Amid Market Basket fiasco, family businesses discuss keys to success

AUGUST 17, 2014

Market Basket power struggle shows what could happen when families, businesses are linked

TARYN PLUMB

As we all know, family can be one of the greatest and most enriching facets of our lives — but also, in some cases, one of the biggest stresses.

And, as we're seeing with the ongoing standoff with the family-owned Market Basket grocery store chain, the stakes are even greater and the results of disagreements can be even more calamitous when family and business are intertwined.

"Whenever you have more than one family member involved in a business, there's a fairly high opportunity of conflict," said Ted Clark, executive director of The Center for Family Business at Northeastern University. "It's either going to be a nuclear bomb, or a nuclear power plant. There's the same level of energy, but one is harnessed and one is destructive."

So what, exactly, does it take to maintain a family-run business that's both successful and satisfying for all parties involved?

Keep to success

Clark cites three key factors: engaging in ongoing strategic planning, holding regular family meetings dedicated solely to issues outside the business, and establishing an independent board of advisers.

The latter can provide "unbiased opinions," a "degree of common sense," and a "voice of reason" from a group with no stake in the business," said Clark, whose organization provides education, networking opportunities and support to family businesses. "That's critical."

Of course, keeping open lines of communication is also vital, he said.

As is simply cultivating healthy relationships among the core members of the business, according to Wayne Rivers, president of the Raleigh, N.C.-based Family Business Institute.

"Most businesses can survive the threats of competition, economic cycles, changes in technology or other factors, but the deterioration of interpersonal relationships will devastate the business and tear apart the family," he writes in an article on the website for the institute, which helps families and "closely held" businesses manage issues around succession, communication and management.

Other essential elements for prosperity, Rivers says, are agreeing on common values and expectations, establishing shared visions, understanding the decision-making process, maintaining accountability and identifying roles clearly.

The latter can be achieved by implementing an employment policy, Clark noted.

"Treat family members as employees," he said, "so very clear expectations are set, and there are very clear understandings."

Still, he acknowledged, all of that is easier in principle than in practice.

"When you're looking at it from a very unemotional perspective, you think 'This is pretty simple, isn't it?'" he said. "It is extraordinarily difficult to keep these things under control."

Even so, many family ventures have been able to flourish. One such example is the Coghlins, whose fourth-generation, nearly 130-year-old enterprise has become somewhat of an institution in Worcester.

Brothers Edwin "Ted" Coghlin Jr., and James Coghlin took over the business from their fathers, then made the tactical decision to split it.

Ted's daughter, Susan Coghlin Mailman, now serves as president of Coghlin Electrical Contractors, Inc. and Coghlin Network Services, Inc., while James and his sons, Chris and James Jr., run Coghlin Cos., Inc., the parent of Columbia Tech and Cogmedix.

"The separation of the businesses was a brilliant idea by my dad and my uncle," Mailman said. "We were able to split the businesses and still maintain a good relationship, which is probably no easy feat."

And as she put it, if a point of contention arises, they handle it "direct, face to face," and "we don't let others in the middle of those conversations."

"We do have a way to deal with it," she said. "It doesn't mean we avoid all conflict."

She suggested that other businesses could learn from her family's example by dividing control and decision-making.

"That's a tactic that can help," she said.

Getting beyond the spats

"We fight and scream," said Celeste Maykel-Zack, who runs Evo Dining in Worcester with her brother, Albert Maykel III. They also have roles at the Living Earth, which their parents, Al and Maggy, have run for more than 40 years. But Maykel-Zack added, "At the end of the day, we always know we only want what is best for each other and all have the same common goal."

Their formula for success has been conserving close family ties, while sharing the same vision. "We each want the businesses to be successful while maintaining the core family unit," she said.

But whatever happens, she said, family absolutely comes first.

"Nothing else can take the place of it," she said. "Businesses will come and go, but family is what made you who you are and brought you to what you have become together. You would never be who you are without each other."

Families that might not have such a tight bond, meanwhile, could consider bringing in non-family executives, Clark suggested, which provides a separation between ownership and management for the relatives invested in the business.

An outsider brings "new perspective," he said, and "opens up a whole new talent tool, as opposed to just the gene pool."

Perhaps due to the bellicose nature of the Market Basket situation, a number of local family businesses, including Coghlin Cos., who were contacted for this article but declined to respond.

As is the case with Market Basket, one of the most prevalent issues with family businesses is "goal conflict," Clark said. Invested and dedicated family members might have vastly different ideas for the company. For example, the second generation might want to ramp up growth, while the first may look to maintain the status quo so they can have a comfortable base on which to retire, he said.

Begin with trust, forgiveness

Then there are the inevitable battles for control.

As Rivers noted, the very same factors that secure any healthy relationship ultimately translate into the business world. Trust and forgiveness are paramount, as are maintaining a mutual respect and a willingness to compromise.

"Constantly being on the short end of a win-lose relationship will only encourage problems between family members," Rivers says on the Family Business Institute website.

Despite all this, though, as Clark pointed out, the Market Basket debacle is a bit of an anomaly.

"I firmly believe that family businesses, when they run well, are unbeatable," he said.

That's even true with Market Basket, he said. When the conflict was managed, "it was an incredibly powerful mechanism" that generated great dividends for the family.
"More often than not, public corporations could learn more from a family business," he said. "People have loyalty to people. That's what the family business can bring."

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