How to Decide Who Can Join the Family Business
Jack Mitchell is the chairman of the Mitchell Stores and the author of “Hug Your Customers.”
It’s one of the most consequential decisions family business leaders face: When relatives come asking for jobs, do you want them in your business? And if you do, when does it make sense for them to join?
Long ago, my brother Bill and I decided we wanted to inspire direct descendants of our mom and dad, the founders of our retail clothing business, to make a career with us. The two of us constituted the second generation of our family business and were blessed with seven sons between us. We wanted all seven to come aboard. Yet, in networking groups we belonged to, we saw unfortunate examples of new family members wreaking havoc on a business — sons and daughters with zero experience who came in and began ordering their parents around, or a dictatorial father inciting such heated conflicts that the capable next generation fled the business.
We certainly didn’t want that. Working with a family business consultant, we arrived at two basic rules for entry in our own company. In general, we dislike rules, because our family business is based on our values as guidelines to our culture. But we thought it important to establish some rules so that both the family and the other business associates are clear on how things work, and so no one thinks the family is anointed or entitled.
These are our two basic rules:
— AFTER GRADUATING FROM COLLEGE OR THE EQUIVALENT, YOU MUST WORK ELSEWHERE FOR AT LEAST FIVE YEARS BEFORE YOU CAN JOIN THE FAMILY BUSINESS.
We want the next generation to follow their dreams and learn about what it takes to get a job outside the family business, and to be able to sample success in it or else switch to a job they like better during this period.
It doesn’t matter to us what family members do when they work elsewhere — we want them to consider their own aspirations. Five years feels right to us. It gives a young man or woman the opportunity to hold several different positions, or one position long enough, to taste life outside the family business.
And that outside job has to be legitimate. The point is to try something genuinely interesting while also earning a paycheck.
One of the other benefits of the five-year endeavor is that it gives a family member the chance to mature and learn a lot, so that when he does arrive at the family business, he can bring along new and exciting ideas and skills.
— YOU MUST BE A GOOD FIT FOR AN ACTUAL JOB AT OUR COMPANY.
Family members must apply for an actual job that’s open, and be qualified for it. He can’t bump someone who’s more qualified, or accept a phony job. No one is entitled to a job.
When we implemented these two rules in the 1980s, they were somewhat unusual. More recently, we added some corollaries, such as 1) you must be interviewed by several of the nonfamily members of our advisory board, and 2) you must be supervised for a reasonable period of time by a nonfamily member.
Why are these rules so important?
Time and time again, a bright son or daughter steps right into the family business straight out of school, and it becomes a colossal nightmare. We’ve seen family businesses implode when the rules of entry aren’t clear. For example, a founder of a high-profile family business near us urged his sons and daughters to join his company, but several of them felt entitled, and dad stubbornly made all the decisions. There were stupendous fights. It was clear to Bill and to me that father doesn’t always know best, and that there has to be some room for the next generation to explore the opportunity to fly on their own.
Families also have to face that there’s no correlation between genes and business competence. All parents like to think their kids are smart and capable, but unfortunately that’s not so. Better that children discover their true capabilities outside the family business. If their kids join right away, family members may find it hard to be objective about their skills. And if they don’t come in for a real job, it sends a terrible message to nonfamily members who ideally “feel” like family and believe in a career with you.
At first, not everyone liked our rules. Indeed, our dad was vociferously opposed to them. One of our sons, Bob, who had a lot of experience working in our store in high school and college and had two internships in other stores, wanted to come in straight from college. Bill and I had to say no. Dad thought we were fools, and barked at us, “You’ll send him out to pasture, and he’ll never come back!”
But we felt strongly that if you start making exceptions, then the whole structure collapses. After all, we disliked rules to begin with, so the few that we did institute were really important to us.
Of my own four sons, Bob landed a job as a photo editor at Sports Illustrated. Russell worked in computer sales at IBM. They are now our co-CEOs. Andrew did relationship marketing for Godiva Chocolatier. Todd joined Apple Computer. His only regret was that he sold his Apple stock when he came into our family business! By working with someone other than their mother, father and brothers, they learned accountability and that a business has fiscal goals that have to be met.
Bill’s sons took their own disparate paths. Scott was the first family member to arrive with retail clothing experience, from Abercrombie & Fitch, Eddie Bauer and Ann Taylor. Chris worked for NBC Sports. Tyler worked for Brioni, then Harry Rosen men’s stores in Canada. They entered our business with polished selling and buying skills, and they understood how valuable it is to personalize relationships.
Seven out of seven sons satisfied our basic rules and joined the family business. But I don’t think Bill and I would have viewed it as a loss if any of them had decided to become a doctor or a psychic or a cowboy. That would have been their choice, and we would have supported it unconditionally.
Bill and I are already looking happily to the future. And we believe our rules of entry have set the company up for a smooth transition to the fourth generation. By establishing similar rules, other family business owners might well enjoy the same satisfaction: a family business that remains just that for generations to come.