Bringing an outsider into family firm. | Crain’s Chicago

By Barbara B. Buchholz

March 8, 1999

The continuing growth of many family businesses has proved a boon to the economy and an incentive to budding entrepreneurs. But it also has created a potential void: a dearth of family members to lead a booming firm and take the positions that come with expansion.

“There’s less likelihood that all the key jobs of growing family businesses can be filled by family as the companies move into a third or fourth generation,” says Ralph Daniel, a business psychologist with the Center for Family Business Dynamics in Santa Barbara, Calif.

In addition, many retirement-age owners have found that their scions are not seasoned enough to head the business. In such cases, they’re wise to seek non-family talent, often in their mid-to-late-50s, who can serve as “bridge” managers and even chief operating officers.

“They’re interim leaders who work at the company, maybe for 10 years or so, or until the children are ready,” says Mike Henning, owner of Henning Family Business Center, an Effingham consulting firm.

Finding qualified leaders to join a private firm where they may never head the business or gain equity and have to deal with daily family dynamics not of their own making can be tough, particularly in the current tight labor market.

Yet, the downsizing at many large firms, the often more paternalistic culture and long-term-oriented outlook of many family businesses — and, for some, the lack of challenge sometimes associated with retirement — have made family firms appealing.

Robert L. Anoff, 50, was eager to become the operations manager at Freedman Seating Co., a four-generation firm in Chicago. Founded near the turn of the century as an upholstery manufacturer for horse-drawn buggies, the firm has witnessed ups and downs, including a Chapter 11 bankruptcy in 1981. Today, it makes seats for small and mid-sized vehicles and employs 275, including four family members: President and CEO Gerald “Jerry” Freedman, 61; son Craig, 32, chief operating officer and heir-apparent, and stepsons Dan Smith-Cohen, 38, and David Cohen, 40.

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