Building Family Business Champions Building Family Business Champions Eric G Flamholtz and Yvonne Randle STANFORD BUSINESS BOOKS An Imprint of Stanford University Press Stanford, California Stanford University Press Stanford, California © 2016 by the Board of Trustees of the Leland Stanford Junior University All rights reserved No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, or in any information storage or retrieval system without the prior written permission of Stanford University Press Special discounts for bulk quantities of Stanford Business Books are available to corporations, professional associations, and other organizations For details and discount information, contact the special sales department of Stanford University Press Tel: (650) 736-1782, Fax: (650) 736-1784 Printed in the United States of America on acid-free, archival-quality paper Library of Congress Cataloging-in-Publication Data Flamholtz, Eric, author Building family business champions / Eric G Flamholtz and Yvonne Randle pages cm Includes bibliographical references and index isbn 978-0-8047-8419-1 (cloth : alk paper) — isbn 978-0-8047-9802-0 (electronic) Family-owned business enterprises—Management Success in business I. Randle, Yvonne, author II Title hd62.25.f58 2016 658.4—dc23 2015028101 Typeset at Stanford University Press in 10.5/15 Minion To the family behind Bell-Carter Foods, in particular Tim Carter; his brother, Jud Carter; and Tim’s son, Tim T Carter Contents Preface ix Acknowledgments xv PART I BUILDING FAMILY BUSINESS CHAMPIONS A Framework for Building Family Business Champions The Evolution of Family Businesses 29 PART II TOOLS FOR BUILDING FAMILY BUSINESS CHAMPIONS Strategic Planning Organizational Structure and Roles 61 85 Performance Management 103 Culture Management 125 PART III SPECIAL ISSUES IN FAMILY BUSINESSES The Dark Side 147 8 Leadership 171 9 Succession 193 10 Lessons Learned 217 Appendix: Family Business Self-Assessment Tools 231 Notes 237 Index 245 Preface We wrote this book to help businesses understand what to to become a “family business champion”—that is, a family business that has undergone at least two successful leadership transitions from one generation to the next, while simultaneously growing and remaining profitable Research has shown that only one-third of family businesses are passed successfully to a second generation of family leadership.1 In addition, “only 13 percent of successful family businesses last through the third generation.”2 Maintaining family business success for more than one generation is clearly a difficult task Nevertheless, many companies have achieved this, including Simon Property Group (a NYSE-listed shopping mall developer and operator), Westfield (an Australian and U.S shopping mall developer and operator), GOJO™ (developer and manufacturer of Purell™), and Heineken (the Dutch beer brewer) The number of family businesses that have been highly successful for more than one generation and can therefore be called family business champions is quite small, and there are even fewer family businesses that have been successful for four or more generations Any family business that has been successful for four generations can be called a “family business dynasty.” Companies that have achieved this special status include Bechtel, SC Johnson & Son, and Bank Santander in Spain.3 Throughout this book, we describe the evolution of another company that has achieved this elite status—Bell-Carter Foods We use Bell-Carter (which has had four generations of ­successful Notes to Chapters and example, John L Ward, Keeping the Family Business Healthy (Marietta, GA: Family Enterprise Publishers, 1987) 12.  See Edward D Hess, The Successful Family Business Plan (Westport, CT: Praeger, 2006), pp 48–49; Hess discusses the impact that treatment of family members can have on nonfamily members 13.  See also ibid 14.  John L Ward identifies “inflexibility and resistance to change” as a key challenge in growing family businesses; see “Mastering the Basic Principles of Growth,” in The Family Business Growth Handbook, ed Howard Muson (Philadelphia: Family Business Publishing, 2002) 15.  Kelin E Gersick, John A Davis, M M Hampton, and I Lansberg discuss the dynamics associated with family business leadership throughout their book Generation to Generation: Life Cycles of the Family Business (Boston: Harvard Business School Press, 1997) 16.  We provide several examples of businesses with “battling brothers” throughout this book It is a pervasive phenomenon in family business Chapter 1.  See Kelin E Gersick, John A Davis, M M Hampton, and I Lansberg, Generation to Generation: Life Cycles of the Family Business (Boston: Harvard Business School Press, 1997) 2.  See, for example, Howard E Aldrich, Organizations and Environments (Englewood Cliffs, NJ: Prentice-Hall, 1979); Danny Miller and Paul Friesen, “A Longitudinal Study of the Corporate Life Cycle,” Management Science 30 (1983): 1161–1183; and Eric G Flamholtz and Yvonne Randle, “Successful Organizational Development and Growing Pains,” Management Online Review (March 2007), www.morexpertise.com 3.  John L Ward, Keeping the Family Business Healthy (Marietta, GA: Family Enterprise Publishers, 1987) 4.  Gersick et al., Generation to Generation 5.  See, for example, Donald H Thain, “Stages of Corporate Development,” Business Quarterly (Winter 1969): 33–45; Robert E Quinn and Kim Cameron, “Organizational Life Cycles and Shifting Criteria of Effectiveness: Some Preliminary Evidence,” Management Science 29 (1982): 33–51; Ichak Adizes, Corporate Lifecycles: How and Why Corporations Die and What to Do about It (Carpinteria, CA: Adizes Institute, 1990) 6.  See, for example, Danny Miller and Paul Friesen, “Archetypes of Organizational Transition,” Administrative Science Quarterly 25 (1980): 268–299; and Eric G Flamholtz and Yvonne Randle, Growing Pains (San Francisco: Jossey-Bass, 2007) 7.  See, for example, Larry E Greiner, “Evolution and Revolution as Organizations Grow,” Harvard Business Review (July–August 1979): 37–46; and Neil C Churchill and Virginia L Lewis, “The Five Stages of Small Business Growth,” Harvard Business Review (May–June 1983): 30–50   Notes to Chapters 2, 3, 4, and 8.  Yvonne Randle, Toward an Ecological Life Cycle Model of Organizational Success and Failure (PhD diss., UCLA, 1990); Eric G Flamholtz and Yvonne Randle, “Successful Organizational Development and Growing Pains,” Management Online Review (March 2007), www.morexpertise.com 9.  For a more in-depth discussion of this model, see Flamholtz and Randle, Growing Pains 10.  The “Manneken Pis” is a small bronze fountain sculpture depicting a little boy urinating into the fountain’s basin; it is a landmark in Brussels, Belgium 11.  Brad Rehrig, The Rehrig Pacific Company Story (Los Angeles: Rehrig Pacific Company, 2013) 12.  Leadership succession can occur at any stage of development—later than or earlier than the Professionalization stage The exact timing depends on a number of factors, including the company’s growth rate, the age and health of the founder/entrepreneur, and the skills and experience level of potential successors 13.  As noted, some businesses are ready to move to the next stage earlier than the stated revenue numbers would indicate Chapter 1.  John L Ward, “The Special Role of Strategic Planning for Family Business,” Family Business Review 1, no (Summer 1988): 105 2.  In this chapter we develop the distinction between a “family business plan” and a “strategic plan” for the business per se 3.  Ward, “Special Role of Strategic Planning for Family Business,” 105 4. Ibid., 107 5.  John L Ward, Keeping the Family Business Healthy: How to Plan for Continuing Growth, Profitability, and Family Leadership (San Francisco: Jossey-Bass, 1987) 6.  Ward, “Special Role of Strategic Planning for Family Business,” 109 7. Ibid Chapter 1.  See Eric G Flamholtz and Yvonne Randle, Growing Pains: Transitioning from an Entrepreneurship to a Professionally Managed Firm (San Francisco: Jossey-Bass, 2007), 191 2.  See the classic article by George A Miller, “The Magical Number Seven, Plus or Minus Two,” Psychological Review 65 (1956): 81–97 3.  See Flamholtz and Randle, Growing Pains, chapter 8; and Jay R Galbraith, Designing Organizations: An Executive Briefing on Strategy, Structure, and Process (San Francisco: Jossey-Bass, 1995 Chapter 1.  The term “performance management” has replaced the earlier term “control,” because of the negative connotations of the concept of control Notes to Chapters and 2.  Corporate culture and the role of performance management are examined further in chapter 3.  See Marshall McLuhan, Understanding Media (Boston: MIT Press, 1994) 4.  See, e.g., Marshall Meyer, Rethinking Performance Measurement: Beyond the Balanced Scorecard (Cambridge, U.K.: Cambridge University Press, 2002) 5.  See the classic article by Steven Kerr, “On the Folly of Rewarding A, while Hoping for B,” Academy of Management Journal 18 (1975): 769–783 6.  This is public information that was reported in the company’s reports to the Securities and Exchange Commission 7.  Some might say that the salaries were unrealistically low 8.  For further discussion of performance management, see Eric Flamholtz, Effective Management Control: Theory and Practice (Dordrecht, The Netherlands: Kluwer Academic Publishers, 1996) Chapter 1.  Eric G Flamholtz and Yvonne Randle, Corporate Culture: The Ultimate Strategic Asset (Stanford, CA: Stanford University Press, 2011); Eric Flamholtz, “Conceptualizing and Measuring Human Capital of the Third Kind: Corporate Culture,” Journal of Human Resource Costing & Accounting 9, no (2005): 78–93 2.  John L Ward and Craig E Aronoff, Family Business Values: How to Assure a Legacy of Continuity and Success (New York: Palgrave Macmillan, 2001), 3.  See, for example, Linda Smircich, “Concepts of Culture and Organizational Analysis,” Administrative Science Quarterly 28 (1983): 339–358; Terrence E Deal and ­Allan A Kennedy, Corporate Cultures: The Rites and Rituals of Corporate Life (Reading, MA: Addison-Wesley, 1982); Joanne Martin, Cultures in Organizations: Three Perspectives (New York: Oxford University Press, 1992); Edgar H Schein, Organizational Culture and Leadership (San Francisco: Jossey-Bass, 2004) 4.  Ward and Aronoff, Family Business Values, 5.  Kelin E Gersick, John A Davis, M M Hampton, and I Lansberg, Generation to Generation: Life Cycles of the Family Business (Boston: Harvard Business School Press, 1997), 149 6.  See also Edgar H Schein, The Corporate Culture Survival Guide (San Francisco: Jossey-Bass, 1999), 15–20 7.  See Gersick et al., Generation to Generation, 149 8. See Edward D Hess, The Successful Family Business (Westport, CT: Praeger, 2006), chap 9.  Eric G Flamholtz, “Corporate Culture and the Bottom Line,” European Management Journal 19, no (2001): 268–275; Eric G Flamholtz and Rangapriya NarasimhanKannan, “Differential Impact of Culture upon Financial Performance: An Empirical Investigation,” European Management Journal 23, no (2005): 50–64   Notes to Chapters 6, 7, and 10.  Flamholtz, “Corporate Culture”; Flamholtz and Narasimhan-Kannan, “Differential Impact of Culture”; Flamholtz and Randle, Corporate Culture 11.  In our review of the literature of culture management, we have not found any other set of variables that has been identified as empirically related to or drivers of financial performance All other variables are proposed with face validity rather than empirical validity Admittedly, this is difficult research to and requires a “special research site.” 12.  Flamholtz, “Corporate Culture.” 13.  This section draws from a company document, “Overview of Taylor-Dunn Manufacturing Company,” by permission of Jim Goodwin, chairman and CEO 14.  This section draws on Flamholtz and Randle, Corporate Culture, with the permission of the publisher 15. Steps and can be reversed, with the identification of the desired culture occurring first, followed by the identification of the current culture This can be necessary in companies where there is no strong preexisting culture 16. Hess, The Successful Family Business, 25 17.  A generation of employees is defined as a cohort of people who enter an organization at about the same time and therefore share a common set of experiences as the company grows 18. Hess, The Successful Family Business, 48 19. Ibid., 49 20.  Flamholtz, “Conceptualizing and Measuring the Economic Value of Human Capital of the Third Kind”; Flamholtz, “Corporate Culture.” Chapter 1.  See Eric G Flamholtz and Yvonne Randle, Growing Pains: Transitioning from an Entrepreneurship to a Professionally Managed Firm (San Francisco: Jossey-Bass, 2007) Chapter 1.  Throughout this chapter, we reference others’ research and theory in discussing key concepts There are a number of “classic” and recent works on leadership effectiveness, including: Joseph L Badaracco, Leading Quietly: An Unorthodox Guide to Doing the Right Thing (Boston: Harvard Business School Press, 2002); Edgar H Schein, Organizational Culture and Leadership (San Francisco; Jossey-Bass, 1985); Craig L Pearce and Jay A Conger, Shared Leadership: Reframing the Hows and Whys of Leadership (Thousand Oaks, CA: Sage, 2003); David E Heenan and Warren Bennis, Co-Leaders: The Power of Great Partnerships (New York: John Wiley & Sons, 1999) 2.  This conceptualization is a slight modification of the four-factor theory of leadership proposed by D Bowers and S Seashore in “Predicting Organizational Effectiveness with a Four-Factor Theory of Leadership,” Administrative Science Quarterly 11 (1966): 238–263 The four factors that Bowers and Seashore identified are goal emphasis, Notes to Chapters and work facilitation, interaction facilitation, and support In our approach to leadership, we divide “support” into two dimensions: supportive behavior and personnel development 3.  Eric G Flamholtz and Yvonne Randle, Leading Strategic Change: Bridging Theory and Practice (Cambridge, U.K.: Cambridge University Press, 2008) 4.  See Eric G Flamholtz and Yvonne Randle, Growing Pains: Transitioning from an Entrepreneurship to a Professionally Managed Firm (San Francisco: Jossey-Bass, 2007), chap 11 5.  For a discussion of the contingency theory of leadership, see the classic work by Fred E Fiedler, A Theory of Leadership Effectiveness (New York: McGraw-Hill, 1967) 6.  Kelin E Gersick, John A Davis, M M Hampton, and I Lansberg, Generation to Generation: Life Cycles of the Family Business (Boston: Harvard Business School Press, 1997), 43 7.  There are women who occupy this role, but the term “godmother” does not have the same connotation For a discussion of the Godfather Syndrome, see chapter in Eric G Flamholtz and Yvonne Randle, The Inner Game of Management: How to Make the Transition to a Managerial Role (New York: AMACOM, 1987) 8.  The green olive business is very different from the black olive business Chapter 1. Ivan Lansberg, “The Succession Conspiracy,” Family Business Review 1, no 2, (Summer 1988): 120 2.  Kelin E Gersick, John A Davis, M M Hampton, and I Lansberg, Generation to Generation: Life Cycles of the Family Business (Boston: Harvard Business School Press, 1997), 193 3.  Andrew Bary, “World’s Best CEOs,” Barron’s, March 24, 2013, S32 4.  King Family Furniture is a real company, but it has been disguised for the purposes of this case 5. John L Ward, Keeping Family Business Healthy: How to Plan for Continuing Growth, Profitability, and Family Leadership (Marietta, GA: Family Enterprise Publishers, 1987), 192–193 6.  See Eric G Flamholtz and Yvonne Randle, Growing Pains: Transitioning from an Entrepreneurship to a Professionally Managed Firm (San Francisco: Jossey-Bass, 2007), chap 7.  Eric G Flamholtz and Yvonne Randle, The Inner Game of Management: How to Make the Transition to a Managerial Role (New York: AMACOM, 1987) 8.  Manfred Kets de Vries, “The Retirement Syndrome: The Psychology of Letting Go,” European Management Journal 21, no (2003): 707–716 9.  See David Garvin and Artemis March, Harvey Golub, Recharging American Express, Case Study (Boston: Harvard Business School Publishing, 1996) 10.  The general partner has overall responsibility and power to make decisions; it also has the highest risk The general partner has personal risk; whereas limited partners,   Notes to Chapters and 10 as the words imply, have risk only up to the amount of their investment in the company Limited partners have voting power only if the company is “in trouble” as determined by specific financial ratios 11.  As part of his management process, John explained to Ryan that John usually sends communication to the LP saying “We are planning to take X action, if you have objections please reply by X date.” 12.  Edward D Hess, The Successful Family Business: A Proactive Plan for Managing the Family and the Business (Westport, CT: Praeger, 2006), 77 13.  Gersick et al., Generation to Generation, 193 Chapter 10 1.  Edward D Hess, The Successful Family Business: A Proactive Plan for Managing the Family and the Business (Westport, CT: Praeger, 2006), 77 Index Accountability: in corporate culture, 132; of employees, 132; of family members, 13, 76–77, 78–79, 80, 106, 118–19, 175–76 Acquisitions, 140 Albatross Syndrome, 96, 99, 152–54 American Century Investors, 205 Aronoff, Craig E., 126, 127 AT&T, 71 Autocratic leadership style, 184 Autonomy, job, 189 Bank Santander, ix, Battling brothers, 19–20, 36, 43, 71–72, 147, 150–51, 161–62 See also Dysfunctional families; Sibling rivalries Bechtel, ix, Beliefs, 127–28 See also Corporate culture Bell, Arthur, 3, 4, 21, 24, 29, 88, 171, 193 Bell, Henry, 3, 4, 21, 29, 88 Bell-Carter Foods, Inc.: acquisitions, 26, 35, 41, 44, 50, 52, 61, 89; board members, 24, 27, 64, 80, 176, 177, 185–86; business concepts, 21, 25, 71; chief operating officers, 52, 93, 194, 202; company overview, 21, 24–27; competitive advantages, 73; core strategy, 65, 73; corporate culture, 25, 130–32, 134, 136–37, 138, 139, 140; culture management, 47–48, 125–26, 182; Director Team, 82; diversification, 50, 52–53, 54; as family business champion, ix–x; family business type, 34–35; family functionality, 15, 19, 25, 26, 34; founders, 3, 4, 21; goals, 79, 175; growth, 15, 24, 25–26, 34–35, 41–42, 44; hiring family members, 142; hiring process, 125; infrastructure, 15, 34, 46–47; leadership development program, 47, 203; leadership styles, 185–86, 187, 188; leadership team, 85, 171, 176–77, 186–87; leadership transitions, 24–26, 27, 29, 171, 186–87, 193–94, 196; organizational development levels, 19; organizational structure, 85, 87, 88, 88 (fig.), 89–90, 90 (fig.), 95–96; origins, 3; performance management system, 103; pickle business, 50, 52–53, 54, 89; Pyramid of Organizational Development, 77, 77 (fig.), 181; revenues, 44; strategic mission, 72, 82; strategic planning, 35, 64, 77, 81–83, 180, 181 Bell-Carter Packaging, 50, 52, 53, 89 245  Index Benevolent autocratic leadership style, 184–85 Berra, Edwin “Yogi,” 204 Brando, Marlon, 185 Budgets, 79–80 Business concepts, 7, 17–18, 64, 71–72 Business foundation, 7, 17, 19, 70–75, 218 See also Family business foundation Cargill, Carter, Daniel, 24, 25, 171, 176, 186–87, 193 Carter, Jud: advisory role, 176; board meetings, 176; career, 24–25; children, 27; as company president, 95–96, 171, 193; corporate culture and, 125–26; division of labor with brother, 27, 41, 188, 193; Halloween parties, 125; leadership styles, 186–87, 188; pickle company and, 52–53; retirement, 27, 82, 194; roles and responsibilities, 26, 87, 89–90, 171, 174; strategic planning, 35, 81–83, 180, 181 See also Bell-Carter Foods, Inc Carter, Tim: advisory role, 176; board meetings, 176; career, 24–25; as CEO, 95–96, 193; children, 27; company goals, 25–26; on company history, 21; corporate culture and, 125–26; division of labor with brother, 27, 41, 188, 193; leadership styles, 186–87, 188; on Lindsay acquisition, 44; on performance management, 103; on pickle company, 52–53; retirement, 27, 82, 194; roles and responsibilities, 26, 87, 89–90, 171, 174; strategic planning, 35, 71, 81–83, 180, 181 See also Bell-Carter Foods, Inc Carter, Tim T.: as CEO, 27, 53, 132, 171, 176, 194; culture management, 126, 182; development plan, 27, 179, 202; leadership development program, 203; positions at Bell-Carter, 194, 196; strategic planning, 81, 82, 180 Carvalho-Heineken, Charlene de, xi CEOs, see Chief executive officers Change: commitment to, 132–33; resistance to, 142 Chief executive officers (CEOs): coaching future, 170, 202, 205, 210–12; compensation, 116 See also Leadership Chief operating officers (COOs), 71–72, 93, 99, 100 China, family businesses, 133 Civil War Syndrome, 99, 150–51 Coaching, of future CEOs, 170, 202, 205, 210–12 Company process orientation, 133 Compensation, see Rewards Competitive advantages, 73 Conditional stages: consolidation, 47–49; decline, 55–56; definition, 31; diversification, 49–52; expansion, 41–43; identifying, 39, 39 (fig.); institutionalization, 52–55; new venture, 39–40; professionalization, 44–47, 86; transitions, 56–57 Consolidation conditional stage, 47–49 Consultative leadership style, 185–86 Contingency theory of leadership, 183 Cook, Clarence, 221 COOs, see Chief operating officers Core strategies, 7, 17, 18, 65, 72–74 Corporate culture: as asset, 126; at Bell-Carter Foods, 25, 130–32, 134, 136–37, 138, 139, 140; as building block, 9; communicating, 140; current, 137; definition, 127; in family businesses, 128–29, 140–43, 182; family members as role models, 47–48; at GOJO, 133, 142, 222–23, 228, 230; key dimensions, Index  129–34; layers, 127–28; relationship to financial performance, 129–33, 134; statements, 129, 134, 135–36, 140; strategic (desired), 137–38 See also Culture management Country club mentality, 132 See also Entitlement mentality Culture management: in acquired companies, 140; at Bell-Carter Foods, 47–48, 125–26, 182; challenges, 140–43; at Consolidation stage, 47–49; effectiveness, 235; in family businesses, 126, 182; informal, 126, 128; leading, 182; need for, 128–29; ongoing, 140; process, 136 (fig.), 136–40, 242n15; transmission to later generations of family, 142–43; as way of life, 143 See also Corporate culture Customer orientation, 130 Dark side of family businesses, see Family business syndromes Decline conditional stage, 55–56 Diversification conditional stage, 49–52 Divisional organizational structure, 89–90, 90 (fig.) Dunn, Fred A., 134 Dysfunctional families: characteristics, 12, 13–15; corporate culture and, 133; definition, 6; organizational structure issues, 96–97; performance management case study, 120–24; sibling rivalries, 96, 99, 142 See also Battling brothers; Family business syndromes; Family functionality; Feuding families; Sinking ships Embezzlement, 165–66 Employees: accountability, 132; delegation to, 187–88; developing, 179; effective interactions, 176–77; equitable treatment, 118; facilitating work of, 177; generations, 141, 242n17; job autonomy potential, 189; nonfamily members, 12–13, 118, 132, 141, 176–77, 198; teams, 176–77; treatment of, 12–13, 130–31 See also Family members; Performance management; Rewards Entitlement mentality, 119–20, 152, 157–59, 165–66 Environmental scans, 68–69 Executives, see Chief executive officers; Chief operating officers; Leadership Expansion conditional stage, 41–43 Face of the family, 190–91 Family business assessments, 56–57 Family business champions: building, 20; definition, ix; examples, ix–x, 3, 230; framework, 16–20, 17 (fig.), 219–20; lessons for success, 217–19; number of, ix, 5; research on, 5–6; road map, 219–20; success formula, 5–6, (fig.) See also Bell-Carter Foods, Inc.; GOJO Industries; Simon Property Group Family business concepts, 17–18, 64 See also Business concepts Family business development, see Conditional stages Family business development plans, 57, 220 Family business dynasties, ix, x–xi, 237n3 Family–business equilibrium, 172, 173, 175, 180, 182–83, 218 Family businesses: challenges, 4–5; definition, 4; selling, 46, 55; transitions to publicly held companies, Family business foundation, 17–19, 63–64, 65, 70, 74, 75, 218 See also Business foundation  Index Family business plans, 63–66, 220 See also Strategic planning Family business profiles, 20, 22–23 (table), 33 Family business syndromes, 147–48; Albatross, 96, 99, 152–54; Civil War, 99, 150–51; Family Drama, 148–50; George Bailey, 154–57; Gladiator, 161–62; “I Deserve It,” 165–67; King (or Queen) of the Hill, 159–61; Medea, 167–70; Money Tree, 157–59; Smiling Cobra, 163–65 Family business types, 33–38, 34 (table), 38 (table) See also Feuding families; High-potentials; Sinking ships; Superstars Family core strategies, 18, 65 See also Core strategies Family Drama Syndrome, 148–50 Family functionality: assessment questionnaire, 15, 16 (table), 38, 56, 68; continuum, 15; culture management and, 126, 130–31, 132–33, 137, 138, 139, 182; definition, 6; as factor in family business success, 6, 11–12, 218, 219; factors in, 12–15; interaction with organizational development, 6, 17 (fig.), 19–20, 22–23 (table), 33; leadership transitions and, 195; performance management effectiveness and, 105, 107, 118, 124; resolving issues, 75, 76–77; strategic planning and, 65, 71–72; SWOT analysis, 66–68 See also Conditional stages; Dysfunctional families Family members: corporate culture and, 47–48; entitlement mentality, 119–20, 152, 157–59, 165–66; face of family, 190– 91; hiring, 42–43, 141, 142; learning by, 14; perceived favoritism, 118–19, 141–42; performance and accountability, 13, 76–77, 78–79, 80, 106, 118–19, 132, 175–76; performance evaluations, 113–14, 142, 178; qualifications, 97–98; reporting relationships, 99–100; rewards and recognition, 13–14, 106–7, 115–16, 118–19, 142; roles and responsibilities, 14, 94, 96–99, 101, 173–74; treatment of, 12, 14, 118–19, 141–42, 143 Family strategic missions, 17, 18, 64 See also Strategic missions Favoritism, 118–19, 141–42 Feedback, 13–14, 112–14, 175, 178 See also Performance management Feuding families: Consolidation conditional stage, 48, 49; Decline conditional stage, 55–56; description, 35–36; Diversification conditional stage, 50–51, 52; examples, 36, 43; Expansion conditional stage, 42–43; Institutionalization consolidation stage, 54, 55; Professionalization conditional stage, 45, 46 See also Dysfunctional families Financial management, 79–80, 165–67 Financial results: corporate culture and, 129–33, 134; investments in company, 79; measurement, 111; objectives and goals, 78, 79 Ford Motor Company, Functional families, see Family functionality Functional organizational structure, 87–89, 88 (fig.) George Bailey Syndrome, 154–57 Gersick, Kelin E., 127, 128, 195, 215 Gladiator Syndrome, 161–62 Goals: family disagreements, 109; financial, 78, 79; in Key Results Areas, 109–10; progress reports, 80, Index  175; in Pyramid of Organizational Development, 78; setting, 78–79, 175–76 The Godfather, 185 Godfather 2, 99 GOJO Industries: board members, 226– 27; business concept, 224; corporate culture, 133, 142, 222–23, 228, 230; as family business champion, ix, 229; family business foundation, 75; family member roles, 190–91, 222–26, 227, 228–30; leadership transitions, 221–23; products, 220–21, 223 Gold, Howard, 116 Gold, Jeff, 116 Golden goose parable, 120 Golub, Harvey, 205 Goodwin, Jim, 135 Heineken (HBM), ix, x–xi, Heineken, Alfred Henry (Freddy), xi Heineken, Gerard Adriaan, x Heineken, Henry Pierre, x–xi Hess, Edward D., 129, 138, 142, 214, 217 High-potentials: Consolidation conditional stage, 48, 49; Decline conditional stage, 56; description, 34; Diversification conditional stage, 50, 51; examples, 34–35; Expansion conditional stage, 42, 43; Institutionalization consolidation stage, 53–54, 55; New Venture conditional stage, 40; Professionalization conditional stage, 45, 46 Howley, Ryan, 207–14 “I Deserve It” Syndrome, 165–67 Incentives, see Rewards Infrastructure, 6–10, 78, 82, 218 See also Organizational development Innovation, 132–33 Institutionalization conditional stage, 52–55 It’s a Wonderful Life, 154–55 Job autonomy potential, 189 Joyner-Kersee, Jackie, 174 Kanfer, Jaron, 228 Kanfer, Joe, 191, 221–23, 224, 226, 227–30 Kanfer Family Enterprise, 75, 79, 226, 227–28, 229 Kersee, Bob, 174 Kets de Vries, Manfred, 204 Key Result Area (KRA)–based role descriptions, 93–94, 95, 103, 108–10, 202 King (or Queen) of the Hill Syndrome, 159–61 Knapp Communications Corporation, 91, 92 (fig.) KRA, see Key Result Area–based role descriptions Laissez-faire leadership style, 187–88 Leadership: competition among family members, 159–61; development, 202–3, 206, 208–10; effective, 172–73, 203; in family businesses, 14–15, 171–72, 173, 182–83; four-factor theory, 242–43n2; importance, 171–72; operational tasks, 175–79, 182–83; role clarity, 173–74; situational, 183; strategic, 180–83 Leadership styles: autocratic, 184; benevolent autocratic, 184–85; consultative, 185–86; continuum, 183– 84; definition, 183; laissez-faire, 187–88; participative, 186–87; selecting, 183–84, 188–90; team (partnership), 187 Leadership transitions: at Bell-Carter Foods, 24–26, 27, 29, 171, 186–87, 193–94, 196; case study, 206–14; ceremonies,  Index 205; challenges, 204–5; credibility of successor, 213; development plans, 179; dream scenarios, 195–97; in family businesses, 194–95, 214–15; family functionality and, 195; in feuding families, 45; George Bailey Syndrome, 154–57; at GOJO, 221–23; at highpotential companies, 45; identifying successors, 201–2; importance, 195; managing, 204–5; Medea Syndrome, 167–70; nightmare scenarios, 197– 200; to nonfamily members, 201; number of, 20; planning, 195, 205–6; at Professionalization stage, 44–45; succession process, 200–206; timing, 240n12; training and coaching, 170, 202, 205, 208–12 Learning: in corporate culture, 26, 132, 142, 179; by family members, 14 Leenders, Mark, Lerner, Mark, 226 Life-cycle models, 29–30, 31–32 See also Conditional stages Likert, Rensis, 175 Lindsay Olive Company, 26, 35, 44, 61 Lippman, Goldie, 190, 220–21 Lippman, Jerry, 190, 220–23, 225, 226, 227, 229–30 Management, see Leadership Management Systems, xii, xiii–xiv, 208–10 Management systems: as building block, 9; formal, 219 Manuck, John, 206–11, 213, 244n11 Markets: as building block, 9; in Pyramid of Organizational Development, 78 Married couples, 149–50, 159–60, 168, 174 Mars, Matrix organizational structure, 90–92, 92 (fig.) Maxwell, Bryan, 39–40 Maxwell, Jennifer, 39–40 McCollum, Mike, 39–40 McLuhan, Marshall, 111 Medea Syndrome, 167–70 Melvin Simon & Associates, 35, 196–97 See also Simon Property Group Missions, see Family strategic missions; Strategic missions Money Tree Syndrome, 157–59 Musco, 50 Nepotism, 141 New Venture conditional stage, 39–40 99 Cents Only Stores: business concept, 7, 238n8; core strategy, 73; executive compensation, 116; as publicly held company, Nonfamily members, see Employees Norms, 127–28 See also Corporate culture Objectives: financial, 78, 79; in Key Results Areas, 108–9; in Pyramid of Organizational Development, 78; strategic planning, 78–79 Operational leadership tasks, 175–79, 182–83 Operational systems: as building block, 9; in Pyramid of Organizational Development, 78 Organizational culture, see Corporate culture Organizational development: assessment questionnaire, 9–10, 10 (table), 38, 56; building blocks, 7–10, 19; business foundation, 7, 19, 70–75, 218; definition, 6; as factor in family business success, 6, 219; in family businesses, 11, 11 (table), 181; family business foundation, 17, 218; framework, 6–10; interaction Index with family functionality, 6, 17 (fig.), 19–20, 22–23 (table), 33; leadership, 181 See also Pyramid of Organizational Development Organizational growth stages, 30, 31–33, 32 (table) Organizational silos, 100 Organizational structure: of Bell-Carter Foods, 85, 87, 88, 88 (fig.), 89–90, 90 (fig.), 95–96; challenges, 95–100; definition, 86; design principles, 86–93; divisional, 89–90, 90 (fig.); effectiveness, 101, 233; family needs and, 95–100; formal and informal, 94–95, 99, 100; functional, 87–89, 88 (fig.); hybrid forms, 87; matrix, 90–92, 92 (fig.); reporting relationships, 99–100; roles and responsibilities, 92–94 Participative leadership style, 186–87 People (employee) orientation, 130–31 Performance evaluations, 112–14, 178 Performance management: in corporate culture, 131–32; in dysfunctional family business, 120–24; effectiveness, 105, 234; informal, 104, 105; issues in family businesses, 105, 106–7, 118–20, 142; leadership role, 175–76; problems, 106; role descriptions, 93, 95, 103; strategic plan implementation reviews, 80 Performance management systems: components, 107–17, 117 (fig.); creating, 116–17; definition, 104; evolution, 105–7; in family businesses, 103, 104–7; feedback, 13–14, 112–14, 175, 178; operations and results, 110; performance evaluations, 112–14, 178; performance measurement, 111–12; planning, 107–10; purposes, 104–5, 124 See also Rewards Performance measurement, 111–12 Performance standards, 131 Peterson, J D A., x Planning: leadership transitions, 195, 205–6; performance management systems, 107–10 See also Strategic planning PowerBar, 39–40 Prefunctional organizational structure, 88 Process orientation, 133 Products and services: as building block, 9; in Pyramid of Organizational Development, 78 Professionalization conditional stage, 44–47, 86 Pyramid of Organizational Development, (fig.); assessing internal strengths and weaknesses, 69–70; of Bell-Carter Foods, 77, 77 (fig.), 181; building, 65; building blocks, 7–10; business foundation, 7; designing, 76–77; family functionality and, 19; as framework, 6–7; objectives and goals, 78; organizational growth stages and, 32, 32 (table), 33 Questionnaires, see Self-assessment tools Rehrig, Will, 39–40 Rehrig Pacific, 39–40 Resources: as building block, 9; in Pyramid of Organizational Development, 78 Retirement, 204 Rewards: definition, 114; executive compensation, 116; extrinsic and intrinsic, 114; fairness, 142; for family members, 13–14, 106–7, 115–16, 118–19, 142; as motivators, 114–15; performance management and, 114–16, 175   Index Roles: artificial, 98–99; clarity, 173–74; definition, 92; descriptions, 92–94, 95, 101; of family members, 14, 94, 96–99, 101, 173–74; separating family and business roles, 99, 101, 114, 173–74, 218, 224, 229 See also Key Result Area–based role descriptions Rolnick, Marcella Kanfer, 75, 190–91, 221, 222, 223–29, 230 Samsung Electronics, Schiffer, Eric, 116 SC Johnson & Son, ix Self-assessment tools: culture management, 235; family functionality, 15, 16 (table), 38, 56, 68; organizational development, 9–10, 10 (table), 38, 56; organizational structure, 233; performance management, 234; strategic planning, 232 Sibling rivalries, 96, 99, 142 See also Battling brothers Silos, organizational, 100 Simon, David, 197 Simon, Fred, 4, 35, 196–97 Simon, Herbert, 4, 35, 196–97 Simon, Melvin, 4, 35, 196–97 Simon Property Group (SPG): as family business champion, ix, 35; founder, 4; growth, 35; leadership transition, 196–97; organizational structure, 90; as publicly held company, 3; as superstar family business, 34 Sinking ships: Consolidation conditional stage, 48–49; Decline conditional stage, 56; description, 36; Diversification conditional stage, 51, 52; examples, 36–37; Expansion conditional stage, 43; Institutionalization conditional stage, 54–55; New Venture conditional stage, 40; Professionalization conditional stage, 45–46 Situational leadership, 183 Smiling Cobra Syndrome, 163–65 Sneller, Milt, 135 SPG, see Simon Property Group Stages, see Conditional stages; Organizational growth stages Starbucks, Steinberg, Inc., 184 Steinberg, Sam, 184 Stewart, Mamie Kanfer, 227 Stewart, R Justin, 228 Stowers, Jim, III, 205 Stowers, Jim, Jr., 205 Strategic leadership, 180–83 Strategic missions: components, 72; at Consolidation stage, 48–49; definition, 7; developing, 72; at Diversification stage, 50, 51–52; at Expansion stage, 43; of families, 17, 18, 64; at Institutionalization stage, 53, 54, 55; at Professionalization stage, 44, 46; purpose, 72 Strategic planning: at Bell-Carter Foods, 35, 64, 77, 81–83, 180, 181; consultants, 81; effectiveness questionnaire, 232; equilibrium as goal, 62, 65; family business development plans, 57, 220; family business plans, 63–66, 220; family issues, 62, 63–64, 181; implementation, 81–83; long-term visions, 64, 180–81; methodology, 62, 66, 67 (fig.) Strategic planning steps, 67 (fig.); SWOT analysis, 66–70; creating business foundation, 70–75; designing Pyramid of Organizational Development, 76–77; developing objectives and goals, 78–79; creating budget, 79–80; managing Index performance and family functionality issues, 80–81 Strategies, core, see Core strategies Structure, see Organizational structure Succession, see Leadership transitions Superstars: Consolidation conditional stage, 47–48, 49; Decline conditional stage, 55; description, 33–34; Diversification conditional stage, 49–50, 51; Expansion conditional stage, 41–42, 43; Institutionalization conditional stage, 52–53, 55; Professionalization conditional stage, 44–45, 46 See also Bell-Carter Foods, Inc.; Simon Property Group SWOT analysis, 66–70 Syndromes, see Family business syndromes Tasks, programmable, 188–89 TATA Steel, Taylor, Davis, Sr., 134 Taylor-Dunn Corporation, 134–36, 135 (table) Team leadership style, 187 Teams, effective, 176–77 Techmer PM, 206–14 Turner, David, 211, 212, 213 Values, 127–28, 129, 143 See also Corporate culture Van Munching, Leo, xi Visions, long-term, 64, 180–81 Waarts, Eric, Wainwright, Charles (“Chuck”), 119–20 Wainwright Automotive Company, 119–20 Wal-Mart, 184 Walton, Sam, 184 Ward, John L., 61, 62, 63, 126, 127 Westfield, ix, 34 Wienholz, Ken, 27, 52, 82, 179, 194, 202 World Class Management, Inc., 135 Wright, Frank Lloyd, 86 Zigdon, Donny, 228 Zigdon, Ketti Kanfer, 228  ... our partners in this writing project Building Family Business Champions Part I Building Family Business Champions A Framework for Building Family Business Champions Arthur Bell, born in 1888,... FAMILY BUSINESS CHAMPIONS A Framework for Building Family Business Champions The Evolution of Family Businesses 29 PART II TOOLS FOR BUILDING FAMILY BUSINESS CHAMPIONS Strategic Planning Organizational... advocate for building family business champions A Look at One Family Business Champion: Heineken Heineken, a true family business champion, has prospered over four generations of family leadership