Much of New England was privy to one of the most dramatic family-business power struggles in recent history last summer when the Demoulas family publicly fought for control over the popular Massachusetts-based grocery chain Market Basket Inc.
But where the bout for company control between cousins Arthur T. Demoulas and Arthur S. Demoulas highlighted an ugly side of family business, others in the region – large and small – have done a better job avoiding the many potential conflicts inherent in working with family.
“Family business is one bankruptcy or one messy divorce away from a disaster,” said Timothy M. Warren Jr., CEO and fourth-generation owner of the Boston-based The Warren Group Inc.
About 40 percent of U.S. family-owned businesses turn into second-generation businesses, but succession rates fall sharply after that, as 13 percent are passed down successfully to a third generation and just 3 percent make it any further, according to facts compiled by the University of Vermont.
The Warren Group, a real estate and financial-information company that started in 1872, is holding the 2015 New England Family Business Conference on June 18 at Babson College in Wellesley, Mass. The conference comprises different events examining the ins and outs of family business, including a breakout session dedicated to human resources and crisis management.
Warren says he’s heard all sorts of anecdotal horror stories about family tension in business, including the Market Basket saga, but succession of Warren ownership has been successful. He attributes that to his father’s and grandfather’s willingness to give him space to grow when he first started in 1973.
“Both of them were appreciative of what I was doing and of my ideas, so they were easygoing in not trying to look over my shoulder and direct too much,” Warren said.
Other companies, such as Providence-based Gilbane Inc., have also been successful over the decades, but have set up internal controls specific to family so that business success comes before family ties.
The company, however, has had some time to iron out the strategy since brothers William and Thomas Gilbane founded the company in 1873.
“Every family member that works here has to earn the right to be here,” said Pierre LaPerriere, senior vice president of human resources.
LaPerriere, who’s not a family member, says Gilbane employs about 2,500 people, including 20 members of the Gilbane family led by board Chairman and CEO Thomas F. Gilbane Jr.
The company last year appointed Michael E. McKelvy president and chief operating officer, marking the first-ever nonfamily member to hold that position.
“The [company] recognizes that it’s about having the right talent lead the business and not the right family member,” LaPerriere added.
The company has a number of other safeguards in place when it comes to Gilbanes, including a policy that requires family members to seek three years of experience working outside the business before joining.
The company has worked on a number of notable national projects, including the Smithsonian National Air and Space Museum, the Brooklyn Museum and the Vietnam Veterans Memorial.
In Rhode Island, the company has worked on the former GTECH corporate headquarters and the T.F. Green Airport Interlink, among several others.
One benefit of running human resources in a family business, LaPerriere says, is the sense of pride the Gilbane family feels working for the company that’s held the family name for generations.
“When family members join the business, they feel as if it’s a legacy to them,” LaPerriere said. “They feel some real emotion about the company being successful and that’s important.”
Pride might not be a measurable business indicator, but Jason Sidok, part owner of H&C Security Inc. in Rehoboth, says it’s something that helps push his business forward.
“The business is associated with our name, so we can push a little bit harder and be a little more honest with each other than we can with other people,” Sidok said.
Sidok’s grandfather, Henry C. Sidok, founded H&C Security in 1973 and helped grow the company from one installer and one truck to a firm with about 25 employees. Today, Jason Sidok owns the company with his father, Henry Sidok Jr., and his aunt, Cynthia Saleeba.
Jason Sidok, 35, joined the family business after he graduated from then-Bryant College. He says the family dynamic is beneficial because there’s a heightened level of comfort he feels working with his father and aunt that allows him to push a little harder and understand a little more clearly what his colleagues are going through personally.
“Being open and honest is an advantage,” Sidok said. •