Taking The "family" Out Of Family Business

As a new generation takes the reins of America's family businesses, they're bringing new values, new techniques, and new goals to the organizations they never wanted to run in the first place.

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WHEN GARY AMATO GRADUATED from Ohio University in 1968 with a degree in business, his father wanted him to come into the family kitchen-cabinet company. But Gary had other dreams. He saw himself as a stockbroker driving in the sunny fast lanes of southern California.

Jeff Siegel, too, had a place waiting for him, this one in the family's prepared-salad business back in Brooklyn, N.Y. He wasn't interested, though. Fresh out of Cornell University, he thought he'd try law school, until a summer job selling office copying machines convinced him he'd found his calling in sales. That was in 1975.

Chad Frost would have been the fourth generation to run his family's ball-bearing company. His degree in engineering from the University of Michigan would have come in handy there, but he just couldn't see going back to the stifling social climate of Grand Rapids. His escape route was to the East, and an aerospace job with Textron Inc.

They are the children of the baby boom -- Gary, Jeff, Chad, and countless others like them. Coming of age during the rebellious decade between 1965 and 1975, they could hardly have been expected to follow too quickly along the path laid out for them by their parents. But life has had its way of catching up with them. Their fathers are all around retirement age, hoping to pass on the legacy of years of work and worry. And the children -- now older and wiser, with children of their own -- are taking a fresh look at their birthrights and business opportunities.

To this antiestablishment generation, Big Business has always been Bad Business. But family business, once disparaged as narrow and bourgeois, appeals to other cherished values: closeness to the consumer, loyalty to employes, independence for managers and executives. "The wallflower is becoming the belle of the ball," is how one writer put it recently. Family business is now chic.

Chic -- and restyled. This biggest, best-educated, most confident generation in American history has not decided to come home again simply to do things as they've been done before. It looks to remake the family business in its own image, according to its distinctive values and goals. Even in quieter times, such transitions are painful and treacherous -- the stories of families and businesses destroyed by intergenerational passions are as old as Oedipus. It's no coincidence that not even one in three established American family businesses is successfully passed on to a second generation. And of that select group, only one in seven will be able to make the business grow.

Gary Amato, Jeff Siegel, and Chad Frost have beat the odds. Despite misgivings, they have come back to the family business, slowly and painfully working out accommodations with fathers who were at first skeptical, and are now admiring. Their family firms today are more aggressive, more productive, and more profitable than at any other time in their recent histories. These are companies that have managed to thrive on growth and innovation -- not, as it once seemed, to resist it. And where once the goal was simply to provide a good living for the family and pass it all on to the next generation, these young owners are out to leave a mark, and make it big.

GETTING OUT OF THE SHOP

Gary Amato, 40, still keeps his dad on the payroll of Alline Laminated Products Inc., the family kitchen-cabinet business, although there's not much 64-year-old Frank can do anymore. For the eight years since the buyout, he's been on the books as a consultant. But each summer when he comes back to Cleveland from Florida, there is less he recognizes about the company that he founded 23 years ago.

Under Frank Amato, Alline was a job shop, 6 employees and $150,000 in sales; today, his son runs a company with 70 employees and sales of over $4 million. Frank had built cabinets with hammer and nails; now they're made with automated routers and computerized optimization cuts. Frank had run a cash business, keeping the books under lock and key; today the company is on its third round of bank loans, secured by the new equipment. Frank had always been tight-lipped about his business, and was practically married to his shop. What would he make of a chief executive officer who gave away equity to his managers, consulted an outside board of advisers, and thought nothing of taking an occasional afternoon off?

At 3:30 on a sunny Wednesday afternoon, Gary Amato flips off Creedence Clearwater Revival playing from his office stereo, slips off his tie, and whistles himself out the door, off to buy the soda pop for his 13-year-old daughter's softball team.

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