When it comes to training for the job, winning the respect of employees and customers, and easing the pains of succession, 'daddy's little girl' is probably the better choice
YOU CAN FIND HIM ALMOST ANY-where these days. Pushing 60. Still working like a dog. Worrying what to do about "the business."
When he started the company after the war, he never really thought of it as a family business. It was a ticket -- a way to pay for the house and the college tuitions and, if his luck held out, to have a little left over besides. But now it has become something more than that. It is the source of a lifestyle more comfortable than he could have ever imagined back when he was getting started. And it is the source of immense personal satisfaction, a reflection of his own values and personality. He thinks of the business now as his legacy, a commitment to his employees and a wellspring for the family's future -- a trust to be husbanded and passed on from one generation to the next.
And that's what has him worried.
Usually, it is late in the day before he unburdens himself. The coat comes off; the tie is loosened. Maybe he puts his feet up on the desk and pours himself a scotch before he can let the fear out.
For years, he'll admit, he had hoped his son would take over. But he's had to give up that dream. Perhaps his son became a lawyer or, worse yet, an investment banker. Or perhaps he came into the business right out of school, only to discover that he didn't have the head for figures or the stomach for hard work or the good sense to learn a little from the old man before trying to make too many changes too fast.
For whatever reason, things never worked out with the kid, and now, although he hates the thought, he's considering putting it all up for sale. All those years of building and scrimping and nurturing -- for what? A five-year payout from ITT? But what choice does he have?
The shame of it is that he has another choice, if only he could see it. Asked about his daughter, he laughs. This business, he says, is no place for a woman, let alone his "little girl." And besides, how is she going to bring up those grandchildren he's counting on and run an entire company at the same time? It is a question posed in a way that admits no answer.
It is, in part, by such logic that no more than 30% of America's family businesses make it to the second generation. And it's such a waste. Forget fairness and equality. We're talking stupidity here. The truth of it is that Daddy's Little Girl is probably a better choice than her brothers -- better suited to the transition, better motivated, and more often than not better trained for the job. The very hurdles she has to leap even to be considered an appropriate heir make her more likely to succeed, and more eager to keep her father happy as he eases out of the saddle. Ask the management experts. Ask the psychologists. Better still, ask the fathers who have tried it. Nearly all agree that when it comes to succession, daughters are better.
Arnold Daniels is a believer. In May 1986, Daniels named his 40-year-old daughter, Dinah, president of Praendex Inc., the management and organizational-development consulting firm he founded 30 years before. After a decade and a half of vitriolic battles, Daniels has reached a truce that lets him work with his two sons, Arnie Jr., 44, and Stephen, 42, and keep the peace with his wife. Thanks to Dinah, he knows that the business will provide for all of them even after he's gone.
Praendex had been a one-man show for most of Daniels's life. He was never much of a manager, preferring to do most of the work by himself rather than organizing or delegating. And as a result, he was never much of a father, either, traveling too much and working too hard to get to know his children as he should have. In fact, Daniels was so absorbed with keeping the business going that he never thought much about passing things on to his sons -- "I didn't even give them a chance to express interest," he says. The sons returned the favor with an antibusiness attitude driven home poignantly to Daniels one night when he spotted Stephen on a picket line in a television report from Berkeley, Calif.
During the 1970s, Daniels's sons, like many of their generation, changed their minds about the company. Suddenly, it seemed more an opportunity than an obligation, an ideal spot to build a career. Dad welcomed in each of his sons, and in turn, drove each of them out again, not just once but twice. They began brimming with new ideas and eager for responsibility -- too eager, with too many ideas, as far as Daniels was concerned. Finally, the shouting got too loud. After a few more years, there would be a reconciliation with each and a hefty raise -- then another round of shouting matches and another angry departure.
"I was looking for somebody who would do exactly what I do, the way I do it, and they were both too independent and too bright to be an echo of me," Daniels remembers. "I wasn't inclined to listen to them -- my wife would say I didn't have enough respect for their ideas."
"It was a no-win situation," Arnie Jr. remembers. "My father was always going to do things the way he had always done them. I could find aggravation anywhere. Who needed it?"
Daniels did. By the mid-1980s, as his 65th birthday came and went, he realized that without his sons involved, there could be no peace in the family. Besides, with nearly $4 million in sales, Praendex had grown too big for him to do it all alone. Even if he could live forever, the company needed more management and better management to keep growing.
Having coaxed both boys back to the business a third time did not make Daniels feel more confident about the future, however. He still found it difficult to listen to their ideas, no matter how much he knew that the company needed fresh thinking. Even when he could acknowledge privately that they had considerable strengths -- Arnie's love of the technical aspects of the business, Stephen's selling flair -- neither of them seemed to offer all that Praendex needed in a chief executive officer.
Choosing Dinah was something of an act of desperation. Before 1986, the daughter's only connection with Praendex had been a high-school summer job as a secretary, and Daniels had fired her then. But she'd dazzled him in the years that followed, rising from a secretary for the Boston Symphony Orchestra to its public-relations director, and then moving to similar positions with other world-class orchestras.
It took both the offer of the president's title and a strong push from her husband to convince Dinah to take up her father's offer. But she saw the logic of it from the beginning. For Praendex to survive, someone had to take over while her father was still active and able to pass on the wisdom gained through experience. She knew about the problems her brothers were having, and she felt confident she could avoid most of them.
"We share a certain temperament," she explains. "I'm the most logical and least emotional of his chidren. I have a conciliatory manner. And my father is much less difficult to work for than some of the other men I've worked for."
Now, 15 months later, her father has nothing but praise for his new president. She has professionalized the company's marketing efforts, launching a successful direct-mail campaign targeted to CEOs of midsize corporations. She's improved the company's relationships with its 22 licensees. There's even a national public-relations push underway.
"Dinah's more daring than I am," Daniels marveled as he showed me around the company's new headquarters. It was Dinah's decision to double the office size, adding expensive new conference space in which Praendex now offers its refresher courses and a new series of seminars -- a loss leader that is now a profit center. "If one of the boys had suggested that, there wouldn't have been a prayer," he continued. "But when Dinah tells me I'm wrong or I don't know enough, I can consider it rationally. When the boys try to tell me the same thing, I react as if it were a personal attack."
Arnie Jr. applauds the changes, too. With Dinah acting as a buffer, he enjoys more autonomy and suffers less head-butting. "It's working incomparably better than it did. She has a talent for saying things to him like a mother to a child. If I had to say the same things, it would be combat. She can scold him and chide him."
Dinah agrees. "I think fathers admire bossiness in their daughters. It tickles them. But I also do things for my father my brothers couldn't stand to do. I Xerox for him, and I make sure he gets the lunch he needs. I'm not proud."
Call it stroking. Call it nurturing. Emotionally, sons just aren't wired to offer it. Daughters are. And for a father facing the prospect of giving up a big piece of his own identity, that's all the difference in the world.
"He feels sure that I admire what he's done, respect that he still does it, and acknowledge that I've never done it -- that's a big security blanket," Dinah explains. "Both my brothers think the business would be better if Dad were out. But I think he has a tremendous amount to teach me. I'm glad he's here."
What really clinches it for Daniels, however, is not only the way his daughter treats him, but the way she treats his business. "I care about this business in an emotional way," she says. "I think about it as a responsibility. It's important that my mom's life not change, and that the business continue to be available to take care of all the family. I don't think my brothers worry about it to the same degree."
Not the Daniels brothers. And not most brothers, according to many of the students of family business I spoke with. Among the most perceptive was Matilde Salganicoff, a Philadelphia family-business consultant and therapist who runs workshops for women in family businesses at The Wharton School.
"Women are taught to be more nurturing, more attuned to emotional needs, and are socialized to express more concern with helping the family," Salganicoff says. "Women generally go into the business to help the family, and secondarily to develop a career. But sons don't go in primarily to help their father or their family -- it's simply not their central theme."
There is nothing particularly new in all this. Fathers and sons have tangled since the days of Isaac and Oedipus, and the relationship has been explored by men no less wise than Shakespeare and Turgenev and Freud. And yet even in this age of psychological sophistication and sexual equality, the daughter option is just beginning to sink into the consciousness of family business owners who will pass on the reins in record numbers over the coming decade. You wouldn't call it a trend so much as a trickle.
"Fifty percent of the potential successors are daughters," reminds Donald Jonovic of Family Business Management Services, in Cleveland. "If only 5% of the actual successors were daughters, it would be a magnificent improvement."
Traditionally, the bias toward the son started very early. Although sons and daughters grew up hearing the same dinner-table conversation about the business, it was the son who heard it through the ears of the heir apparent. As a result, sons have tended to view the business as their birth-right and have not taken the time or trouble to go out and get other experience. The top job has been something they expected to inherit, not earn.
For daughters it has been very different -- and better for them that it has. When a daughter winds up taking over the family business, it is most often only after she has proven herself in other companies or other settings. The odds are that she has had to work harder, train harder, and push harder to get where she is going. And her performance on the outside is an early and fairly reliable indicator of how successful she'll be at the head of the family company.
Convincing Dad that she is worthy is only the first hurdle, however. Convincing employees, clients, and suppliers is something else. That's always been a challenge for children brought into the business, and only a sustained period of competence and accomplishment can ever quiet the whispered questions about favoritism and nepotism. But for daughters, there is an added layer of prejudice to overcome -- the same prejudice faced by ambitious women anywhere. Not all daughters survive those tests, but those who do come out stronger and more confident for it.
I found just such a daughter at an iron forge in Elyria, Ohio. Kasper Foundry Co. is an old-line, third-generation family business in a traditional industry, with a plant that Charles Dickens might have used as a setting: a dimly lit cavern of grime and molten metal, freezing in winter, sweltering in summer, where brawny men sweat and swear and spit tobacco. As she moves through the foundry dressed in jumpsuit, hard hat, and silver-studded cowboy boots, 26-year-old Betsy Kasper looks as if she has stepped out of the movie Flashdance.
Ernest Kasper laid down some strict rules before he'd even talk to Betsy about her coming to work at the foundry. First, she'd have to succeed in another company. Then she'd have to show him three other jobs she'd been offered. Within two years after collete, however, she'd passed his tests. "Give me anything," she pleaded with her dad, "as long as it's in the shop."
Although she collapsed in the bathtub each night after work, Betsy found she loved the place. "It's hard to prove to guys in a foundry that you can pull your weight," she remembers. "But I worked as hard as they did, and I never asked them to do anything I wouldn't do myself." She filled a Red Man brand tobacco pouch with bubble gum and carried it in the back pocket of her overalls, occasionally spitting on the floor with the best of them. And after months of shared sweat and endless conversations about pickup trucks and coon dogs, most of the men came to accept her. Within a year, she knew all 90-plus employees by name. She could see the business -- and life -- through their eyes.
When she completed her apprenticeship, Betsy made it her business to respond to the concerns she had picked up on the shop floor. In compliance with new Occupational Safety and Health Adminstration requirements, she implemented a right-to-know program that gave employees information about the hazardous chemicals used in the foundry. She promoted the company basketball games and had the cafeteria painted. And because of her experience working nearly every job in the plant, she was able to create the company's first quality-control manual, a step-by-step production guide that now lets Kasper Foundry compete for government contracts.
"Sure I'm proud of her," Ernie Kasper beams. "I'd be a damn fool not to be. The day and age when people keep women out of business is over. If they can do the job, why shouldn't they?"
"My aim is to take over the company," says Betsy. But, still, she wonders, "What if I want to have children?"
And there, it turns out, is the most difficult hurdle to the father-daughter succession. It hardly seems fair. No father would ask a son how he plans to juggle the responsibilities of business and family. But when it comes to daughters, fathers do ask. In time it is possible that that, too, may change. But somehow I doubt it.
The question here is not day care, or who will do the grocery shopping, or who will look after things during the three months after the baby is born. Those are concerns, but they are hardly concerns unique to the CEO of a family business. What is unique is the level of emotional commitment that a business extracts, especially from a daughter. Remember that for the daughter, the business is an extension of the family. That is one reason daughters are better at easing the pains of succession. But it is also a reason why a daughter's work life can more easily become all consuming.
Roland A. Bacci thinks about that. His 31-year-old daughter, Robin, took over the family-owned Mercedes-Benz dealership in San Rafael, Calif., after a long apprenticeship. Since then, sales have climbed by more than 25% a year. She shares his values and attitudes, right down to the habit of picking up any stray pieces of paper she finds on her inspection tours around the dealership. And she has put together her own team of new managers in sales, parts, and service. Her brother, David, also in the business, is satisfied with the arrangement.
So why isn't Roland Bacci happier? It's his daughter.
Oh, yes, she's thriving. She is healthy and attractive and successful beyond his wildest dreams. As a father, he's never felt closer to her than he does today. But he senses something is missing in her life -- and his. "She's so warm and so wonderful -- I'd love to see her married and having children," he says with a sigh. "That would make me happiest."
Robin doesn't fully share her father's concern. She works long and hard, bikes regularly, and takes pleasure in her tightly knit family. Other things will come in time.
"I've finally grown into myself," she says. "This is the happiest I've ever been." To anyone who speaks with her, it is clear that the challenge of running the dealership is now a seven-day-a-week high. It is her passion and her purpose.
"It takes all my energy, my love, and my attention," admits Robin. And in a sentence, that sums up why Roland Bacci is worried.
As the Cadillac pulls out of the company parking lot, he reaches into his pocket to make sure he still has the letter. It's to his daughter at college, and in it he asks her to consider joining him in the business after she's finished with her studies. No, he says, his health is fine. And business couldn't be better. It's just that he wanted her to know, formally and officially, that there was a big job with her name on it back home. He's confident, he says, that she can fill it.
Once he started writing, it all seemed to flow. He wanted her to know about the satisfactions of running a business, but some of the problems as well. There were the financial problems and the management pressures. But most of all were the succession problems any family business is bound to go through. He's not the easiest guy in the world to work for, but she knew that. And he's not likely to bow out too quickly. But they could work all that out if she were willing to make the commitment. Don't decide right away, he advised. Take some time to think about it.
He stops the car at the first intersection and hops out. As he holds the letter in the mailbox opening, he wonders how his son will react and whether he shouldn't first talk it over with his wife. But mostly he wonders what his daughter's reaction will be. She'd never expressed much of an interest in the firm, but then again, she'd never really been asked. The truth is, she has it all over her brothers -- in the way she thinks, in the way she handles people. He'd be lucky to get her. He was silly to have waited this long.