Director, Family Business Center of Pioneer Valley
On May 22 at the Pinnacle Center in Hudsonville, the Family Business Alliance of Grand Rapids is hosting a seminar on effective family meetings and family councils for owners and members of familyowned companies. The keynote speaker at the event is Ira Bryck, an Amherst, Mass.- based expert in the study of family-owned businesses, who will discuss the importance of family-owned businesses maintaining constant communication. MiBiz spoke with Bryck on the economic impact of keeping businesses within the family and of maintaining dialogue among family members.
What’s a preview of your talk in West Michigan later this month?
My topic, when I come to Grand Rapids, is on family meetings, family councils and (to a lesser extent), family retreats. Families that own businesses together, some of whom might be actively involved in the business and others that just own stock –– and others that don’t own stock –– just need to understand what’s going on.
Why is that important?
This is more of an effort where families need to sit down together. There are usually some people that are more interested than others. Some are like, ‘We need more communication. We need more information. We need to learn from our parents what their intentions are, etc. We don’t know our cousins because our parents are fighting.’ That happens a lot.
Many of West Michigan’s best-known companies — Meijer, Amway, Gordon Foods, Haworth — are still owned by the original families. What does that say about the region’s economy?
What it says is that you have an entrepreneurial environment and that it has supported that business through all the years. Just speaking from my own experience, with locally-owned businesses, the profits go back into the community.
How else does that legacy of family-owned businesses impact local economies?
Family-owned businesses generally are more loyal to their customers. You take Toyota, the world’s largest family business: They bragged for a million years that they never fired anybody during the slowest of times. They’ve had to massage that statement a little bit in the last decade. You don’t get that loyalty compared to General Electric, where Jack Welch said, ‘Fire the bottom 10 percent every year.’
Research from Grand Valley State University shows family businesses tend to be a ballast within the economy because of their stability during downturns. Would you agree with that?
Yeah, for a few reasons. Number one is the family is there and it’s not just absent stakeholders. Decisions are made in large companies by people that don’t have their hands on the wheel. I know a lot of business owners in western Massachusetts and I’ve seen them go through downturns. And they say, ‘We need to hang on to talent.’
What are some tangible impacts of that?
Family businesses, in many studies, outperformed the stock market by nine times. And largely it’s because they’ll hang in there for smart growth and they won’t have shareholders buying and selling the stock based on short-term performance, because some things take a while to grow.
From a high level, what issues are family-owned businesses facing?
First of all, I come from a family business background. I was the president with my parents in the oldest children’s clothing store in the country for many years. Both of my parents’ parents grew up in family businesses. Family business is doing great. I used to have a book called ‘Best Boss, Worst Boss’ which was summarizing an annual contest to come up with the best boss in America and the worst boss. And the best and the worst were always owners of family businesses.
Why is that?
At its best, the boss believes that whole company should be a ‘family,’ and the policy should be fair and it should be run according to merit and not nepotism. And it does all of that. And at the worst, you just see all the infighting, all the sibling rivalries, or a competitive disadvantage. (It’s) everything that you hear about, even on a million TV shows that seem to dwell on family businesses in a dramatic way.
You’ve said that you disagree with some of the research and believe family-owned businesses are a smaller piece of the overall economy than many people think. Can you explain that?
It really is a smaller piece of the economy than a lot of people say. … Some research has said that 90 percent of businesses in the United States –– and in the world –– are family-owned. But it really is a much smaller number than that. Even in a discussion that I had with the main guy who researches that, he admitted that he was counting in the difference between the 39 percent that I think are family-owned and the 80 percent or 90 percent that he says (are family-owned).
What do you mean by that?
He’s counting kids that work on a farm growing up, but they’re not ever going to take over the farm, or startups that may one day be a family business, but (have a) much greater chance of failing. (It also counts) if a spouse gives advice to a business owner at 3:00 in the morning but has no official role. That research that said almost all businesses are family owned is based on including those three categories, which is weird.