and decision-making easier with cousins, even if the group is larger.
  • Second, the larger cousin group is usually more accepting of policies, procedures and ‘one person, one vote’ approaches than the smaller sibling group. Siblings can be more uncompromising and inflexible, expecting to see their preferences prevail in the smaller group – each perhaps at times assuming that they would get to be ‘the decider’ as their parent had been.  Cousins tend to have an easier time with the notion of collaboration and shared authority.
  • Third, the greater diversity in the larger cousin group can bring valuable strengths to the family and the business. Diversity in geography, age, lifestyle, occupation, and hobbies brings tremendous richness and a plethora of perspectives. Families that can be open and welcoming of this variety find themselves greatly enriched, more resilient and over time, more reflective of the wide world.

As you move from siblings to cousins, rather than being daunted by the larger size and complexity of the ownership group, consider exploring the advantages and finding ways to harness them to your benefit!

Our book, From Siblings To Cousins, Prospering in the Third Generation and Beyond,  (Aronoff & Ward) is a great primer on this subject.

A helpful article that explores the dynamics of later cousin groups is: “The Challenges of a Large Shareholder Group”, by Klett and Weichers in The Family Business Succession Handbook, available from Family Business Magazine.


The Ford Family as Owners

by John L. Ward

Friend and colleague Amy Schuman urged me to read American Icon: Alan Mulally and the Fight to Save Ford Motor Company (by Bryce Hoffman, 2012). It’s a compelling and captivating story of a dramatic turnaround. It’s also a great family business story.

The family business topic I want to focus on is the role of the Ford family as owners and governors. There are 13 fourth generation cousins with 30 members of the next generation ascending.

  • For the longest time the G4 cousins have met quarterly – mixing a social and business briefing agenda. They never voted; they always worked for consensus.
  • For decades they believed that their role as owners was to provide unity, stability and long-term commitment.
  • Where there was conflict it was not from company issues but from old resentments over perceived fairness in family matters.
  • In their meetings, as controlling owners, they discussed
    • Confidence in the CEO;
    • Contingency plans if the CEO or strategy didn’t work out;
    • Significant debt decisions;
    • Dividend policy;
    • Maintaining control of the company.
  • Bill Jr., as executive chairman, took on several roles:
    • Emphasizing company innovation
    • Fighting off cultural complacency
    • Providing institutional memory
    • Identifying CEO candidates with the board
    • Managing family owners relations
  • Other family members
    • Served as cultural ambassadors with dealers;
    • Visited locations;
    • Participated in local philanthropy.

Family business owners will find even more value in the book. Founder Henry I was a classic example of “founderitis.” He also had a magnificent vision and social purpose. His son, Edsel II, was overwhelmed by his father’s inability to let go. Subsequent generations had to work hard to earn credibility and fight off perceptions as “rich dilettantes.” Bill Jr., now chairman, received invaluable, trusted coaching from independent directors who themselves understood family business – especially Hocksday of Hallmark.

Then there’s the bulk of the fantastic book telling of Mulally’s turnaround strategy and his philosophy of management.

Enjoy. I’m quite sure you’ll embrace the stories.  Thanks, Amy.


Why I’m Seeking a Well-Qualified Female Board Member

Amy Schuman
Amy Schuman

Why would a client specifically ask to be presented with female director candidates? While writing this post, I asked the Board Chair of a large, fourth generation real estate business, why he was so keen on finding a female for his company’s next independent director. This is what he told me – with permission to share:

“I went to an all-male college, and had lots of experience in all-male environments. I’ve served on many boards over the years, and I’ve found that the presence of both genders enhances the contributions that all members of the body will make. Men seem to be more constructive with both men and women in the room.”

“I also think that there are points of view that are gender driven. There’s knowledge and sensitivities that differ between the genders. When you have only one gender, you don’t have a balanced perspective or balanced participation.”

“Because women are often the primary caregivers, they are more involved in the educational process and their sensitivities carry over into housing decisions. Men may not see those things. It’s not quite universal, but on the average, women bring different life experiences to the table.”

Research actually supports this view. There are plenty of studies to quote, but let’s look at just one post-2008 study conducted by Leeds University Business School. The study found that companies with at least one woman sitting on their Board of Directors had a greater chance of surviving the downturn than companies without any women on their boards.

There’s plenty of research on this subject, but this post is already pretty long so – take a look at these sites for more data on the advantage of board diversity:




Female Role Models

Amy Schuman
Amy Schuman

Recently a client was refurbishing his offices and he commissioned two sculptures for the lobby: One of Abraham Lincoln, and one of Winston Churchill. I happened to be in his offices when they were being installed, and he called me over to admire their beauty. They had been rendered by a local artist who had done a masterful job of capturing the inspirational spirit of both of these men.

“Got a question for you,” he said as he called me over. “I want to put a female in the lobby alongside these two men, and I’m having a tough time figuring out who to put here.”

We talked for awhile about what was making it so tough to identify the right woman to put in the lobby. Obviously, a female U.S. President was not a possibility. Margaret Thatcher, Indira Gandhi, Golda Meir all had served as heads of their states, all were inspirational and pioneering, but none seemed right to sit alongside Lincoln and Churchill.

I polled family and friends over the next few days for their ideas, and though many good ideas emerged, nothing has topped the charts as a clear winner. Eleanor Roosevelt, Susan B. Anthony, Jane Addams, Barbara Bush, Harriet Tubman, Amelia Earhart, Nancy Reagan, Marie Curie, Sacejawea, Madelyn Albright – none seemed right.

“What is it?” asked the client, a successful family business leader, who had grown his second generation business both in size and innovation. “Women’s contribution is clearly important, in family and society and business. Is it that women are more comfortable leading from the background? Is it that woman prefer to make their contribution in the home and schools, more quietly and away from the limelight”

We haven’t figured it out, but it was certainly an interesting discussion. And so, dear readers, I pose the question to you. What woman would you nominate to sit alongside Lincoln and Churchill in the lobby of this family business headquarters?




“Family” Cultures Yield Financial Results

Amy Schuman

We spoke earlier this week about a Midwestern retailer that walks its talk. Their corporate culture is directly shaped by the values of the owning family. So – the family gets the deep satisfaction of knowing they are part of a company that is living the family’s values. How about financial results?

Well, the company enjoys unbroken, significant growth and profitability.

The company is a preferred employer in every town where it opens a location. It enjoys a turnover rate well below the industry average, with vastly reduced employment expenses related to recruitment and training. As a result, its long-tenured co-workers get to know their patrons pretty well, which leads to fantastic customer loyalty and repeat visits.

When it goes out to borrow, banks and other financial institutions are tripping over themselves to be the first to loan them money for their continuous capital improvements and growth projects.

They have been awarded the top Mystery Shopper award in their industry, three out the past four years.

There are loads more examples of the awards and recognition, significant return to owners on their investment, and co-worker pride to share with you, but blogs are supposed to be short and sweet.

Has this one example of an exemplary family business culture inspired you? There are many paths to exemplary family business culture. Your path will be unique to your family, your location, your products and services. The important thing will be – to pay attention to your culture, and your unique expression of excellence within that culture. It is a proven path to excellence!


Communications, Compensation and Corporate Culture

Amy Schuman

Many family businesses struggle with the question – how much financial information can we share – both with employees and with other family members? In fact, one negative stereotype of family business culture is of a secretive owning family that only fully trusts a small inner circle.

Yet sometimes, family culture can work in the opposite, positive, direction. Many top performing private companies extend the ‘family culture’ well beyond blood relatives. The Midwestern retail business referenced earlier this week is a passionate proponent of ‘Open Book Management’ – where all team members, at every level of the company, have full knowledge of the company’s financial goals and performance – and where everyone shares in generous profit sharing. Innovative bonus programs give every co-worker the opportunity to build for a secure retirement, based on company performance.

At year end, the founder and members of his top management team hold a series of meetings to report on company performance, set goals for the coming year, and most important – thank every co-worker for their hard work and contribution. In these meetings, the company’s mission and values – directly shaped by the values of the owning family – are reviewed and reinforced with examples from top performing stores. Though the timing always coincides with the busy holiday season, the top team spends a full week travelling the mid-west to these meetings, going out to the co-worker’s locations to thank them where they live and work. 

These actions speak as loud as the words.  And the results are more than only on morale.  The ‘family’ culture that this company works hard to create and sustain leads to some fantastic financial results. Stay tuned for more later this week…


Use the ‘Parking Lot Test’ to Discern Corporate Culture

Amy Schuman

Arriving at the client’s headquarters, I noticed that only 3 of the 15 visitor parking spaces right in front of the building were occupied. As always, I parked my car at the very back of the lot, which was quite full. Also parked way in the back, I recognized the owner’s car, and several vehicles belonging to Board members and advisors. Board meeting day was always like this. The Board members and owning family members all park in the back, leaving the close-in spaces for the team members.

The Parking Lot Test tells you a lot about a company’s corporate culture and values. When the top management and family ownership welcome the chance to leave the best parking spaces for their co-workers, you can bet you will find many more examples of a terrific culture. When owners consistently park their own cars in the Visitor’s spaces right by the front door, well, you can draw your own conclusions as to what this might say about the corporate culture and values.

And yes, team members and co-workers – not employees – populate this company.

Note this is not some California high tech company with ‘foosball’ in the lobby, it’s a mid-west retail-related company that’s consistently won its industry’s top awards as well as being named as one of the Top Employers in their region.

What other practices would you expect to see here, just based on the Parking Lot test alone? Stay tuned for more in coming days.


Just Like Her Dad, part 3

Amy Schuman
Amy Schuman

All week we’ve been pondering the case of ‘Jennifer,’ daughter of the founder, who has been told by those around her that her success seems assured, because she is seen to be Just Like Dad. Jennifer is a wise young woman, so here are her thoughts on the matter:

I know people are watching me really closely. My father is so loved and respected by those around him here at the business. He built a fantastic enterprise in only a few decades, and the people here are dedicated and committed to the values and vision he has put forth. Treating others the way you want to be treated. Working hard. Providing top-notch products at fair prices. Earning a fair wage and sharing in the gains made by the business. The entire family believes in these values – originally stated by my dad.

When people tell me I am just like Dad, I think they are referring to these values and vision. It is definitely my job to show everyone that I am equally committed to those values, and to make sure the larger family understands this too.

That’s the easy part. The hard part is when I am in meetings, and people seem to turn to me for decisions on matters that are well outside my job responsibilities. I never know if I should speak up or stay quiet. I am working in sales right now, and when we discuss pricing or product design, I often have a strong opinion. But I worry that when I state my opinion, the people around me will take it too much to heart. Sometimes it appears that when I make a comment, some of the people in the room assume this is my dad’s opinion, which is not the case. This has all caused me to hang back a bit — but, I still have a lot of good ideas and want people to know! It can be pretty confusing to know what to do.

As time goes on, it becomes clear tha I am very different from my dad in many ways. First and foremost, I am a mother of the most adorable little girl you’ll ever meet. Although I care about the company’s success, I also want to be there for her when she needs me. I’m not sure how this will work out but I already know that I need a strong international sales team, because I am not going to spend half the year travelling to our customers on other continents like my dad did. Also, I want us to look into making flexible work arrangements more available for the parents in our workforce. Both my father and the CFO are not too excited about this, but I want to find a way to make it work without hurting our company. In the long run, I believe policies like that will actually make our company stronger.

 I’m sure there will be plenty of other important differences between my father and I, but my support of the same values will never change.

So, there we have it. Being Just Like Dad has upsides and downsides that merit our attention and energy.

Those of you that follow our blogs and read our books probably know that when an either/or question like this is slapped on the table, our answer is likely to be: YES. In other words, rather than being forced to choose between two desirable options, we will never give up seeking a way to get BOTH.