Like father, like son? Not always
Transitioning a family business from one generation to the next is always a challenge. Where the first generation may have focused on survival, the second may be tasked with consolidating gains.
In any generational transfer, the retiring family member may be focused on conserving cash and the incoming member on reinvestment for future growth. Then, too, new generations can build on a family heritage but must also face the new problems of a new day.
Happily, it is in the best interests of all parties to make a transition work. Toward that end, three leading companies recently shared with Rural Builder what their own experiences were like and their advice for making transitions smooth and mutually beneficial.
As the largest division of W.H. Maze Company, Maze Nails is a major supplier of nails to the post-frame construction industry. Beginning as lumberyard in Peru, Ill., over 160 years ago, the company is now lead by its fifth generation president, Roelif Loveland. Founded by Irish immigrant, Samuel Nesbit Maze, the business employs three sixth-generation descendants.
Based in Mazomanie, Wis., Wick Buildings has been a staple in the post-frame industry since 1954. Today, the company has grown to become Wick Building Systems, selling its products under the registered brands: John Wick Home, Artcraft Homes, Marshfield Homes and Rollohome. Jeff Wick, president and CEO, is part of the second generation that is still active in the family business.
Graber Post Buildings of Montgomery, Ind., started in 1973 with a construction crew of four men just trying to support their families. In the last decade alone, the business has doubled to become a nearly $100 million company that manufacturers and distributes materials for the post-frame industry. During that time, owner
Glen Graber has transitioned the daily leadership to his son Jonathan, who now serves as vice president of operations management.
Maze Nails: Hitting the nail on the head
Maze Nails is a company born out of a necessity.
“When his small lumberyard couldn’t buy high-enough quality nails to satisfy his customers, Mr. Maze purchased a little nail machine and began to make his own,” relates Loveland.
The original product, solid zinc cut nails, were replaced with round wire nails in the early 1900s. After the company introduced automated hot-dip galvanizing in 1955, its growth was assured.
“Since the original entrepreneur is quite a few generations back, I think the subsequent generations have viewed their roles in the company as caretakers,” says Loveland. “Sometimes that means adding new products — or sensibly acquiring other companies, or increasing customer satisfaction, or just making certain that the machinery, equipment, and facilities are kept in great shape.”
Today Loveland and his two brothers, Jim and Pete, keep things running smoothly. With each brother serving in a different capacity and well-suited to his position, Roelif Loveland reports that there has never been any interest in vying for each other’s jobs. Each has his own sphere of responsibility that keeps him busy and professionally challenged.
“In our case, we just got plain lucky,” says Loveland. “I’d been working directly with customers for over 20 years, so I seemed the natural pick for president.
“My younger brother Jim had extensive experience in all phases of plant operations, so he became the plant manager. Pete, the eldest brother, heads up the management team at Maze Lumber since he has considerable outside experience with lumber operations.”
The timing of the transition tends to be similar with each Maze generation.
“A long tradition at Maze has been to work to retirement age and beyond,” Roelif says. In fact, Loveland’s’ father played an active role in the business until his death in 2000 at age 74. “Why let all that experience go to waste as long as you love what you’re doing?”
Though nothing can replace experience, Roelif Loveland says, “The next generation brings energy to tackle new projects.”
Though the Internet has expanded opportunities for businesses, it has also increased competition. “The new generation understands that there are many choices for post-framers and building material customers. So they know the importance of finding new ways to reach out to them,” he says.
Looking through the perspective of a generation behind him and the one ahead, Loveland admits there can be bumps along the way.
“The challenge of any transition is the willingness to let the younger generation make some decisions on their own, while the older generation stays hands-on enough to provide some limits,” he points out. “Some decisions will be good, and some won’t. But as long as it doesn’t sink the ship, a poor decision should be a great learning experience.”
Leading a company can be tricky when the former boss is still around and he happens to be your father. “My dad made it clear to me as a young employee: ‘As long as my signature is on your paycheck, I’ll have the final decision on things around here,’” relates Loveland. “He was right — someone has to be the boss.”
Now that Loveland himself is in charge, he strikes a similar balance between holding the reins and letting them go.
“Sometimes unbridled enthusiasm from a younger generation for an out-of-the-box idea will be enough to make it work,” he says. “But as the older generation, we sometimes have to reject ideas — though we do it gently — if we know the idea won’t serve customers or the company very well.”
Transitions can test family and company ties. But keeping other perspectives in mind can make the ride less bumpy.
“While we all want to push those initiatives that are important to us, it’s also important to realize that shaking up the apple cart is often unsettling,” Loveland notes, “especially when the company has been running smoothly, customers are well-satisfied, and we’re making a buck.”
Loveland admits, “There are certainly times when a major shake up might be needed in a company. But a change of leadership should be relatively seamless for employees, customers and vendors. A smooth transition gives customers the confidence that we’ll be there with the same high-quality products and strong values that attracted them to Maze in the first place.”
Accomplishing that goal requires unity.
“When I became president, I could depend on the support of my two brothers and a number of dedicated management personnel. That made it a lot easier for me,” relates Loveland. “Treating each other with respect creates a family atmosphere. We all have areas where we excel and areas where we depend on more-capable associates to fill in for our weaknesses.”
Loveland believes that he himself has a trust to fulfill. “While political leaders might put off hard decisions and saddle the next administration with problems,” relates Loveland, “our philosophy at Maze is to always leave the company in better shape than we found it. Then, as the next generation becomes capable and enters the business, it becomes their responsibility.”
Wick Buildings: The road taken
The story of Wick Buildings almost didn’t happen. Now 82, founder John F. Wick was raised on a dairy farm near Superior, Wis. After graduating from high school in 1944, the year before World War II ended, he went to the University of Wisconsin and joined an accelerated Naval Reserve Officers Training Corps program.
John Wick’s son Jeff, the current president and CEO, explains how his father studied civil engineering and later transferred to a commerce school where he earned an accounting degree and a master’s degree in finance.
“He even started working towards a doctorate,” relates Wick, “but in 1953 decided he didn’t want to be a professor and moved back to his family’s farm.”
Then a visit to the 1954 Minnesota State Fair spurred an idea. “My dad saw a pole barn, but didn’t know of a company who made them — aside from the one who displayed it. After working for that company very briefly that fall, my father decided to start his own pole barn building company in Madison, Wisconsin.”
With his knowledge of agriculture and family farming, John Wick’s building designs centered on the needs of farmer and soon the business took off.
“The building system had characteristics that took into account things like tractors, which frequently move in and out of a barn,” Jeff Wick explains. Some half a century later, the company has built more than 65,000 structures and operates from two production centers.
Like his father, Jeff Wick never thought he would lead a building manufacturing business. Though he worked at the company for two summers in high school, he recalls, “My father was very careful not to pressure any of his children to work for Wick Buildings Systems,” he says. After graduating from college Wick took various jobs in the family business, but in time decided to return to school and complete a master’s degree in finance.
His goal was to learn how to run a business — but not necessarily his father’s.
“I became a dealer for panelized housing for a few years,” Wick says, “and then created an operating company that ran two hotels that Wick Buildings helped construct.”
But in 1986 Wick’s direction turned. “Wick Buildings got into some difficulties because of a miscommunication between my father and some lenders,” he explains. At the time, though Jeff Wick had a seat on the Wick Building board of directors, he himself was busy running his two hotels. “But since I deal comfortably in high-stress situations, I got involved as diplomat in the discussions with the banks to work out a solution.”
Jeff Wick ended up exiting the hotel business and joined the family business. He admits that an outsider might have brought a new perspective, or even greater competence, to his position. “But a family member,” he points out, “has the advantage of understanding the company culture and brings to the business a different kind of commitment.”
As an added benefit to the company’s bottom line, Wick believes, “Family members typically have much lower compensation demands — generally half of what someone would get paid in the same role at another company.”
But in the end, he says, “If you can’t do the job, even as a family member, you’re not going to last very long.”
His father, John Wick, remains chairman of the company. “There’s a level of authority that only he has,” Jeff relates, “but he’s been good about letting us do our jobs.
“We’ve learned that generational succession must be done with purpose, structure, and thought. So it’s important to gain knowledge by seeing how other companies have done it.” Toward that end, the Wick family participates in a local family business center.
“Many builders are family businesses, and there are resources available to help you address the issues,” Wick counsels. “It’s been a real learning opportunity for us. Whenever a transition takes place, it needs to be intentional and managed. But the first and highest obligation is to be effective in your marketplace. If your business isn’t viable, all talk is a moot point.”
With three generations now involved in the company, Jeff recognizes that “the third generation will need to examine the company’s processes and put their own stamp on things.” Yet something all the generations share, he says, is that “our family likes the industry we’re in—and we’re blessed with lots of longtime employees who want to work for a family company, people who share our values and want their work to have meaning.”
Graber Post Buildings: Taking a risk
Though Graber Post Buildings in Montgomery, Ind., is now well established, the story of its humble beginnings in 1973 offers an ongoing lesson for the company.
“My father Glen started with three coworkers, an old green van and $50 in his pocket,” says Jonathan Graber, who today oversees daily activities in his job as vice president of operations managements.
“They were constructing mostly agricultural buildings and decided to buy their own material instead of through other vendors, while avoiding as much debt as possible,” Jonathan says as he tells the story.
Then in 1987 Glen Graber decided to take a big risk. Though the company had been successful, Jonathan states, his father “decided to invest almost $900,000 to start roll-forming their own roofing and siding panels.”
If the idea failed, the company would go under. But the risk paid off. “Now 80 percent of our business is in the steel wholesaling market, serving 20 different states,” Jonathan relates. “If my father hadn’t taken the risk, I don’t know if the company would still be here.”
By 2000, Glen Graber decided the time was right to start making the transition to a new generation of leadership. “It was a tough process and took over five years to complete,” says Jonathan. His father entered semi-retirement, having earned the right to spend more time on the golf course and relax in his Florida home. But Jonathan had to work through the challenge of winning over those who were accustomed to working with his dad.
“I understood there might be some uncertainty and resistance,” he recounts. “But the transition became a lot smoother after the first year, when people realized I was only going to change things that weren’t working.”
As often happens when family businesses make a transition, the new generation must address new challenges presented by a changing marketplace. Though Graber Post Buildings was still growing, Graber explains, “Our margins were getting smaller. So I wanted to make sure we weren’t taking things for granted, because it’s easy to get complacent. At the time, we didn’t even have a salesperson on the road. But in the last five years, we started hitting trade shows and doing advertising which has gotten us back to major growth.”
While Jonathan Graber faced new challenges, he readily acknowledges the benefits of building on his father’s legacy. “Although it took a few years to learn the ropes, I’ve tried to lead like my father,” he relates. “At first it’s overwhelming. Even though I saw things I wanted to change, I knew it wasn’t wise to throw out several things at once.
You have to take it one at a time. I had to be sensitive to the employees, knowing that change is difficult.”
An uncle, Don Graber, is also involved in the business as a vice president and remains a vital resource for Jonathan.
All told, the transition process has taught Jonathan Graber some lessons about leadership that he readily shares with others. “You must respect people to gain their trust,” he counsels. “Be fair with everyone and not close-minded.
Surround yourself with the most educated and talented people—and get their ideas, even if it means setting personal feelings aside. Never make snap decisions.”
Graber admits, “Sometimes my father and I had different views on issues. While I saw myself as having a modern approach to leadership, I don’t have the experience he does.”
If there is a disagreement, he adds, “Then even though I might feel strongly about something, most of the time I defer to my father and let it be his call. I talk to my father at least once a week to get his advice. He’s still the guy whose experience keeps the train on the tracks.”