Top 100 2011: Companies often run in the family, but do they run well?

Published Aug. 12, 2011

Most private companies are family-owned, passed down from generation to generation. How that succession occurs — when, who, what department — can lead to the company’s growth or demise. A couple members of the latest generation talk about how their family businesses made those changes and what it’s like to be part of a business legacy.

Tom Wolf

Chairman and CEO of The Wolf Organization Inc.

York

Company description: Distributor of kitchen and bath cabinetry, building material supplier.

Tom Wolf is the sixth generation to run the 168-year-old building materials company.

What’s the toughest part about working for a family company? “The succession planning.”

Sometimes those plans go awry. It’s his second stint as CEO. He and two cousins bought the business from their fathers in 1985 and ran it for 21 years. They sold a majority stake in 2006. But during the recession, the debt from the sale was dragging down the company, so Wolf and his cousins bought it back in 2009. In between, Wolf was secretary of revenue for the commonwealth.

What’s the best? “The relationships and the trust. The understanding that exist between family members. One cousin and I are only five months apart (in age), and we grew up across the driveway from each other.”

Neither of his two daughters, ages 28 and 30, is interested in running the company. “But the door is always open.”

How do you empower your employees when there are so many people there with the same last name? “We distribute 20 percent to 30 percent of our net profit to our employees, and we share all financials. Family members also have to work their way up. When you do that, you have a fairly good understanding of how the business works and how hard the work is.”

How do you demonstrate objectivity in evaluating employees? “We’re the only ISO-certified company in our field. That lays all of that out.”

Growing up, did you want to do something other than work for the family firm? If so, what was it? “I never wanted to go into the family business. I was going to be a centerfielder for Philadelphia Phillies. But then I played baseball as a child and realized there was no way in hell that was ever going to happen.”

Wolf later racked up political science degrees: a bachelor’s from Dartmouth, a master’s at the University of London and a Ph.D. from MIT.

But the emotional tug toward York County was too great and he started, as all family members do, at the bottom rung at The Wolf Organization. “I was a Ph.D. forklift driver, then a truck driver.”

The adage is the first generation builds the company, the second enjoys and the third destroys it. How did your company avert such a fate? “Yup. Three generations from shirtsleeves to shirtsleeves.”

Each generation buys the company for its full market value. That resets the clock each time, and all family members get their share of the company without diluting control of the company.

Otherwise, “it is really tough to manage a company as the number of shareholders expands.” Doing the math, there would have been 230 shareholders-heirs in the Wolf company over the past 168 years.

Instead, there are only three, two cousins who are retired and a very-well educated former forklift driver.

Travis Eby

President of M.H. Eby Inc.

East Earl Township, Lancaster County

Company description: Maker of livestock trailers

What’s the toughest part about working for a family company? “Expectations as the next generation. And you put extra pressure on yourself because you don’t want to 
let your parents down. Co-workers sometimes hold you to a higher standard. As the next generation, you’re sometimes viewed as the winner of the gene pool lottery.”

What’s the best? “Being a private company, you’re only responsible to the business and employees. You can make an investment that will ruin our quarter because it will benefit 2013. It’s a blessing to work with my father and my brother. We get to be a family and business partners.”

How do you empower your employees when there are so many people there with the same last name? “We have an executive committee of three Ebys and eight others. They’re all given the opportunity to give their input. We don’t operate in a vacuum. A lot of times they have really great ideas.”

How do you demonstrate objectivity in evaluating employees? “Anyone who says they (evaluate objectively) probably isn’t being honest. In a family business, there’s always going to be some nepotism. We have certain employees that certainly could do our jobs if we were ever hit by a bus. Part of our succession planning, we discuss that if any of us reaches a point of incapacitation, who can replace us.”

Growing up, did you want to do something other than work for the family firm? If so, what was it? “Deep down, always knew I would wind up here. My brother is a mechanical engineer, so we all knew Nick would be in the business. For a while I was going to pursue something in communications — in radio or music. But my dad gave me the opportunity to work in sales while still in college. We did some of the menial tasks in high school, but when I started doing sales, I realized how much I loved it. We’re in the livestock trailer industry, and I remember telling my friends in college I can’t imagine selling trailers in Iowa. We have a plant out in Iowa now, and I love it out there.”

The adage is the first generation builds the company, the second enjoys and the third destroys it. How did your company avert such a fate? “The reason those adages are said is because there is some degree of truth in them. My grandfather had three employees, and it was mainly a woodworking shop. My dad started taking some chances and the company really started growing. You can’t buy a reputation. You have to earn it. It would be very easy for the third generation to be the boss’s kid and come and go whenever he wants. You make a conscientious decision that I’m not going to be that guy — the one who runs it into the ground.”

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