December 30, 2001

Back to the Fold: From Dot-Com to Dad and Mom

By ABBY ELLIN

As a teenager growing up in Salem, Va., John Reynolds spent his summers working at Reynolds Siding, a remodeling company his parents have owned for more than three decades. He returned to work there after college, but he soon grew restless.

"I wanted to do something different, to live in a different town and not work with my parents," said Mr. Reynolds, who is now 27. "I didn't understand how the working world worked, the demands, that people are expected to do work and have responsibilities. Also, having my parents as my bosses — I didn't like that. They treated me like a kid."

In 1997, Mr. Reynolds left the family business to pursue a doctorate in theology at Duke University; he hoped to teach some day. But a year later, he changed his mind again and decided to work as a clerk for a law firm in Richmond, Va.

Still unhappy, he returned to the family business in the summer of 2000. He is now a vice president for sales and marketing, and he is enjoying his work. "Once I worked for the attorneys I realized it doesn't matter who your bosses are, you're not always going to like them," Mr. Reynolds said.

He said his parents welcomed his return. "They hadn't realized that I was an asset to them, and now they do," he said.

Mr. Reynolds is among many young people who have decided to work at family-owned businesses. Some have grown disenchanted with the outside business world. Others have been forced to return after receiving pink slips or watching their new- economy dreams disintegrate, experts on family companies say.

Nearly 90 percent of American businesses are family owned or controlled, according to the Institute for Family-Owned Business at the University of Southern Maine. (Among them are big-name companies like Cargill, Anheuser-Busch, Levi Strauss, Gap and Hallmark Cards.) Yet only 30 percent of the family-owned businesses in the country survive into the second generation, 13 percent into the second and fewer than 3 percent into the third, the institute said.Whether the influx of adult children to family businesses will have a long-lasting effect on the companies remains to be seen. "I don't know where it's going to come out, but it's an interesting time," said Fredda Herz Brown, managing partner of the Metropolitan Group, a consulting firm in Tenafly, N.J., that works with family businesses. "It's so dependent on the economy and what's happening in particular industries. There's such tremendous, rapid change."

Many young people who come from families that own businesses return to the fold after a few years in the outside world, said Ann Dugan, founder and executive director of the Family Enterprise Center at the Katz Graduate School of Business at the University of Pittsburgh.

"Even though what they say is one thing, when they see what the reality is in the outside world in terms of salaries and status and perks, they usually reconsider," she said. "Also, as they get older, people understand that they really do want to make a contribution to the family business — that usually the family name is somehow affiliated with it, if not on the name of the business itself. And there is sort of a pride and ego that kicks in at that point as well."

Although many adult children, like Mr. Reynolds, had once said they would never work for the family — fearing that it would be nepotistic or a sign of personal weakness — they are finding it necessary to return to the nest. Still others wish that their parents had a nest they could return to.

Bill Shapiro, the founding editor in chief of MBA Jungle, a magazine for aspiring young executives, said he thought that nepotism was slowly losing its stigma. In fact, he included a favorable article about nepotism in the magazine's September issue. "Nepotism makes good business sense; you probably feel more pressure to perform if Dad is signing your paycheck and your family name is on the company stationery," he said in an interview. "Also, relatives are often more efficient in their daily dealings. Relatives perceive one another's thoughts and emotions so viscerally and so quickly that an arched eyebrow or nervous tapping of the pen can take the place of a three-page memo." Company loyalty is also a factor for those joining the family business.

"Everybody at the company — from the board of directors to management to the line employees — knows that you're not going to leave the firm and go to the competition for a fatter paycheck," Mr. Shapiro added. Joining the family business is also a chance to reconnect with family members, as Patrick Amori is learning. In March 2000, Mr. Amori, 29, left his job as an advertising account executive to help his father run Il Covo Dell'Est, an Italian restaurant in the East Village in Manhattan. Although he had earned a decent salary as an account executive and had many people working for him, "it wasn't what I wanted to do," said Mr. Amori, who is now the restaurant manager.

"I wanted to see what my father does every day; I wanted to see a side that was different from what I saw as a kid, when he would work all day and come home at night tired," he said. "Now I'm able to be part of his life and try to do good for the family."

Others have also found their experience rewarding. Melissa Wilson, 24, had never imagined working at Tito's Tacos, the taco stand started 43 years ago by her great- grandfather in Culver City, Calif. It now employs 70 people. "My family is a bunch of entrepreneurs, and I felt like it would be the easy way out if I worked for them," she said of her initial hesitation to join the company. "Plus, the business has caused lots of problems in the family because it was so successful — people fighting about who's going to inherit it."

Two years ago, during the Internet boom, she graduated from the University of San Francisco with a degree in international relations and took a position as a Bay Area office manager at Icon Medialab, a Swedish company that helps businesses develop Internet marketing strategies. She said she received incentives including a high salary, overseas training classes, four-week vacations and promises of a promotion.

But as the months unfolded, it became clear that she was not going to be promoted as quickly as she had hoped. Her peers were being laid off, she said, and she felt she was in a dead-end job. So she quit and looked for new work, living off credit cards and saddling herself with $10,000 in debt. The only available jobs were other office-manager positions, which she did not want. Finally, she began working as a manager at the taco stand last April. Much to her surprise, she said, she is happy.

"I have the freedom to do things here I wanted to do at my dot-com and didn't realize I could do at a restaurant," she said. "I'm in a management position at the most famous taco stand in Southern California, making more money than I could ever have dreamed."

Having relatives as bosses can be difficult, she conceded, because it can be hard to separate business from family. But mostly, she added, "it's a blessing in disguise."

Ira Bryck, director of the University of Massachusetts Family Business Center in Amherst, Mass., cautions family businesses not to hire newly unemployed relatives just because they worry about their futures. "A family business that's going to grow has to make sure it's hiring based on the needs of the business," said Mr. Bryck, whose own family owned a children's wear store, Barasch's Kidstore, for four generations.

"The proper thing for the family business to do is a need assessment and say, `Despite the fact that this person is in need, does our business need that member?' " he said. "Family business is not just a place to hide out — it's a place to make contributions, to add your skills and talents. It's important for family members to say: `You're going to have to commit to this company as you would to any company. You're not here to hide out until the economy heals itself.' "

Mr. Bryck predicted that family businesses in general would undergo many changes in the next 20 years, particularly as family- business owners of the baby boom generation retire. Some will be looking to expand by buying other businesses, and others will be looking to sell. "So there is an opportunity for family members to help grow the business," he said.

Many young people say that is exactly what they plan to do. "I want to franchise the company all over the country," Ms. Wilson said of the taco stand. "Then I want to retire."

 

Copyright 2001 The New York Times Company