Characteristics

In Young Business Families, the parental generation is usually under forty years old, and if there are children, they are under eighteen. This stage can cover a long period for the family, from the early adult years of young entrepreneurs or successors through the teen years of their children. That includes, in one stage, many of the stages from traditional family development theories: courtship, marriage, settling down, birth of the first child, birth of other children, and the children’s early school years.

Rockman Equipment Company: Part 1

Rockman Equipment Company was founded in 1926 by Micah (“Big Mike”) Rockman. Micah had been working in an automobile repair shop and had foreseen the potential in the repair equipment business. Over the next seventy years, Rockman expanded to distribute and service all kinds of automobile maintenance and repair equipment. Micah ran Rockman Equipment his own way and developed a reputation as a shrewd businessman and a demanding employer. Micah’s only son, Wyatt, began working at the company after school when he was eleven years old; it was the only job he ever had. Micah made sure that Wyatt learned everything there was to know about Rockman Equipment, starting on the shop floor, picking parts, and cleaning up around the repair bays. Wyatt was always a good student, and as he neared graduation he thought about going away to college. But when the boy graduated from high school, Micah made it clear that it would be preferable if Wyatt would enroll part time at the local junior college. Wyatt never considered disagreeing.

Wyatt met Margaret Sullivan on a blind date. Margaret had returned to their home town of Knowland after college and a few years of working in Texas. They got along well from the start. Margaret was more sophisticated than most of the girls Wyatt had dated. He liked her blend of calmness and self-confidence. She saw Wyatt as a diamond in the rough: lots of thoughtfulness and dependability, wrapped up in a surprising shyness. Given Wyatt’s travel schedule, they saw each other only sporadically during the year and a half of their courtship. Finally Wyatt made a formal proposal. Margaret accepted without hesitation. They were married on Wyatt’s twenty-fifth birthday; Margaret was only twenty-three. Over the eight years that followed, they had three children: Joe, Marcy, and David. With Micah’s financial help, they bought a beautiful home on the outskirts of town. Wyatt was Micah’s general manager and designated successor. The great American dream seemed well within their reach.

In 1968, when Micah died, Wyatt (age thirty-seven) was surprised at the depth of his own grief. He replayed scenes with his father over and over in his mind. He wondered what his father would have said to a customer or how he would have priced a deal. His greatest fear was that each person was saying to himself, “Wyatt’s okay, but he’s no Big Mike.” Part of Wyatt’s uncertainty came from the terms of Micah’s will. Wyatt was given only 50 percent of the voting shares in the company. The other half was divided between his two sisters. Wyatt was not sure how he was going to make the sibling partnership work; he and his sisters had not been that close while growing up.

As the new president, Wyatt suddenly found himself working seven long days a week. He and Margaret had less and less time to talk. They rarely fought, but they also had less time for evenings out, or to be with friends. When Wyatt was invited by the mayor to chair the Businessmen’s Committee for a major civic event, Margaret had been thrilled, but Wyatt had to turn down the appointment, saying that he couldn’t possibly be out of the office that much at that time. Margaret argued, “You’ve been buried in that office for three years since your father died. This is supposed to be a business, not your whole life.” But Wyatt could only respond, “Pretty soon we’ll have more time together, and with the kids. But I can’t take on something like this now.”

Despite Margaret’s desire for more of Wyatt’s time, she was committed to keeping the family in the business. When Wyatt asked her if she thought he should consider selling out, she replied that the name of the company was Rockman Equipment, built by Micah for Wyatt and, in turn, for their children. Wyatt thought a great deal about her confidence and determination. He decided that it was time for their oldest son, Joe (age thirteen), to begin to spend some time at the company. Wyatt explained to Joe that he had a job for him at Rockman Equipment, so that he could earn some spending money and get used to the place. Joe was very excited about the idea. He agreed to spend all day Saturday helping out in the parts department. He was a little reluctant to give up his Saturday afternoon football game with his friends, but Wyatt was firm, and Joe wanted to please his father.

Wyatt was reminded of his own start in the company at about the same age. The difference was that he had spent every afternoon there, dropped off by the school bus. Big Mike would show up at the end of the day, usually to find some fault with his work before giving him a ride home. Thinking about his own son, Wyatt realized that his father had not done everything right—maybe there was some room for him to do better.

Key Challenges

Creating a Workable Marriage Enterprise. The first key challenge of the Young Business Family stage is establishing a relationship with a spouse or intimate partner, and the early years in the children’s lives. With so much emphasis today on the difficulties of marriage and the anachronistic quality of the traditional family, it may be surprising that marriage remains so popular. In 1890 only 63 percent of the U.S. population ever married; in the 1970s the figure climbed to about 95 percent.¹¹

Given the drawbacks and risks of marriage, why does it still appeal to so many people? The romantic view of marriage does not say much about how a couple goes about the business of daily living after the wedding is over. A more useful concept for our analysis is the “marriage enterprise”:¹² the system that the couple builds to accomplish its dream of partnership and, in many cases, family. Contemporary marriages are complex psychological and social arrangements. In creating their psychological marriage, the couple develops implicit and explicit agreements and habits about money, work, affection, sex, children, social behavior, relationships with in-laws, and goals for the future. Violations of these agreements are the source of most marital conflict. But as the individuals grow and change, the marriage enterprise must change with them, while not abandoning its basic premises. Some people believe that allowing the marital enterprise to mature and develop as the individuals change is the most important task of marriage and the best predictor of marital longevity.

In families with businesses, the marital enterprise has special significance, but it can take very different forms. In the Rockman family, for example, Wyatt sees running the family business as his full-time job. He leaves home to go to the office early in the morning, works hard, and returns late. His implicit arrangement with his wife, Margaret, is that he will be the primary breadwinner and she will be the primary home manager and child rearer. Wyatt spent as much time as he could with his children on weekends, before Micah died and he had to go to the office most Saturdays and Sundays. Margaret worked outside the home before the children were born and thinks about returning to part-time work or starting a small business of her own when they are grown. In their marriage enterprise, Wyatt works on his dream of becoming a leader, matching his father and gaining the respect of his siblings, and reaching financial security. The marriage enterprise also supports Margaret’s dream: to create a stable and enviable home, to raise successful children, and later to have a part of her life where she makes an important contribution outside of her family and spousal role.

Their friends the Huangs have formed a somewhat different enterprise. Ted and Elaine began a fast-food franchise together, with a loan from Elaine’s father. Later they bought a restaurant and a small motel, and eventually another motel. Elaine still manages the restaurants; Ted is president of the motel company. They go to the office together every day. They bought their first motel when the youngest of their two children entered school. Since then, they have had a live-in housekeeper who takes care of the home, babysits, and cooks for the family. Neither Ted nor Elaine would make a significant business decision without consulting the other. Their work sometimes keeps one or both of them out of the house in the evening or on weekends, but they have made it a rule to have dinner at home as a family at least four nights each week, and to spend Saturdays together. Each is pursuing a dream that includes both business success and family identity. The business has created a great deal of conflict between the spouses over the years, but it has also made them a closely collaborative team.

In these two examples, many things look the same. The couples were married in the same year. They have the same number of children, and family members are the same ages. The businesses are comparable in size. Both marriages are happy. But the two marriage enterprises are very different. The spouses in the Rockman and Huang marriages expect different things from their partners and from being married. They have probably never articulated these expectations to each other, but each spouse has a good sense of what those expectations are. And neither wife or husband would likely be very satisfied with a spouse from the other couple.

The type of marriage enterprise that the couple forms in the Young Business Family stage has implications not only for their one-to-one relationship, but also for the family environment and its reflection in the business. For example, the couple will gradually evolve a style of interaction on the continuum that family theorists call enmeshment-disengagement. ¹³ In enmeshed families, anybody’s business is everybody’s business; there is a high level of intimacy and interdependence, and little privacy. In disengaged families, autonomy, self-reliance, and individuality are highly valued. Extremes in either direction can be dysfunctional. Most strong and healthy families demonstrate aspects of both styles.

Families with businesses tend to be at least a little on the enmeshed side. The family identification, close relationships, emphasis on trust, and comfort with group tasks in enmeshed families lead to many of the advantages of family businesses. But whichever style the family adopts at home, it has important implications for the structure of the business. If a family has a very enmeshed style, family members may look for opportunities to escape from the intense “togetherness” and create islands of independence. The business is an attractive opportunity to find such a refuge. As a result, some members from enmeshed families will be determined to enforce rigid boundaries protecting their space in the business. If taken to a dysfunctional extreme, their need for autonomy may come at the expense of good communication and integrated operations. Conversely, some individuals from strongly disengaged families will see the business as an opportunity to create a family bond. The business can be the prime integrating force in a disengaged family. Over the years we have encountered many families, particularly second- and third-generation disengaged families, in businesses that were founded by hard-driving, distant entrepreneurs, where family members have said clearly that if it were not for the business, their disengaged family would have spun apart long ago. But in this direction also, the extreme case can sometimes result in an overreliance on consensus models in management and in restrictive shareholding policies (prohibiting sales).

Another aspect of the marriage enterprise in the Young Business Family stage that is particularly important in business families is the distribution of power. All young business couples and families adopt a form of hierarchy as part of creating their marriage enterprise.¹⁴ The traditional pattern of authority in families with businesses has been pictured as authoritarian: the husband/father in control, the wife/mother as a supportive partner (who may have authority in certain circumscribed areas at home), and children as apprentices. Although there are clearly families that demonstrate this style in its fullest sense, and although business families may be more traditional on average than the general population of families as a whole, this style is not as common as the popular culture believes. We have found that shared authority, spouse copreneurship, sibling partnerships, dominant children, and matriarchies are much more common in business families than was once thought. It may be that these more egalitarian forms are becoming more common because they are also more successful. Family systems where authority is more broadly shared may fit better with the varied and changing demands of running a business.¹⁵ In addition, the increasing prevalence of second marriages may be encouraging more egalitarian patterns, especially among older adults. Second marriages in general have more balanced authority than first marriages, with less rigid sex-role differentiation.¹⁶

Some couples actually build the business together, and there are thousands of family businesses that were founded by copreneurial couples.¹⁷ In some of these cases, the spouses work as equal partner-managers.¹⁸ True partnership equalizes formal authority and facilitates communication. However, comanagement may also maximize conflict and make unconscious or covert power imbalances more obvious. More commonly, one spouse is more senior than the other. When a couple works together, their power relationship is part of all aspects of their lives—they cannot get away from it either by going to work or by going home.¹⁹ This magnifies the satisfactions of an arrangement that both spouses like and equally magnifies the conflict and resentment in a relationship that is not comfortable for one or both of them. One encouraging finding is that, despite the intense demands in both the work setting and the home, most couples feel that developing a business together has strengthened their marriage.²⁰

Making Initial Decisions about the Relationship between Work and Family. Whether or not both spouses work in the family business, it is a difficult challenge for the Young Business Family to nurture the domain of work and the domain of the family simultaneously. Time, energy, attention, and money are usually in short supply in any marriage at the young family stage. In business families, however, there are special pressures. First, there are the demands of the business itself. These often include late hours, seven-day work weeks, and the takeover of family social events by business discussions. There may be social obligations with customers and suppliers. The business may use up all of the Young Business Family’s financial reserves and even require personally collateralized debt. It is sometimes hard for the partner on the outside to understand the level of involvement and identification experienced by the spouse in the business. For example, time pressure is the dominant feature of the Rockman family at this stage. Wyatt may be prone to be a hard worker, but his situation exaggerates that tendency. He is following a successful father with a strong personality and coping with all the posttransition demands of business, family, and ownership at the same time. Margaret tries to be supportive, but the nature of their marriage enterprise does not call for much sharing of information, so she cannot truly empathize with his situation.

Second, if the Young Business Family is part of a larger family business, then dynamics with the extended family may frequently intrude on the couple’s private efforts to form their own marriage enterprise. Intense and shifting relationships with siblings, turf battles, and competition to perform conspicuously well in front of the parents can add enormous pressure to the young marriage enterprise, making the couple feel out of control of that part of their lives. Finally, when children are born, the Young Business Family has to cope with a new set of conflicts: work-parenting dilemmas and the expectations of the extended family, who are simultaneously employer/colleagues and grandparents/uncles/aunts/in-laws. To avoid conflict and confusion at this stage, the couple needs a strong sense of its own identity as a separate young family and a focus on its own concept of the marriage enterprise and the role of work in it.

Working out Relationships with the Extended Family. A third key challenge of the Young Business Family stage is finding a place for the new family in the extended families of both spouses. Keeping a balance between sides of the extended family is always a challenge for a young couple. It can be even harder if one spouse’s family is involved in the business (on which the couple may be financially dependent) and the other spouse’s family is not. The relatives of the spouse on the business side are then connected in all three circles—family, business, and ownership—whereas the relatives on the other side have only the family connection. The business-owning extended family may try to envelop the new marriage as if nothing had changed. This can create tension over the amount of time spent at quasi-business gatherings of the family of origin, such as Sunday barbecues, evening meetings, family vacations, or business trips. The young business couple then has to make a conscious effort to avoid spending all of its time with the business side of the extended family.

An opposite problem arises if the business-owning extended family does not approve of the marriage or like the new spouse, or if it is simply wary of all in-laws. This can be a special problem if the new family’s style is very enmeshed. For example, in the Smith family, the parent-founders of the family printing company always expressed the value that whomever their four daughters married would be considered a full member of the family—just like a son. When the oldest daughter married, her husband was offered a job and a block of shares in the company. Two years later, the marriage ended in divorce, the son-in-law joined a competitor, and the family engaged in a lengthy legal battle to recover the outstanding shares. At that point, Mr. Smith approached his third daughter, who was planning to marry one of the company’s accountants. Mr. Smith told her that not only would he not be giving any shares to the new husband, but he wanted the couple to sign a prenuptial agreement withholding her shares from community property, and he would prefer it if the new son-in-law gave up the company’s account. This caused a major conflict in the family, the cancellation of a formal family wedding, and deeply hurt feelings. Mr. Smith was feeding a lifelong sibling rivalry between the two sisters. The younger daughter had been proud that her husband and marriage were going to succeed where her older sister’s had failed, and that she would be proven more competent, loyal, and loving at last. Her father’s action felt like advance punishment to her; she had lost something due to her sister’s behavior. Her father, badly injured by the experience with his oldest daughter, could not understand how his younger daughter did not see the simple wisdom of his new policy.

Raising Children. Finally, Young Business Families face the formidable challenge of deciding whether or not to have children, when to have them, how many to have, and how to raise them. Most couples who do decide to become parents would agree that children change everything, especially the marital enterprise. Adding children to a marriage changes the vision of the future. It changes priorities, or at least brings priorities that have existed only in theory into the realm of here-and-now reality. And, perhaps most importantly, it adds an enormous new set of tasks to the marriage. ²¹

In the Young Business Family stage, the impact on the business of becoming parents will depend to a large extent on the decisions that were made about work in the marriage enterprise. If one spouse has been working in the family business and the other has been a homemaker, as in the Rockman family, the marital contract may not need fundamental renegotiation when children are born. Having children may add many new responsibilities to the homemaker spouse, and new pressure for financial success to the business spouse, but the role differentiation can remain much the same.

On the other hand, if both spouses in the Young Business Family have been working in the business, as in the Huang family, becoming parents will have important consequences for both the marriage enterprise and the operation of the firm. There are limited options open to them to cover the responsibilities of child rearing. If both want to keep their positions in the company, they can enlist a family member or nonfamily employee to care for the children when they are young, supplemented by day care, nursery school, and school as they grow up. They can try to put strict limits on their hours in the business, covering for each other with staggered schedules (this solution often looks better on paper than in reality). However, the most common solution is for one spouse, traditionally the husband, to be a near-full-time owner-manager (perhaps helping at home as much as possible), while the other spouse, traditionally the wife, cuts back on her time in the business and covers the primary responsibility for the children. (This can lead to the situation of the “invisible woman” in the family business.²²) Whatever solution is chosen, the key is for there to be an explicit renegotiation of the marriage enterprise—fully discussed until each spouse can support the new arrangement.

With the birth of children, the parents in the Young Business Family become the middle generation in the family business system. It is often the birth of children that causes a founder or founding copreneurial couple to consider for the very first time that their company might become a family business. Having children instantly pushes back the horizon of the future for most people. Their timetable for planning and dreaming stretches beyond the next year or the next milestone to include their children’s growing up, becoming adults, and continuing the family in future generations. In business families, the company is a convenient vehicle for all those fantasies. It can serve as a context for the normal dreams of parents: providing for all the child’s needs, teaching and guiding children as they develop skills, working together on increasingly mutual projects, even watching the children eventually carry on the family identity and legacy into the distant future, generation after generation.

In many business families, conveying the psychological legacy of the firm is an important part of child rearing from the beginning. Although the world of careers seems far in the future for the young children in the Young Business Family stage, this is a critical period for forming their impressions of the family business. Children will internalize their parents’ attitudes and values about the firm, a sense of the quality of life it provides, and impressions of the business’s impact on their parents’ marriage and family relationships. Lessons learned at this stage, intentionally or unintentionally, will not be easily changed by the lectures that parents may give later in life, and they will determine in large part the potential for the business’s continuity in the future. One second-generation CEO of a company that imported and manufactured women’s knitwear expressed her dismay that none of her four children wanted to join her in the rapidly growing, profitable business. “It’s a far better economic opportunity than any of them have anywhere else, but it looks like when I am ready to retire I’ll have to sell it out.” Interviews with her daughters and son made it clear that their decisions were actually predetermined many years earlier, in the Young Business Family stage. Their memories were all the same. “Every night, she would come home and be obsessed with how difficult it was, how miserable her coworkers and customers had been that day, how tough it was working with her brother. Now all of a sudden she wants us to see how much fun she was having, and how satisfying the business was all those years. It’s too late; I have an idea about what family business is like, and it’s not for me.”

Characteristics

In the Entering the Business stage, the owner-manager and spouse are now typically between thirty-five and fifty-five, moving into and through middle age, and adjusting their business strategy and personal lifestyle accordingly. Most of the younger generation are now teenagers and young adults, just beginning their work lives, and making their initial decisions about entering the company. They need clarification on the opportunities the family business provides—both as future owners and as potential leaders. If the family is small or the business is demanding, the senior generation may face a recruitment task if it hopes to retain family management in the future. If the family is large and executive roles in the business are seen as very attractive, then the task is likely to be one of selection. In either case, the coming-of-age of a new generation forces the family business to redefine itself. Why are we a family business, and who will care about maintaining our identity in the future? How is “family” defined for us? Which offspring, or branch, or namesakes are entitled to access to employment and financial benefits from this business?

Although many family issues are important at this stage, three are most critical. The first is the midlife transition that the senior generation must transverse during this period. The second is the process of separation and individuation that moves the emerging adults out of the parental home. The third is the process by which the younger generation decides whether or not to join the business.

Rockman Equipment Company: Part 2

By 1984 the two oldest Rockman children, Joe (age twenty-five) and Marcy (age twenty-two), had finished college and were pursuing their first ventures into work careers. Dave, the youngest (age nineteen), had graduated from high school early and was also testing his abilities in the world of work.

Three years earlier, Joe had started working full time on the Monday after his Saturday graduation from college. He had never worked anywhere but at Rockman Equipment, except for one summer job in a construction company owned by a fraternity brother’s father. Joe had always felt restless at college. He would have left college several times if it had not been for strong pressure from his mother, Margaret. She was relentlessly determined that he graduate.

Actually, Joe had been able to apply some of what he had learned as a business major and in his summer job to his work at Rockman. In his first job in a branch office, he had suggested to the sales manager that they have weekly staff meetings to inform each other about new developments with customers. Joe knew that, if he were not the owner’s son, his ideas would have been ignored, but he didn’t care why he was listened to as long as he got the results that he wanted. Then a few months later, Wyatt had suggested that he come back into the main office. Joe agreed and had been living at home ever since. He didn’t mind his work, but he felt a little like he was still preparing to do a job, instead of doing it.

Marcy had graduated from the University of Colorado. Unlike Joe, Marcy had had a wonderful time in college. Besides the skiing, she had loved economics, psychology, Shakespeare, history of art, and, most of all, math. After graduation, her first plan had been to spend a year in Europe with her best friend. When that idea fell through, she returned to Knowland for the summer and naturally started helping out at the company. Soon she was going to the office every day, still on a “let’s see what happens” basis, helping out in the finance office under the CFO.

Dave had graduated from Knowland High School a semester early and immediately began a six-month adventure sailing around the Pacific with the crew of an oceanographic research vessel. When the project ended, Dave decided to stay in California with one of the other crew members. Wyatt arranged a job for Dave with one of their suppliers in southern California. Dave wasn’t thrilled about the prospect of spending his time in California working in a factory, but it was clear that his parents’ approval for his staying, and their financial support, depended on his agreement. Things had worked out very well. The hours he was putting in at the factory were long, but Dave had to admit that he was enjoying it.

Margaret had reacted to the departure of her youngest child from home with some regret and a good deal of relief. After twenty-five years of taking care of children, it was now just Wyatt and her. Margaret was toying with the idea of becoming a kind of interior design consultant as a small business venture. She was reluctant to approach Wyatt about the idea; business was bad, and Wyatt was preoccupied with work. She was also a little worried about the constant bickering between Joe and Marcy. She had always felt that, if the two of them could spend some time together, they would overcome their childhood rivalries and learn to be good friends as adults.

Wyatt (age fifty-one) had begun to think that his anxiety was out of proportion to the business slump. He felt as if he was in a personal slump, dissatisfied with his accomplishments and eager to try something new. Wyatt’s comfort came when he considered the family. He was very comfortable in his marriage, and he was also very grateful that the children had avoided most of the serious problems that plagued the young adult kids of so many of the people they knew. But he felt very uncertain about the future. Wyatt felt like he was running as fast as he could at the business, and just barely staying ahead of the wolves. Could he hang on and continue to build, so that his children would have a vibrant, healthy business to take over? And who was he building the business for? Did Joe really have what it takes? Was Marcy a realistic possibility, even in this new era? Could Dave ever live the life of a businessman in Knowland?

Key Challenges

Managing the Midlife Transition. Early in the Entering the Business stage, the parents are most likely to be going through the midlife transition. This term, one of the most significant contributions of Levinson’s work on adult development, is a more complex elaboration of the “midlife crisis” that has become part of our popular culture. It refers to a period of several years, usually the early forties, when it is common for adults to experience a time of self-assessment. Wyatt Rockman is reflecting on the classic midlife transition—thinking about his accomplishments to date and wondering if he has enough time left to get closer to achieving his most important dreams.

The midlife transition is often a powerful experience, because it comes between two major sections of adult life: early adulthood, between the ages of twenty and forty, which is the exploratory, achievement-focused, and commitment-making era; and middle adulthood, between the ages of forty and sixty, which are the years of maximum authority, senior status, and control. It is during the early forties that most people stop and ask themselves if the path they have been on in early adulthood is compelling enough to continue in middle adulthood; that is, are their early choices still satisfying enough to be their life’s work? All aspects of the life structure are brought under review: career, marriage or romance, parenting, extended family relationships, religion and spirituality, social role, physical and sexual activity, recreation, and whatever else occupies an important place in life. This time of life is experienced as “halftime.” As has been demonstrated at many levels of analysis, the halfway point is a natural stimulus for stock taking, with a new sense that there is only limited time left.²³ There is still time, one feels, to make dramatic changes, to take a different path, and to do better—but that will not always be so.

There is so much going on in life during these years that it is difficult to separate internal developmental processes from responses to life events. The oldest children are leaving the parental home, and others are likely to be at various points in adolescence. In a business family, this may raise unconscious anxiety about the potential for continuity, even though the time of transition is only dimly imagined in the distant future. Parents may be troubled by their teenagers’ normal separating behavior, concerned that once they leave home or jobs in the business, they will never return.

At the same time, the parents of midlife adults are aging more dramatically at this point, and some will die. In business families, this marks the completion of the prior generation’s cycle of control. Now the mantle—and the burden—of leadership belong fully to the midlife generation, without the intrusion or the security of the parental guide. Both the parents and the offspring are departing; midlife adults can very quickly change from feeling that they are embedded in the middle of an active family to a sense that they are alone. For some this leads to a positive feeling of freedom. The burden of intense familial responsibility is finally reduced, they are released from the parental evaluative eye, and they are free to explore previously hidden sides of their personalities. For others, this freedom is accompanied by a sense of isolation, abandonment, and missed opportunities with both parents and children.²⁴

There are other ways that the midlife transition has special meaning in business families at this Entering the Business stage. The initial career decisions of the younger generation stimulate self-questioning in the parental generation as well. While talking with their teenage and young adult children about whether or not to join the family firm, business owners are reminded of their own decisions. “How did I become a businessperson? Did I feel that I had a choice? Has working in this firm provided me with the rewards that I expected?” Most important, “If I had it to do over again, would I make the same decisions?” Two generations, asking themselves the same questions, are what set the dynamics of the Entering the Business stage into motion.²⁵

Separation and Individuation of the Younger Generation. The parents’ midlife transition coincides with the second key challenge of the Entering the Business stage: the departure of the offspring generation from the parental home. This separation goes far beyond a change of address for each child in turn. The family structure is changing. The marriage is changing. So is the meaning of the parental role, including what each generation needs from each other, expects from each other, and has to try to accept from each other.²⁶

Many models of the family life cycle identify this stage with the concept of “launching.” The idea is that the younger generation is ejected from the family one by one at about the time they graduate from high school. If the parents have done their job right, the preparation has been adequate, and the offspring are ready to relocate to college, or the armed services, or a job, or a marriage. The job of the nuclear family is mostly done; the responsibility for negotiating the world of adulthood now rests with the offspring.

It is clear that even in nonbusiness families it rarely works that way. Many young adults now continue to live in the parental home into their twenties.²⁷ Others leave and return, either at the breakup of an early marriage or just to save money. Even for those who move out, the transition from teenager to adult is a more gradual process in most families, covering a number of years. In addition, different families have very different visions of the optimal level of generational independence. In many neighborhoods, the course of the “launched capsule” is rarely more than a few blocks.²⁸ Ethnic groups differ in their models for appropriate relationships between the generations.²⁹ Still, there is a powerful norm in American culture that becoming an adult means leaving the parental world and forming an independent life, whether that entails moving across the country or only across the street.

The generational separation that is an inherent task of the Entering the Business stage is very difficult for many business-owning families. As a result, sometimes the family overfocuses on the single question of whether or not the offspring will join the family firm. In fact, families who negotiate this stage most successfully take a broader view, acknowledging that both generations have important transitions to accomplish. The older generation must begin to learn a new parenting role as parents of adults. And the younger generation must attend to all the components of moving into adulthood: career, self-reliance, financial responsibility, intimate partners, and social network.

Sibling dynamics are also critical to understanding family business systems in the Entering the Business stage. Siblings are life’s longest relationships. For most people, there is no one who shares as much as a sibling—genetically, environmentally, and historically.³⁰ In the Entering the Business stage, the childhood relationships, largely shaped by parents, gradually evolve into adult sibling relationships, which are fashioned and sustained by the brothers and sisters themselves for the rest of their lives. This is the time when brothers and sisters make important decisions about how much their adult lives will remain intertwined. Choosing a career in the business usually means committing oneself to remaining intimate with siblings for a lifetime—interdependent not just on family matters, but on career and financial ones as well. The young adults in the Entering the Business stage have to decide whether that level of closeness seems workable for them.

In some business families, the company is always central to the sibling relationships, because the business dominates all aspects of family life. In these cases, the surest way for a child to get attention and rewards from the parents, even at an early age, is through the business. One, several, or all of the brothers and sisters may make it a point to learn about the business, spend free time at the office or in the factory, take a Saturday job at the front counter or cataloguing inventory, or work as a sales clerk in the summers during high school. By the Entering the Business stage, these children have absorbed the family priorities and understand their options. Staying in the business means keeping first-class status in the family; choosing another path means becoming peripheral to family interaction. The more successful you are in the company, the higher your value in your parents’ eyes.

Other families create different sibling environments. The parents protect time away from the business to spend with the children individually and together. As a result, the sibling bond develops separately from work. This can be reinforced by family vacations that are not connected with business trips; dinners together where the topics of conversation are the children’s day at school, not the parents’ day at the office; and encouraging adolescent children to take part-time jobs somewhere else. When that is the pattern in early childhood, then siblings are more likely to view working in the business as a career option, not as a criterion for membership in the family. In addition, because each child has access to the parents in the personal family arena, competition for access to them through the business is reduced.

Among the many aspects of sibling relationships, three that are of special importance to business families are birth order, and the dynamics of differentiation and identification. Birth order is particularly important in business families because of the traditions of primogeniture (preference for firstborn males in inheritance).³¹ Historically, strong traditions have supported primogeniture in business-owning families. First, the gender bias toward males as business leaders means that many families have traditionally looked to their sons as successor candidates. In addition, the natural family hierarchy of age, and the head start that older siblings have on education and experience, mean that preference often goes to first or early-born sibs. Finally, for some families primogeniture is less a choice than an avoidance of choice. Most families are uncomfortable with explicit competitive evaluation among siblings and will look for other decision rules, which protect the parents from the recrimination and guilt associated with favoritism. In choosing a next-generation leader, primogeniture is the most common automatic assumption—the way it will be unless and until some other solution replaces it.

An explicit or implicit assumption that the oldest son is the most likely heir to the business will have a strong effect on family dynamics in the Entering the Business stage. Depending on the style of the business and the family, the other siblings may react with intense envy or with relief. “Designated heir” status usually carries with it greater access to the parents and a wonderful sense of specialness. But it may also carry greater demands for performance. The chosen child may have little choice or, like Joe Rockman, may at least feel that way. For that child, early commitment to the firm may restrict options about school, extracurricular activities, weekend and vacation experiences, and friends. The parents may feel they are benefiting from primogeniture as a decision rule, because uncertainty is reduced and continuity is enhanced. But primogeniture is an arbitrary rule, based on family values about age and gender. Applying it to the business can leave the siblings with resentments that will influence their relationships for the rest of their lives.

Primogeniture is only one example of the way brothers and sisters divide up the psychological space of a family in order to achieve recognition as unique individuals.³² Firstborns have an advantage in selecting a special role, because they enter an open field, but even in families that ignore primogeniture, this freedom is restricted by the conscious and unconscious desires of the parents. The firstborn may be highly motivated to try to become the person that the parents are hoping for. Or the firstborn may feel coerced into satisfying the parents’ dreams and resent the perceived freedom of the other siblings to choose different paths. Later-born children are in a different situation; they can either compete with the same skills or look for distinctly different roles. Parents may encourage competition (wittingly or unwittingly) with an attitude of comparison, such as “I hope you will be as . . . as your sister,” or, more negatively, “Why can’t you be more like your brother?” This can be a complicated and tense dynamic in some families. Defeating or overtaking a sibling can be a Pyrrhic victory. A sibling’s public failure can be an embarrassment for the whole family. And exaggerated competition at the Entering the Business stage can also make it very difficult to form a viable Sibling Partnership in later stages, when the parents are no longer around to referee.

Differentiation is the centrifugal force of sibling groups, acting to pull individuals apart. There is also an opposite, centripetal force, which holds them together: sibling identification. Intimacy with siblings has its own rewards, especially in coping with parents. When parents are preoccupied with the incessant demands of the business, sibling identification and interdependence can be enhanced—often evolving, during the Entering the Business stage, into a powerful sibling alliance. The strength of this alliance may be an excellent predictor of the chances of success of a Sibling Partnership in the future.

All sibling groups demonstrate some balance of wanting to be together and wanting to be separate individuals. The differentiating pressure moves siblings to want to work in different parts of the company, or one to get an MBA while another disparages business education as irrelevant, or one to love being identified with the family business while another seems embarrassed by it. At the same time, the identification pressure encourages them to visit each other unexpectedly, to rally to one another’s support when one is threatened or in trouble, to defend one another against parental criticism or attack, and sometimes to agree to comanagement of the business even if the individual would rather have unchallenged control. Both influences have to be taken into account in assessing the real collaborative potential of the sibling group in the Entering the Business stage.

Facilitating a Good Process for Initial Career Decisions. It is an oversimplification to portray this issue as it is most often presented in the succession literature: Do the parents try to coerce the offspring into joining the business, or are they given truly free choice? We have found that the actual process unfolds over a number of years and includes many interrelated questions, all of which must be resolved, such as:

• ■ Will the business continue for another generation?
• ■ Do the parents want their children to consider careers in management in the firm, or to participate only as owners?
• ■ Will several members of the next generation run the firm together, or will only one individual be invited to join?
• ■ Do the parents want to structure opportunity and experience so that they ultimately control who enters, or do they want the offspring to choose for themselves?
• ■ Will offspring who want to be in the business start immediately after school and work straight through, or go away and then decide about coming back?

In finding answers to these questions, the senior generation must come to terms with its own dream for the future. Lansberg has explored in another volume the intricate power of the dream of continuity.³³ It is at this stage that parents are confronted with their own aspirations for their children. Many factors will undoubtedly contribute to the shape of those aspirations: their own history as offspring of prior generations of parents and grandparents; the pleasure or the struggle they have experienced in the business; their assessment of the firm’s economic potential; their sense of each child’s talents and potential. All parents confront the challenge of preparing their children to have the best opportunity for success as adults. What is different for parents in business families is that, in the midst of all the alternatives that young adults face, there is one specific opportunity that must be either accepted or rejected: the family firm.

Of course, the parental decision making is only one side of the generational separation issue. Perhaps the more important family processes in the Entering the Business stage are those occurring among the offspring. Some younger-generation members have been psychologically in the business since they were babies. They made plans to work in the company, had after-school and summer jobs, shaped their education around the demands of management roles in their industry, and consider their careers to be inevitable. Others never gave it a thought. Even if they did bookkeeping on Saturdays or drove the delivery truck all summer, it never occurred to them that their connection to the business would extend beyond their emancipation at the end of high school. And of course there are all kinds of combinations in between. For the vast majority of offspring, however, the question looms and must be confronted: Do I want to invest my work life in the family firm? Particularly at the Entering the Business stage, answering the underlying developmental dilemma is key: Can I become an independent adult, with a life of my own, and still stay embedded in the business (and therefore the world) of my parents? The younger generation’s answers to these questions, as they work through the Entering the Business stage, will largely determine the future of the family business.

Characteristics

During the Working Together stage, two or more generations are fully involved in the family business together. The senior generation, most typically between fifty and sixty-five, is at the peak of its authority in the business circle. If the business is profitable, the owner-managers can use the income for expansion and new ventures, and to fund a comfortable lifestyle to which many adults aspire at this age—home, travel, social life, recreation, and place in the community.

The members of the junior generation are now in their twenties, thirties, and forties. They have made the decision, at least initially, about whether their work lives will be inside or outside the business. If in the business, they are preoccupied with making space for themselves as independent, competent adults, in their parents’ shop. How is it possible to be loyal but also distinctive; to show strong leadership potential, without being presumptive or condescending; to be authentic and genuine, but not act like the owner’s kid; show your comparative value in relation to siblings without overtly competing with them?

For the senior generation, this is the time of the empty nest, as the youngest children leave home and the oldest move further into their own lives and their own new families. In fact, one of the hallmarks of the Working Together stage of development is that the family has become a network of families, as the younger generation marries and has children of its own. The parental marriage enterprise, formed in the Young Business Family stage and often tested in the midlife Entering the Business stage, now faces the challenge of commitment after the primary family task—raising children—has been completed. As Duvall put it in her landmark study of family life cycles, “The most important task of the middle years is that of finding each other as husband and wife again.”³⁴

Three of the family issues that are most critical in the Working Together stage are fostering good intergenerational cooperation, managing family communication and conflict in productive ways, and developing the family into an extended family network.

Rockman Equipment Company: Part 3

In 1982 Dave Rockman came back from California to begin college at the University of Texas, his mother’s alma mater. When he graduated in 1986, he started working at Rockman Equipment as a salesman. For two years, between 1986 and 1988, all three of Wyatt and Margaret’s children were working in the company. Joe was now general manager of the equipment division. Marcy had moved over to the Rapid Tune division, where she ran the accounting department. Dave took over the midwest sales territory.

In 1990, when Marcy returned after being away for two years getting an MBA, Wyatt began to think about planning for the future. He had joined a family business forum sponsored by a local business school, where a speaker on succession planning had really hammered home the point that you need to give successors real jobs with responsibility. After that, Wyatt decided to identify Joe, then age thirty-two, as the next president of Rockman Equipment. For now, he made Joe the vice president of operations, although he had a hard time specifying exactly which operations Joe would have managerial responsibility for.

One result of those decisions, unexpected by Wyatt, was that Dave and Marcy reconsidered their own careers. Both of them knew that, in the long run, they would have a very hard time working for their brother, Joe. Three months later, Marcy moved back to Denver to join a start-up software firm with a friend from business school. A month after that, Dave met a young attorney, Maria Schiavone, and soon after they were married. Maria’s father offered Dave a job in his company in Chicago. Dave loved working with his father, but Wyatt had made his choice about Joe, and Dave needed to think of his and Maria’s future, so he took the job.

In 1991 Joe also married. Wyatt and Margaret hoped that getting married would lighten Joe’s moods and soften his style with people. In the business, moving Joe from middle manager to senior executive was a bumpy road. Wyatt had tried to pass significant responsibility to Joe and give him plenty of room to make his own mistakes. Making mistakes was something that Joe proved to be good at. When talking to “outsiders,” Wyatt had a million good reasons for each of the problems and errors that Joe had made. Privately, he was very worried.

Joe began by making some changes in important positions in his department. Unfortunately, most of them did not work out, and Wyatt felt obliged to step in and correct the situations. Then Joe began a complete overhaul of the marketing department. Joe felt that the department had been doing little more than routine advertising; he wanted to implement a comprehensive market approach that he had learned at school. He spent a great deal of money on a glossy direct mail packet and hired a consultant who specialized in market segmentation and research. Wyatt was intrigued at first, but quickly grew alarmed at the expense of the plan that Joe was proposing, and at its lack of practical applicability. The idea died after a brief and heated discussion about the plan. Someone had left Wyatt a copy of the proposal, which Joe had not shared with him. He called Joe into his office for an angry meeting. Wyatt reprimanded Joe for his “secrecy,” reminding him that Wyatt was still ultimately responsible for everything that happened in this company. Joe was very discouraged. He felt that this analysis was the best work he had done, and he was looking forward to showing it to his father. As usual, it had not worked out that way.

The tensions between Wyatt and Joe were very apparent to all the managers at Rockman. In private conversations, they would agree that, although some of Joe’s new ideas were terrible, the company needed to try out some different approaches. One senior vice president told another, “Wyatt is open to new ideas. I just don’t think he likes to hear them from Joe.”

Joe found it easier to talk to his mother than to his father about his dissatisfaction at work. He complained that Wyatt did not give him the information he needed to do his job, and would chew him out one day and praise him to everyone else the next. Wyatt, on the other hand, was worried about Joe’s poor “people skills.” Ever since Joe had returned to Rockman Equipment from college, Wyatt had been getting complaints about Joe’s arrogant manner. Even when Joe’s ideas were good, Wyatt felt that his abrasive manner undermined his own best efforts. Still, he knew that he needed to do something to help Joe feel more ready to take over the company. Finally, he decided to create the position of president for Joe. Wyatt would change his title to chairman and CEO of the equipment company. Joe wondered what a president does when someone else is still CEO, but that was not the kind of question he could ask Wyatt.

Key Challenges

Fostering Cross-Generational Cooperation and Communication. The most common way that family members assess the quality of family life is by talking about communication. This is true throughout the family life cycle, but never more so than in the Working Together stage. Offspring are marrying, having children, establishing their own homes and social networks, and becoming more and more separate—even as they share management and ownership responsibilities in the company. The primary challenge of Working Together in the context of family development is creating the linking mechanisms that allow the family system to continue integrated operation in the face of dramatic decentralization and diversification. Communication is the most important of these linking mechanisms.

Families differ widely in the emotional tone of their typical interactions: warm or cold, intimate or distant, hostile or friendly, and so forth. In business families, however, it is also important to look at the quality of communication as a purposeful activity, a process essential to getting the business’s work done. Working Together family communication needs to demonstrate certain characteristics:

1. Honesty. Honesty is simply the degree to which family members tell and expect the truth. In business families that value honest communication, a son or nephew who is a junior manager will expect that, when a parent-executive asks for an opinion or feedback, he can respond with the truth, without negative consequences.

2. Openness. All families have taboos against some topics, such as sex, money, teenagers’ romances, problems at work, and death. In families that value openness, these restrictions are kept to a minimum. Across business families in general, the most common complaints about family communication concern frustration over limits on openness. For example, if talking about recent strategic decisions is considered a challenge to the authority structure, or if protecting individual turf means that no one can ask questions about someone else’s division, the openness of communication is restricted.

3. Consistency. In some families, you can assume that one person’s opinion today will be the same as his or her opinion tomorrow, and that words and actions communicate the same thing (that is, a statement of affection is accompanied by a facial expression and a body posture that also communicate affection). In other families, that is often not the case. For example, a young manager may find that some days she has easy access to her father in his president’s office, where he calls her “honey” and asks her to sit in on his senior staff meeting “just to see what it’s like.” The next day, when she comes into his office to deliver a market analysis, he informs her coldly that she is taking liberties as a family member and should always go through channels. Perfect consistency is neither desirable nor possible. However, in families where inconsistent communication is the norm, the members’ confidence and sense of security may be low, and family relationships at work may be clouded by an atmosphere of perpetual anxiety.

Taken together, these three characteristics can give an accurate picture of the quality of communication in a business family. Individuals in a family may differ from each other in communication style. One parent may be very open and the other very closed, or one sister may always be a stickler for the truth, whereas the other tends to exaggerate. Overall, a Working Together family whose communication is high on honesty, openness, and consistency will be better able to manage conflicts productively than one that is low on several or all of the dimensions.

There are a few common communication bottlenecks in the Working Together family. Parents have a great deal of difficulty giving honest feedback to their children of any age. This can interfere with good management development of the younger generation if the parent is the only supervisor or mentor. Wyatt Rockman worried that he was constantly criticizing Joe, and he gradually became reluctant to provide any feedback at all. He did not realize that Joe was eager for good data about how he was doing, and that much of his anxiety came from having to read his father’s mind and put together a sense of his reactions from small gestures and offhand comments. In fact, the relatively low level of both honesty and openness in their relationship made their work relationship a strain on both of them.

Also, parents often find it hard to add topics that were out of bounds when the offspring were children to the “permitted” list for their adult sons and daughters. For example, some parents in the Working Together stage find it hard to suddenly begin discussing financial issues in both the company and the family, especially in bad times. This reluctance is not just the parents’ problem; the sons and daughters may also be ambivalent about “intruding on their parents’ privacy,” even if the information is necessary for them to fill their adult roles in the family and their management responsibilities in the company. These openness and honesty issues need to be resolved in the Working Together family.

If the family system has reached a high degree of complexity, especially in a Cousin Consortium, communication between branches may be particularly complicated. Different histories may have created different interpretations of the same material and different assumptions about communication rules. Asking for an opinion in one branch of the family might be a request for an honest appraisal; in another branch, a request for support and encouragement. Does the family strictly follow the organization chart or the family relationship network, or some combination, in sharing information? Should a sibling assume that sharing information with a brother also means sharing with his brother’s wife? Do the employed siblings have a common understanding about what information is not to be passed on to those family shareholders who do not work in the company?

In-laws can be lightning rods for unexpressed family conflicts and repositories for old grievances that the family has difficulty resolving directly. For example, two brothers work together as managers in the company’s corporate office. At the end of a difficult day, the older brother storms into his house and complains to his wife, “That younger brother of mine is a pain in the neck. He challenges everything I say just to give me a hard time. He came up with a harebrained idea today that I could tell was a waste of money just by glancing at it, but he expects me to jump on board everything he suggests. Having him around is taking all the fun out of working at the company.” His wife is sympathetic, and angry with the brother for making life difficult for her husband and ruining their evening and his time with his children.

At the same time, on the other side of town, his brother is also steaming. “That older brother of mine is an arrogant SOB. He treats me like a child, just like he did when we were young. I tried to show him the project that I’ve been working on for a month, and he threw it away without even looking at it. I’m trying to support him, and he views everything as a challenge. Working for him is taking all the fun out of being at the company.” His wife is also sympathetic, and remembers all the other times she felt her brother-in-law was slighting her husband.

The next day, the brothers meet in the hall and greet each other warmly. “I’m sorry about yesterday,” says the older one. “I was frustrated about the Z account and took it out on you. I know you’ve put a lot of time in on that project, and I look forward to sitting down and going over it together.” His brother responds, “Hey, the whole thing was my fault. I could see you were busy, but I pushed it on you anyway, and then I just blew up. Whenever you’re ready to talk, just let me know.”

The following Sunday, at the senior generation’s house, the brothers are laughing in front of the barbecue, and their wives are staring at each other from opposite sides of the back yard. At one point in the afternoon, the older brother says to the younger, “It’s really too bad that our wives don’t get along better. I would have thought they’d be best friends.”

In-laws are very prone to being drawn into the emotional dynamics of the business family, without benefit of the information or access to each other that their spouses who are in the business share. Because the process is invisible to the family members involved, conflict with in-laws can be misdiagnosed. Business families need to carefully examine the communication flow to all adult family members and take the steps necessary to reduce assumptions and increase the honesty, openness, and consistency of communication in the system as a whole.

Encouraging Productive Conflict Management. Once the two generations are working together, complex issues of authority and collaboration almost inevitably cause flare-ups. Application of the three-circle model makes it apparent that conflict is built into the structure of the family business system. Individuals, operating with the best of intentions, still have different agendas and perspectives on events because of their different roles. Sons or daughters, in trying to establish competence, may resent their parents’ authority; parents may be hurt or angered by the disrespect they feel in the challenges of their children. Children who are not working in the business may feel that, in comparison with their working siblings, they are not receiving adequate benefits from the business or equal attention from their parents. There may be difficult role changes in the family, especially if the parents have health problems or other complications that begin to reverse the parent-child caretaking relationships that have characterized the family in the earlier stages of its life cycle.

This level of conflict is likely to increase as the family moves through the Working Together stage and begins to grapple with the succession process. The elevation of Joe Rockman to successor-designate caused Marcy and David to reassess their futures. In the end, it was not a lack of appeal in the business itself that led them to seek other careers, but their lack of confidence in the future of their Sibling Partnership. They were lucky to recognize their feelings and to have other options; it would have been worse to have stayed in a situation that they found continually irritating.

Even when there is agreement and acceptance of the succession plan, conflict can result. For example, the Ackerman family, which owns a small printing company, had always been known for the harmonious atmosphere in the company and at home. As the parents neared sixty and began to think ahead to retirement, however, the level of anger seemed to increase. No one could explain what was causing the new friction among the three siblings and between each of them and their parents. The oldest son and his family suddenly decided not to join the rest of the family at the lake house in July, breaking a twenty-year tradition. The youngest daughter became more outspoken and derisive about her oldest sister’s second husband, suggesting aloud that he only wanted to get in on the business. The nonfamily employees were also drawn into the conflicts, as management meetings became so hostile that important decisions could not be made. The family finally engaged a consultant, who began a series of meetings with family members. After only a few weeks, it became clear that the formal designation of the oldest daughter as the next general manager (though not a surprise to anyone) had released strong competitive feelings in the other family members. Brothers and sisters were responding to their experience (partly imagined and partly true) that other family members and key managers had begun to treat the “chosen one” differently from the others. Even though the siblings agreed with the choice, they could not control their unconscious resentment and fear about being treated as second-class family members.

Conflict is most productively treated as an inevitable aspect of family (and other group) life that cannot and should not be avoided. In fact, conflict can be valuable; it may clear the air, allow people to regain some distance in a relationship in which they feel temporarily overwhelmed, or help a group of family members work through a difficult decision. The Working Together task of transitioning from a unitary family, with one generational hierarchy, to a network of nuclear families requires a toleration of some level of conflict. It is the way the family and the business can grow and incorporate new norms and values. This is most important as the family makes room for new members (spouses and grandchildren). It is also critical to the beginning stages of a transfer of leadership from the senior generation to the junior one. Few families can make the changes that are necessary in the Working Together and Passing the Baton stages without some conflict.³⁵

However, it is essential to manage the family conflict so that it is productive and not destructive, and so that it does not spill over, uncontrolled, into the business and ownership dimensions.³⁶ The costs of unmanaged conflict are higher in the Working Together stage than they were in earlier stages, because both generations have invested a great deal in the younger generation. Since avoiding conflict by separating is more difficult, the family needs to try to diagnose the sources of family conflict and change the process of conflict resolution, not just to battle through until there is a winner. Do people blame each other or take responsibility for the consequences of their behavior? Is conflict concentrated between two family members who fight on behalf of everyone else (a “conflict pair”)? Do people vent their frustration by complaining endlessly about each other? Do arguments become abusive? Two reciprocal generational realizations are often called for: the senior generation’s recognizing that the offspring generation is also made up of adults, whose points of view require respect; and the younger generation’s accepting the fundamental realities of the authority hierarchy in the Working Together business. Often, a family council, as described in chapter 8, can be very helpful in providing a venue for conflict resolution outside the business structure.

Managing the Three-Generation Working Together Family. Because of increased average life expectancy, families in general are more vertically diverse than ever before. As the business family continues to grow, it may come to a point where there is a mix of three generations active in the business at the same time. It is difficult enough for the Working Together family to manage intergenerational dynamics between parents and their offspring. Adding a third generation brings in a whole new set of challenges. The senior generation may hold the CEO role, or be involved primarily through ownership and the board. If the former, it will carry ultimate responsibility for the company’s performance. If the latter, it will be concerned with maintaining an appropriate level of input and authority within the bounds of this new role. The middle generation is probably dominant in most of the key family manager positions. The primary responsibility for running the company’s operations will rest on its shoulders. The younger generation in the Working Together stage is likely to be new in the company, trying to find a foothold. Its members may be recently married, with young children, looking up the ladder from the bottom rung and wondering if they will be able to find a fulfilling and financially rewarding career in the business.

In the best of situations, this three-generation mix can create positive bonds that enhance the vitality of the extended family far beyond the norm in contemporary American culture.³⁷ Frequent cross-generational contact and true interdependence may enrich the lives of the children with a wide range of observable, meaningful, and varied role models. This is especially likely if the senior generation is sensitive to its offspring’s legitimate need to be masters in their own homes and undisputed parents to their own children.

But often one consequence of this generational “sandwich” in the Working Together stage is that the clarity of the middle generation’s authority is sometimes compromised. These midlife managers may feel subordinate and economically dependent on their parents long after their peers are financially in control of their own lives. It also has an impact on the third generation, which may see the grandparents as the truly powerful figures in the family. When the senior generation is unaware of that dynamic, the situation can lead to resentment and acting out by the middle generation. Whether the interference of the senior generation is intentional or not, the negative impact on the self-confidence and sense of control of the middle generation can be severe. Even if the work relationship between the generations in the Working Together stage is very good and the business is prospering, some middle-generation managers leave the firm. This can be a great loss to the business and may make continued family control of the business unlikely. It is an excellent example of how an unresolved dynamic in one dimension can have dramatic effects on another dimension.

One of the arenas in which the senior generation must be careful to play an appropriate role is in relation to the career choice decisions of the grandchildren. The senior generation is now heading a Working Together family, but the middle generation may be moving into the Entering the Business stage. This means that the youngest generation will be struggling with questions about whether or not to come into the business. Sometimes grandparents, especially if they are still active in the company, may be even more inclined to try to influence those decisions than the young person’s parents are. Strong dynastic senior leaders may see the recruitment of the grandchildren’s generation as the true test of the enduring power of their own legacy. Conversely, if the senior leader is experiencing regret or bitterness over the disappointments of his or her life career in the business, he or she may exert influence in the other direction, disparaging any statements of interest by the grandchildren. Either way, because the senior generation is unencumbered by the full parental role, it may be less inhibited about making its desires known to the grandchildren. It takes a strong response from the middle generation to prevent problems in these situations.

Characteristics

Ironically, this is the most well researched stage in the life of business and ownership, and the least well understood stage of family development. The stage begins when the senior generation moves into late adulthood, usually around its sixties, and lasts until its death. In business families, many of the most important issues now are directly related to the actual change in ownership and management control in the firm. But it is a mistake to let the drama of transitions in the business obscure the equally powerful events that are occurring on the family axis. What began as a marriage many decades ago has developed along its own unique path into a complex clan of descendants. In most families, by this stage there will be at least two generations of offspring; in a few families there may be as many as four. It is now the second generation that is struggling with or has just moved through midlife. In almost all cases there will be a mixture of intact families, single-parent families, remarriage, and step-families—some close, enduring relationships and some disconnections.

As the American population ages, social scientists have become more interested in later life. Excellent work on gerontology has been done in recent years, although it has focused primarily on physiological aging and the individual experience of the elderly. Sociological and demographic studies have explored retirement, residential patterns, and intergenerational helping behavior. Still, we have only scratched the surface of what we need to know about family dynamics in the Passing the Baton stage of business families.

The key family issues of this stage are the elder generation’s disengagement from the business, the generational shift in leadership, and the implied confrontation with death. The actual succession process will be discussed in depth in chapter 7. Here we focus on the family dynamics that are characteristic of this stage in the family’s life course.

Rockman Equipment Company: Part 4

By 1996 Rockman Equipment had undergone a complete restructuring. A holding company, Rockman Industries, had been formed, with Wyatt as chairman and other family members on the board. There were now six operating companies. Then, as often happens, the most important family events came without planning or warning. In the middle of January 1996, Wyatt was stricken with a serious heart attack. In the early hours at the hospital, before the family could be reached, it was not clear he would survive. Margaret waited outside the emergency room until he was moved to intensive care, then contacted the rest of the family.

Joe’s two years as president of Rockman Equipment had continued to be difficult. Rockman had been slow to respond to the recession and to changes in market opportunities. Joe could not seem to live down some of the early problems he had had in his new job. Joe and Carol had been married for five years and had two children. After getting the news of Wyatt’s heart attack, all he could think was, “What do I do now? What do I do now?” over and over.

Dave’s life over the same two years, in contrast, had seemed to move from one success to another. His work record in Chicago had been excellent. He was now thirty-five, married, a bit eager for a new challenge, but generally happy. He and Maria had reached the decision that things were finally settled enough to begin a family. Dave realized that he felt a sense of responsibility for his father’s heart attack, because of his decision to leave Rockman. He wondered if he had grown up and left his family, or abandoned them.

Wyatt’s triple-bypass went off smoothly, and he was given an excellent prognosis for recovery. The heart attack, terrifying as it had been, had also given Wyatt a new sense of freedom and determination. In the months after the surgery, Wyatt was preoccupied with plans for how he was going to take up the reins of the company again. Joe had done his best, Wyatt thought, but these difficult times required a more experienced leader. Day after day, Wyatt had thought about marketing, new ministores, a reorganized structure, and key managers who should be replaced.

An old friend helped Wyatt think more clearly by focusing on who he was and what he had accomplished, on his increased sense of pride and commitment to his family. He also talked about how he and Margaret had become closer than they had been in years. Gradually Wyatt realized that he had been protecting Joe for many years, waiting for him to grow into the kind of leader the company and the family needed. His health had jolted him out of the head-in-the-sand, reactive stance he had taken for years. Talking with Margaret, he came to the realization that Rockman Equipment’s future and his were diverging.

Six months later, Wyatt was prepared to move Rockman Industries into a new stage. Margaret had been a partner in these decisions more than ever before in their lives, and they were both still a little uncertain about this new relationship. But the satisfaction that came from talking with her about everything was one of the most important, and surprising, things Wyatt had learned this year.

The culmination of all the planning was in January of 1997, almost one year to the day after Wyatt’s heart attack, at the first meeting of the Rockman Family Council. Wyatt told the family that, in six months, he would be resigning as CEO of Rockman Equipment but remaining as chair of the board of Rockman Industries. He and Margaret had decided to spend about six months of every year in Costa Rica. Wyatt thanked Joe for the effort he had given as president, but told him that he had reached the conclusion that Joe could not be happy or successful running the company in the future. Marcy was entrenched and happy in her rapidly growing business in Colorado—newly married and working hard. Wyatt had decided to offer the CEO job to Dave. He set up a transitional year for Dave and Maria to see if they wanted to make the move back from Chicago. He hoped that Joe would stay in the company in some capacity.

Key Challenges

Succession is still the most discussed topic in the family business literature. We devote a full chapter (see chapter 7) to our view of this complex process. At this point we only want to highlight the most important family tasks at this stage of development. The most common story about succession is the clash of two opposing forces: the senior generation’s difficulty leaving, and the junior generation’s difficulty waiting. It seems that if there were a formula for determining precisely the optimal moment, the best meeting point of senior and junior readiness, a high percentage of family business dilemmas would be resolved.

Senior Generation Disengagement from the Business. In fact, the process is much more complicated than just timing. It is reflected in two words that are often used as synonyms: succession and continuity. Actually, these two concepts encompass two different yet complementary processes, and it is the dialectic between them that makes the process so complicated and dynamic. Succession reflects the sequential aspect of the transition, as one thing needs to end and be “succeeded” by something new. Continuity refers to the part of the present world that needs to be preserved in the new era. Both succession and continuity are essential, in proper balance, in order to minimize the disruptive consequences of a generational transition.

The transition of management leadership is a task of the business circle. The family task is to consider its own transition, and in so doing make possible the necessary changes in the business. In one sense, the first key task of the Passing the Baton stage is an acknowledgment that, in fact, the stage has been reached. Familial resistance to that step is formidable and widespread.³⁸ For the senior generation, leadership has provided status, meaning, power, and other rewards. As Jeffrey Sonnenfeld, the leading researcher on styles of patriarchal retirement in family firms puts it, the greatest impediments to peaceful transitions are the senior leader’s fear of losing heroic stature and the heroic mission.³⁹ Heroic stature is the position of power and status that sets top leaders apart from everyone else. Heroic mission is the sense of “specialness” that comes with the leader’s conviction that his or her cause is noble and important, and that he or she is uniquely qualified to accomplish it. The need to hang onto these two life-affirming rewards leads to a variety of coping styles, some of which work successfully to ease the transition and some of which undermine it.

The rest of the family often colludes in this resistance to acknowledging that the time for transition has arrived. There are cases where the successor generation is impatient, and cannot wait for the parents’ departure from the business. However, we have found those cases to be less frequent than the situation where the younger generation is struggling with ambivalence and, as a result, joins fully in an avoidance of the topic. In his analysis of the “succession conspiracy” that delays attention to the inevitable transition, Lansberg identifies four classic family contributions: (1) the fear of differentiation among the siblings; (2) the offspring’s fear of being perceived as greedy; (3) the spouse’s fear of loss of identity and activities; and (4) the family’s fear of the leader’s death.⁴⁰ These factors lead all the other family members to collude in the senior generation’s denial of the imperative of preparing to “let go.” It has been one of our most interesting lessons to observe how often this general family resistance is stronger than the younger generation’s impatience to “take over.”

Another source of resistance to confronting the generational transfer is the poverty of our shared understanding of retirement.⁴¹ The new literature on retirement is almost exclusively based on research on salaried workers; attitudes toward retirement among business owners rest on myths that are almost all negative. Many senior family members fear retirement as a certain precursor of failing health and a quick slide toward death. Others are preoccupied with “becoming less relevant, or even of being forgotten by those who follow.”⁴² Those friends who may be enjoying their retirement have often moved away or are no longer in the same social routine, so it is difficult to learn from their example. It is an uncomfortable, often undiscussable topic in our culture. As a result, this transition parallels the entry to adulthood described in the Entering the Business stage: A leap of faith into unchartered waters, where decisions must be made on the basis of too little data.

For all of these reasons, both generations may have difficulty thinking about and talking about the senior generation’s disengagement from the firm. Even if all the ingredients are present, it often takes an external event to catalyze the process. Wyatt Rockman was jolted into action by his heart attack. Some dramatic physical crisis is probably the most common stimulus. Another is the retirement of an associate or friend. One of the most common triggers is a business milestone, in the form of a business anniversary or the completion of some long-term organizational project. Getting the issue of the seniors’ withdrawal from active management on the table, with some shared sense of the appropriate timing and an emerging vision of the new roles that will follow the change, is the first task of this stage.

Generational Transfer of Family Leadership. The second hallmark of the Passing the Baton stage is the shift in responsibility for and control of family affairs from the most senior generation to the next in line. This may happen gradually or suddenly, but, like retirement, is very often precipitated by an unplanned event. There are a number of such “one-way” doors that the family can pass through. The most definitive is the death of one or both parents. But there are other events that can precipitate significant change in family leadership roles. The parents or the surviving parent may decide to sell the family home and move to a small condominium. They may move even farther, to a warmer climate or back to the community they were born or grew up in. As in the Rockman family, there are many physical events that can happen without warning, such as heart attack, stroke, or accident. There are also others that occur over time, such as debilitating illness, dementia, Alzheimer’s, or slow recovery from an injury. All families expect such events, but none is truly prepared for them. The consequence of these precipitating experiences is that the capacity of the most senior generation to exercise executive control of the family is diminished. Leadership falls by default or design to younger generations.

By the time the business family reaches the Passing the Baton stage, the complex emotional issues associated with the transfer of power and leadership from senior to junior (actually, middle) generation begin to surface in earnest. For the seniors, the signs of physical and mental decline are by now becoming increasingly inescapable. According to Erik Erikson, the distinguished psychoanalyst and theorist on human development, this era confronts seniors with an inner struggle between a sense of integrity and a sense of despair.⁴³ Despair can stem from deeply felt disappointment over the shortcomings and failures in their lives. The same ambitious dreams that led these individuals to begin their entrepreneurial careers decades ago can make them particularly vulnerable to measuring their accomplishments against unfulfillable goals and unreachable successes. Indeed, as Sonnenfeld points out, the relentless pursuit of an heroic entrepreneurial mission is often at the root of business owners’ (particularly founders’) inability to effectively plan succession in their companies.

Conversely, the Eriksonian sense of integrity emerges from a deeply rooted appreciation of the unique life course that the aging leader has followed and of his or her place in the timeless generational link between those who have come before and those who will follow. Senior leaders in business families who can realize their own particular contributions as generational stewards of the family enterprise are more able to muster the courage necessary to constructively participate in the transition to a new generation of leadership. Their ability to appreciate their own accomplishments frees them to encourage and celebrate the movement of their heirs to positions of authority in the business and prominence in the family. The possibilities for collaboration are enhanced, and the seniors can serve as mentors for several generations simultaneously.

The consequences for Passing the Baton families in which the senior generation turns toward despair instead of integrity can be significant. The seniors may keep a lock on strategic power in the business, pursuing an elusive final, grand accomplishment, which they feel will allow them to withdraw in triumph. They may justify this holding on by continually denigrating the skills or readiness of the next generation. This can not only be demoralizing to their own successors, but also undermine the confidence and commitment of nonfamily managers, customers, suppliers, and financial supporters, thereby threatening the entire system. Equally damaging, they may actually retire but continue in subtle ways to sabotage the efforts of successors. Such behavior is fueled by a need to prove to themselves and the world that they were more valuable, and more irreplaceable, than anyone imagined. These motivations may be completely unconscious, but that does not make them any less destructive.

It is in the family that the best opportunity resides to help members of the senior generation confront the conflict between integrity and despair and resolve it. The Sonnenfeld concepts of heroic mission and heroic stature are very applicable to the family’s task at this stage. In many families, the best predictor of the level of ease and pleasure that is experienced in the Passing the Baton stage is the extent to which the family has found ways to protect the heroic stature of the senior generation even after family management functions have been passed to the offspring. This requires that the family find ways to help seniors relinquish the power to control events in the business and the family, while reinforcing their authority as valued elders in each system. This can happen in important symbolic events, such as the family’s willingness to have celebrations and holidays on the parents’ territory, even if they no longer do the organizing work.

There are, of course, senior-generation individuals and couples who are delighted to pass on the mantle of family leadership. They look forward with enthusiasm to freedom from expectations and responsibilities. Their departure from the firm is closely followed by a new, independent lifestyle of travel, investments, hobbies, a network of senior friends, and visits with family. We have encountered some families like this in the Passing the Baton stage, but not too many. The mildly enmeshed family style that served so well in earlier stages does not readily dissolve when the senior generation passes sixty. One consequence of the three interlocking subsystems—family, business, and ownership—is that roles in one area tend to be replicated in the others. Therefore, because the senior generation typically retains the chair role or an active leadership position on the board of directors, and may often maintain a link to the firm as an adviser or contact to critical customers, it is hard to let go of the leadership function in the family circle. Ironically, passing the baton in the family circle may be harder in business families than in families in general. It requires the compassionate collaboration of both generations.