Multigenerational family businesses pepper the American and global business landscape, and especially the US meat processing industry, from farm to table. Some have taken their businesses public, some have opted to sell, and some remain privately owned and controlled by the families that founded them. What they all have in common are the unique challenges multigenerational family businesses face every day.
Shortly after the merger of the American Meat Institute (AMI) and the North American Meat Association (NAMA) in 2015 to form the North American Meat Institute (NAMI), conversations started happening about how the newly formed NAMI and its members and their resources might help family businesses in the industry navigate the obstacles unique to them, as well as strengthen the new merger of the two organizations.
Starting a family
“It was not too long after the merger, maybe at our first executive board meeting and I was talking to Dave [Miniat] about both of us being fourth generation in multigenerational family businesses,” said Eric Gustafson, chief executive officer of Coast Packing, Vernon, Calif., and member of the board of directors of NAMI, executive board member and co-founder of NAMI’s Family Business Task Force. “We talked about how great it would be to further strengthen and galvanize this merger and coming together as a group to provide value to our membership base because there’s a ton of us that are family owned and operated.
“From that, he and I and a few others pushed it. It was just a great way to get people working together because there were some of us from the NAMA side and some of us from the AMI side kind of coming together and doing it. I think it worked really well and helped bridge some of the gaps there.”
Dave Miniat, CEO of Ed Miniat, explained that NAMI showed tremendous success in educating its members and preparing them for risk in areas such as food and worker safety, environmental safety and animal welfare, just to name a few. He also noticed an area that he felt lacked the attention it deserved and needed.
“One of the biggest threats that we have as family businesses is the dysfunctional family, or a business that can implode because of a lack of best practices needed to survive,” Miniat said. “So, it became obvious to me that there was something there that we really needed to address. I’ve seen, throughout my 20-year tenure with the meat institute, family businesses being bought by the large corporations or going public, and many times that’s because of family dynamics and other issues that happen when you are running a business and also managing a family.”
Family-owned-and-operated businesses present specific issues, and with greater success and age, those issues can multiply or become magnified. Families and businesses differ greatly, and the challenges they face and how they deal with those challenges will also differ. However, some core issues exist for all family-owned businesses.
Gustafson noted succession planning, conflict resolution and the need for open, honest and respectful dialogue.
“Those can be challenging things though,” he said. “Especially if you have an old guard that thinks of things one way and a new guard that’s trying to usher in a new generation of leadership. You’ve got to work through some of those challenges and how you communicate them.”
Miniat drilled deeper into the dynamic of multigenerational family businesses and how challenges evolve with success and age. As a business grows over years and generations, so does the family that owns and operates that business. A business’ executive staff and number of employees increase along with the number of family members with interest in the business. Over time and generations this increase complicates the dynamic within the business and the family, especially in terms of a succession plan.
“When the prior generations took over the business was much smaller than it was 30 years down the road,” Miniat said. “So, how do you prepare those kids and people? Do you prepare them internally? Do you prepare them externally? Do you send them to work at another company for a few years, so they get outside experience? Those are questions and policies that are probably going to be appropriate. So, where do you start with that? How do you create a policy and how does that affect your own kids or nephews or nieces? Do you treat them differently?
“There’s all kinds of questions that come up and if you do it wrong you might have one child that’s mad at you because you chose the other. You might have a sister that’s mad because you didn’t choose her son to run the company. There are real logical potential problems. Those are just examples of succession.”
The complexity of succession represents a small fraction of obstacles a multi-generational family owned business needs to overcome. Dividend distribution and education for family members with careers outside of the business have the potential for issues as well. The complicated nature of governance presents its own set of difficult choices.
Miniat put forth a set of questions just off the top of his head.
“When do I need to create a board of directors? When do I need to create an outside board of directors that are not family? How do I find them? How do I pay them? What roles do they play? What form of governance? Should it be an advisory board? A fiduciary board?”
Gustafson emphasized open communication and putting the success of the business first when addressing issues across generations and differing visions of the future. And while every company will deal with problems that arise in its own unique way, having certain vehicles and strategies for useful communication and conflict resolution in place will help.
“Some people like to hire third-party mediators or consultants to help be a buffer and sometimes you just have to walk away,” he said. “Sometimes people just can’t get past the emotion or whatever the situation may be, so you’ve just got to walk away from the table and come back when cooler heads prevail. Also too, when you create a structure, whether it’s at a board level or a governance level or an advisory board level, if there are rules of engagement agreed to upfront and they deviate, you refer back to those as a working document. A lot of families will do that. They’ll have those rules of engagement, working documents that govern and provide a roadmap for how to deal with some of these conflicts.”
Miniat cited his top three resources that the Task Force suggests family businesses utilize. These programs offered by top university business schools and an international peer-group provide family owned, multi-generational businesses with the education and tools they need to survive and thrive in today’s business climate.
The Loyola Family Business Center is a member of the Loyola Business Leadership Hub within Loyola University Chicago’s Quinlan School of Business. The Family Business Center provides a confidential sounding board through peer advisory groups made up of business-owning families, as well as educational opportunities and events held by the center. More information is available at: https://www.luc.edu/leadershiphub/centers/familybusiness/.
Northwestern University’s Kellogg School of Management provides family businesses executive programs including interactive lectures, case studies and group discussions with peers facing family business challenges similar to yours covering subjects such as general management, finance and accounting, governance, growth and innovation, leadership, marketing and sales, operations and technology, and strategy. More information is available at: https://www.kellogg.northwestern.edu/executive-education/individual-programs/executive-programs/fambiz.aspx.
The Family Business Network (https://www.fbn-i.org/) provides the means to build more sustainable businesses into the future through a sales-free, global community with events and safe spaces for peers to learn from, share with and inspire one another in a variety of formal and informal settings. NAMI and the task force also work closely with The Family Business Consulting Group (https://www.thefbcg.com), based in Chicago. Consultants from the firm are frequent speakers and presenters at NAMI-sponsored events and are trusted sources in MEAT+POULTRY’s Family Business Focus feature stories and podcasts.