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Why family owned companies should look beyond kin for key roles

Why family owned companies should look beyond kin for key roles

March 14, 2017

As published by Rachelle Damico, Crain’s Detroit Business

For many traditional family businesses, the leading generation looks to the upcoming one to fill key roles.

However, there are situations where hiring a family member isn’t possible. The next generation may be too young, or other relatives may not be interested or have the right skill set.

“There probably aren’t enough family members to do all of the things that have to be done,” said Richard Segal, principal at West Bloomfield-based Segal Consulting Inc. “At some point, you probably have to expand.”

Family business owners looking to continue or grow the company should consider hiring managers outside of the family.

Rejeana Heinrich, associate director at the Stevens Center for Family Business at Saginaw Valley State University, said non-family members in key roles typically do better than family members because they have the emotional distance that is necessary to be more objective.

“It’s hard to hire a family member for a big role,” Heinrich said. “Families get torn apart over it.”

Carolyn Riegler, a director of Bloomfield Hills-based consulting firm O’Keefe & Associates Consulting LLC, said bringing in an outside executive can help bring creativity and out-of-the-box thinking to an entrenched family business.

“The ability for somebody to come in who’s got decades of experience and who really knows their stuff can bring a breath of fresh air to a company,” Riegler said.

In this month’s Second Stage, Crain’s talked to experts who specialize in family business — as well as a small, medium and large family company — about why family companies should consider hiring for key roles outside of the family business.

1. Hiring an outside manager will give your company a new perspective

A non-family member can bring a fresh perspective to a company’s family dynamic.

“I think a lot of entrepreneurs are too caught up thinking they’re the only one that can run the business,” said David Wujciak, owner and CEO of Flint-based Qualified Temporary Services Inc., which does business as Qualified Staffing.

“You start to do things a certain way every time, and it isn’t always the more effective way,” he said.

The staffing company has 28 offices throughout the country. An acquisition planned for this month will add another five offices, as well as an office in Canada.

The company employs 130 full-time workers and about 10,000 temporary workers who receive W-2s.

Wujciak owns the company with his wife, Diane Wujciak. His brother, Michael Wujciak, joined the company about three years ago to assume general manager responsibilities for two IT companies Qualified Staffing acquired.

Wujciak no longer runs the company’s operations; he resigned as president in 2016.

“I didn’t want to be the one making all the decisions all the time,” Wujciak said. “I viewed my organization as strong if it could do well without (me) around all the time.”

Wujciak hired an outside manager, Doug Billot, in 2001. After seeing how strong Billot’s management skills were, Wujciak promoted him to general manager in 2003, allowing him to manage the company’s day-to-day responsibilities.

“He’s more analytical and cerebral,” Wujciak said. “He thinks things through in an entirely different way than I do.”

Wujciak promoted Billot to president in 2015. He handles the company’s hiring and firing.

“He pulled together a team that works well together,” Wujciak said.

Wujciak said his accomplishments include engineering the company’s many acquisitions and playing a big role in growing the company organically from a sales standpoint.

“The company has grown tremendously because of it,” he said.

2. Hiring an outside manager can help improve communication

Hiring non-family members for key roles helps companies communicate more effectively.

“Families communicate in certain ways — sometimes very clear and direct, and other times indirect or passive,” said Jamie Michelson, president and CEO of third-generation family company Simons-Michelson-Zieve Inc. “It’s really about bringing objectivity to it.”

The privately held advertising agency was founded in 1929 and employs 50. The Troy-based company’s clients include the Detroit Red Wings, Detroit Tigers, Mackinac Island’s Grand Hotel and the Michigan Lottery.

Within the past two years, SMZ has added many key roles outside of the family dynamic — including its executive creative director, vice president and director of finance and administration.

Michelson said hiring a diverse staff is necessary for the advertising company to remain successful.

“Advertising agencies are only as good as their mash-up of people from different backgrounds, perspectives and points of view,” Michelson said. “That’s what makes it work.”

Outside executives can also help serve as a mediator between family and non-family member employees.

Throughout her career, Riegler has worked with more than 70 family companies. She said many times in her role she acted as a family counselor or business therapist.

“I’ve worked with a father and son who couldn’t be more opposite in their thinking and their ideas, and I’ve had to bring them together,” Riegler said. “(Outside executives) are able to evaluate and give unbiased opinions of strategies and business plans.”

3. Hiring an outside manager can help raise new issues

Hiring an outside manager can help a family company uncover issues.

Megan Ackroyd and her father, Allan Ackroyd, own third-generation family company Ackroyd Scotch Bakery and Sausage Inc., which does business as Ackroyd’s Scottish Bakery.

The Redford Township-based company was founded in 1949, employs 11 and ships its Scottish baked goods nationwide.

Ackroyd’s promoted a non-family member employee to the position of production manager in 2016.

“It’s bringing different experience and different knowledge to the table,” Megan Ackroyd said.

Megan Ackroyd said the production manager took charge by organizing the company’s storage, labeling items and allowing the company to access ingredients in a timelier manner.

“My dad and I have similar personality traits — we both don’t like minutia,” she said. “It needed to be stored and organized better.”

Megan Ackroyd said the production manager also helps lighten the day-to-day operations load for her and her father, allowing them more time to work on the business. The company plans to expand their bakery by opening a retail store and production facility around the Ferndale or Royal Oak area within the next 12-18 months.

“As we continue down our path of growth, we have full intentions of hiring additional management outside of our family,” Megan Ackroyd said. “There’s simply no way to grow without doing so.”

4. Hiring outside managers are good for a company’s morale

An outside executive can help non-family employees feel like they’re being listened to and appreciated.

Riegler said outside executives help retention rates because they serve as a sounding board for non-family employees’ grievances and inequities.

“They can be the voice of the employees,” Riegler said. “Employees will sometime perceive favoritism or unfair practices in terms of promotions and pay raises among the family members.”

Outside executives are also better at holding employees accountable.

“A non-family member can and frequently does serve in that role of making sure people are held accountable and applying policies and procedures,” Heinrich said.

Non-family members who are hired for key roles can also help bridge the generational gap between the current leading generation and the next generation.

“They will make sure the right decisions are being made, while still being in a position to groom and serve as a role model and a coach for the upcoming generation,” Heinrich said.

They can also bridge the gap between family and non-family employees.

“Frequently the non-family executive will be able to listen and hear the non-family employees in a way the family members don’t,” Heinrich said.

5. Hiring an outside manager can help with transition planning

Hiring an outside manager can help ensure a family company can make it to the next generation of leadership.

If something happens to the family company’s leader, such as injury or death, it can lead to huge financial consequences for the company.

A factor in Wujciak’s decision to step back from the company and promote his outside general manager as president was to ensure his company would be prepared for a disaster, rather than having someone without prior knowledge walk into the company blindly and try to run it.

“If something happens to me I would like to know that this organization can move along,” he said.