August 03, 2015

Integrating Non-family Members Into Business Requires Care

By Janet Wiens
– Memphis Business Journal –

Family-owned businesses are a breed unto themselves in many ways, and trusting operations to an outsider can cause turmoil or increase a company’s health.

Forging successful partnerships between family and non-family members hinges on several key factors, including understanding where the business is and wants to go and the goals and vision that have been established by the owners.

Integrating non-family members into a business to help run it happens for several reasons according to N. Gordon Thompson, managing member of Thompson Dunavant, the largest locally owned CPA firm in Memphis and a company with a history of working with multi-generational companies.

“Four main reasons come into play,” he says. “Each of these comes with its own set of challenges and requirements.”

The first scenario occurs when a family business needs outside management expertise because of the death, disability or retirement of a family member. Another opportunity for outsiders arises when a company’s success requires a different skill set than can be provided by family members or there imply aren’t enough family members to go around.

The last situation occurs when members of a family’s second or third generation do not want to be involved in the business because its success has provided them with the financial independence to pursue other ventures or they don’t have an affinity for the business.

“The first step is to determine whether the family plans on exiting the business it’s in or whether it plans to go forward,” Thompson says. “This is especially true when a key individual dies or retires. The answer to this question dictates the type of individual that will be a good fit for what’s ahead.”

Another key factor in Thompson’s opinion is the ability of the potential outside candidate to embrace and share the core values and vision that family members have for the business, a viewpoint shared by Rusty Bloodworth, executive vice president at Boyle Investment Co. Bloodworth has been with Boyle off and on since graduating from college and moved up through the ranks to his current position.

“When you’re not a family member one of the greatest keys to success is to understand what’s important to the family,” he says. “You can’t impose what you want. You must appreciate the family’s value system and goals.”

Boyle brought outsiders into the company because there weren’t enough family members to fill management positions within the company. Three members of the Boyle family are actively involved in the company today, and there are five non-family members with management roles in the organization.

“It’s very rewarding to become an extension of a family and to contribute to the continued success of something they have invested so heavily in,” Bloodworth says.

The situation at Fleming/Associates/Architects, Inc., is different than at many other firms, according to Scott Fleming, the firm’s current president and son of its founder, Robert Fleming, who founded the firm in 1953.

Fleming joined his father in practice in 1981, and became full owner in 1993. At that time he began working on a limited basis with a consultant to help determine the future direction of the firm.

“One key was to provide opportunities for non-family members to grow professionally and to have management opportunities,” Fleming says.

In 2000, Fleming brought in three partners who have ownership in the firm.

“We have a management structure that recognizes the contributions of key individuals within the firm while also putting in place the leadership that we need to continue growing and producing quality work for our clients.”