Moving from the entrepreneurship phase of any business to one that’s well-established is a challenge for anyone. But moving from that stage, and then managing to successfully pass that business on to future generations is another feat entirely. Navigating the business world while also tied to family loyalties and values can create a difficult set of tensions, and it’s more difficult than it seems to pass the baton from one generation to another, effectively creating a family dynasty within the business.
Some companies, like Enterprise Holdings (the car rental company) and Ford Motor Company passed the headship of the company on to the next generation, but then looked outside the family for future leadership. (In both of those cases, however, family members are still involved.) The business dealings of every family are different, but the Harvard Business Review wrote about common traps family businesses should try to avoid in order to keep their legacy — and company — alive. Authors George Stalk and Henry Foley, both family business advisors in varying capacities, wrote that 70% of family businesses are sold or have failed before the second generation even has a chance to take them over. Only about 10% of family-owned businesses stay alive long enough for a third generation to take the reins.
One of the traps Harvard Business Review mentions is finding a place for family members in the company, even if they have no relevant experience and haven’t cultivated the skills necessary to run a company. Instead, there’s a “best practice” emerging that encourages younger generations to attain a college degree, and even work outside the family business for a few years to gain relevant experience, the authors note. Though it’s not embraced by everyone, that model does work for the Mitchell family, a high-end clothing company in Westport, Conn. aptly called Mitchells.
Current CEO Jack Mitchell and his brother Bill inherited the company from their parents, and since have required their seven sons (and even Jack’s wife, Linda) to work outside the company for no less than five years each. “The five-year rule not only gives the next generation work experience, it also gives them wisdom they can bring into the family business,” Jack Mitchell explained in a Fortune column. “When our sons join the business, they made positive recommendations, and my brother and I respected them even more because they had these outside experiences.”
Whether it’s those types of rules, or having your father introduce you to colleagues even before you take an official role in the company, there are lots of businesses that have upended the negative trend and successfully passed on their businesses from one generation to the next. In light of Father’s Day this weekend, here’s a list of seven that have handed off the torch from father to son, and seen their companies continue to grow as a result.
1. SC Johnson
In every commercial for household products like Windex, Pledge, and Glade, you’ll hear the “SC Johnson — A family company” slogan said at the end. In every sense, the company has managed to keep the business in the family, for an impressive five generations. Founder Samuel C. Johnson started the company in 1886 in Racine, Wisc. and the company has been passed down from father to son ever since. H. Fisk Johnson now serves as chairman and CEO, and continues his family’s legacy of running the business while also taking up an interest in environmental issues. By any measure, the company has seen success, and is No. 36 on Forbes’ list of largest private companies, with revenues of $9.6 billion.
Family continues to be important to the Johnson leaders. Sam Johnson, the fourth generation of business leaders and Fisk’s father, said the following in a film he created to document his recreation of a trip his own father took in an airplane from Wisconsin to Brazil: “As I thought about the plantation and what my father had done, and then thinking also about the future, I came to the conclusion that as a son I shouldn’t worry too much about whether I have lived up to the expectations of my father…but whether we as fathers live up to the expectations of our children.”
2. Perdue Farms
The chicken company that stresses the integrity of its chicken (and now doesn’t feed its livestock antibiotics) was founded in 1920 by Arthur Perdue, the same year his son Frank was born. The company grew throughout Arthur’s lifetime, but truly became a national brand when Frank became a television pitchman for the business in the 1970s. (Frank, by that time, had been leading the company since 1950, even though Arthur stayed active in the business until his death in 1977.)
“I owe all my success to my father – he taught me everything,” said Frank. “He taught me about honesty and integrity and reliability; he taught me the importance of being a person of your word; and he taught me about quality. The tenets on which this company was built were all his, and all I did was expand on them.” Frank’s son, Jim, initially pursued an interest in marine biology and got his Ph.D. in fisheries before joining the family business in 1983. In 1991, he took over as chairman and also became the face of Perdue chicken on television.
Though it reigns as the company everyone loves to hate, Comcast has been able to successfully pass the business from one generation to the next. The company had rather humble beginnings when it was started in 1963 by Ralph Roberts as a single-service cable operator in Tupelo, Miss. Ralph’s son, Brian, interned at the company and later attended his father’s alma mater, The Wharton School at the University of Pennsylvania. By 1990, 31-year-old Brian was elected the company’s president after working in several field offices and then as Comcast’s Vice President of Operations.
Brian was then named CEO in 2002 and became chairman of the board in 2004. Long before that, the Roberts men were known for their keen business sense, which they often used in tandem to guide mergers and other projects that helped the company grow. The company might have a wealth of bad press, but it’s also undeniable that the company has been extremely successful and has continued to grow under Brian’s leadership. The company had $657 million in annual revenue when Brian was named president, which has grown to an astounding $69 billion — a figure likely to keep growing despite Ralph Robert’s death on June 18.
4. Koch Industries
Speaking of companies and/or people that don’t often make the “nice list” of society, the Koch family has managed to create an empire of wealth that started with the founding of the business in 1940 by Fred C. Koch. Koch Industries is involved in a variety of products, including chemicals and operating refineries, as well as fertilizers and fibers. Major divisions you might recognize are Georgia-Pacific and Flint Hill Resources.
The company is No. 2 on Forbes’ list of largest private companies in America, with estimated revenues of $115 billion. In today’s news you often hear about the “Koch brothers,” which is almost always referring to Charles and David Koch who now are CEO and Executive Vice President, respectively. The two are known for their political activism for conservative causes, and are estimated to have a net worth of more than $40 billion each. Though those two brothers have been in the spotlight and have continued to steer the company toward bountiful profits, the company succeeded in spite of a family feud in the 1980s and 1990s with brothers Bill (who is David’s twin) and Frederick, who ultimately lost their quest for controlling interests in the company.
5. Love’s Travel Stops & Country Stores
Love’s was founded in 1964 by Tom and Judy Love and is headquartered in Oklahoma City, Okla. The company now has more than 340 locations in 40 states nationwide. Tom Love, 77, remains the company’s executive chairman, and sons Frank Love and Greg Love are co-CEOs.
Though Tom Love founded the company, he also received important advice from his own father, which he shared in a Forbes Father’s Day post a few years ago. When Love arrived home one Christmas night to spend with his family, there was a handwritten note waiting for him from his father. “His last line: ‘You’ve got the rest of your life to change the world, but you’ve only got one shot at raising those four kids. Merry Christmas,'” Love recounted. Now three of the four children work for the company, including Jenny Love Meyer who works as the company’s vice president of communications. Revenues for the company are estimated to be about $22.6 billion, placing them at No. 13 on Forbes’ list of largest private companies.
The candy company developed its roots when Founder Frank Mars made the first Mars candies in his Tacoma, Wash. kitchen in 1911. The story of the candy and confections company has a more winding route to success, as Frank and his son, Forrest E. Mars, Sr. made the Milky Way bar in the 1920s but then pursued other interests. Frank moved to the United Kingdom, though still in charge of the Mars business, and Forrest Sr. founded the M&M’S brand in 1940.
In the late 1960s, Forrest Sr. acquired the branch founded by his father to create the Mars brand we recognize today. The company purchased Wrigley in 2008 and now is responsible for creating chewing gum brands like Orbit, Extra, and Doublemint. Mars is unique on our list because company leadership is now in the hands of non-family members, but Forrest Sr.’s children are credited with the globalization of the Mars brand. Forrest E. Mars, Jr., John Mars, and Jacqueline Badger Mars are still involved with the company today, as well as other family members.
It’s difficult to write anything about family dynasties without mentioning the Waltons. Sam Walton founded Wal-Mart in 1962, and was publicly traded 10 years later. The company quickly diverted from having family members serve as CEO, but has retained significant family control. Sam Walton’s son, Rob, became chairman of the board when his father stepped down, and recently passed the baton on to his son-in-law, Greg Penner.
Wal-Mart’s close family control has garnered criticism from shareholders over the years, and is a point of contention with those who believe that the family retains too much stock for being a public company. Shareholders most definitely have a say in the company’s operations, as the business has swelled to sales of $482.2 billion for fiscal year 2014. The family maintains that it has kept the chairman and CEO positions separate since 1988 for that reason, and that no family members have supervisory roles over others. Still, those stock holdings put many Walton family members at the top of Forbes’ list of richest Americans.
More from Business Cheat Sheet:
- 8 Unforgettable Stories of Comcast Screwing Over Customers
- 5 of America’s Most Powerful Business Dynasties
- It Just Became Harder to Hate Wal-Mart
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