Newspaper article St Louis Post-Dispatch (MO)

The Family Picnic Is a Predictor for Family Business

Newspaper article St Louis Post-Dispatch (MO)

The Family Picnic Is a Predictor for Family Business

Article excerpt

Working for a family firm whose members do not get together for outings may be no picnic.

If they don't get on well together socially, the company may not have much of a future and working for it could be a career-killer.

Largely because of its potential for conflict, a family firm is at greater risk of failure than one managed by outside professionals.

"What I found," said business professor Michael Wakefield, who recently sifted data from 1,002 family firms having sales of more than $2 million each, "is that cohesiveness of the family is the best predictor of whether there is going to be conflict over business issues.

"If they don't have family picnics, if they don't play together, it could be they are bickering and having disputes that could break up the business," said Wakefield, who teaches at Black Hills State University in Spearfish, S.D.

"I would look to see how well these people got along as individuals outside the business. That would dictate whether there will be problems or not."

"Some conflict may be desirable," Wakefield added. "It means they are concerned about the company and not afraid to air opposing views. Too much conflict, though, means that there are power struggles and they are more concerned about their power base than about the business. Too little conflict could mean complacency."

Odds are, he said, that 80 percent of all family firms "will cease to exist as family firms by the third generation."

While that's a peril for a hired executive it's also an opportunity.

The outside hire who joins a family firm about the time a son or daughter is ready to take over should not realistically hope to become chief executive.

However, Wakefield said, an outsider "will have an excellent opportunity to step in and move up" if the company's blood lines are thinning out, which often happens around the third generation. …

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