Management key to good succession
When George Cowper lined up to run 42km in the London Marathon last month, he wasn't the only one facing a test.
Back home in Christchurch, sons Nick and Tim were left in charge of the family business, Hummingbird Coffee. It wasn't the first time - four years ago George took six weeks off - and it seems it won't be the last.
Cowper and wife Sue bought the business 12 years ago when he was in his late 40s. Now he's eyeing a two to three day a week gig at Hummingbird instead of the daily grind. It's fortunate, then, that Nick and Tim are worthy shoe fillers. Each has more than a decade's experience at the family firm and has proved a natural leader in different specialties - Nick's is marketing and management; Tim's is operations.
The business may seem incestuous, George admits - Sue works in its central city café and only a daughter training in forensic science has broken the mould.
Nick joined the company as a 16-year-old the day after his parents' purchase, older brother Tim the following year. Now Nick is the general manager and Tim manages operations and the roastery.
"Back then I was a general dogsbody, washing dishes and packing coffee, doing bits and bobs in school holidays and whenever it was needed," says Nick.
"When I did my degree (a Bachelor of Commerce) I was covering when staff were sick. I was doing our barista training so I'd do a couple of hours of lectures, train someone in how to make coffee, then go back and do some more lectures."
While Tim has spent all his time in the roastery and managing the orders, Nick's been everywhere else. He stripped paint off the roof of the historic building that now houses the company's Oddfellows café, worked in the café when it opened and has held technical and sales roles.
It was easy for George to find jobs that matched his sons' strengths.
"Tim showed natural tendencies to run the roastery, but he's not what I'd call a strong marketer," says George. "Nick clearly has a strong marketing bent."
It's estimated 80 per cent of Kiwi privately owned businesses are family firms, if the definition of such a company begins with couples working together, says Dr Deb Shepherd, a University of Auckland business school lecturer who has been researching family businesses for about six years.
With colleague Dr Chris Woods, Shepherd will facilitate the third annual Family Business Forum at the university later this year.
Family firms that get it right have the company mission in their blood and free the next generation to innovate, Shepherd says.
"There's something about the generations that grow up talking and understanding business. There's a lot of tacit knowledge, they've just heard about it from growing up with their parents.
"[The family members] have really good communication around issues pertaining to family and business. In the ones that are growing there's scope for the incoming generation to continue to be entrepreneurial, so the outgoing generation isn't holding these businesses back."
The ones that don't carry on haven't necessarily failed, they may just be in a sunset industry or the founder's children may not be interested in the business.
In some cases, family dynamics "implode", says Shepherd.
Ushering the next generation into a family firm can be rife with challenges. Children following in their parents' footsteps are often resented by staff looking for signs of nepotism. Parents might cling to old ways, afraid their vision for the company will be lost.
The hard part for George Cowper came when he tried to mentor his sons. The former chief executive of Lane Walker Rudkin (LWR) Hosiery Group in the 1980s and of Canterbury Cotton Oxford Europe in the 1990s, George thought he was up to the task.
"I like to think I was pretty good at mentoring people when I was at Lane Walker Rudkin, but I tell you, you can't mentor your own children. I started it, but I sort of backed off, it just wasn't going to work. That's when I got external people coming in."
George sent Tim and Nick to Ethiopia and Guatemala to see harvests, while Nick has attended offshore trade fairs and an LWR sales conference in Australia (thanks to a former colleague of George's). George also recruited a former LWR human resources manager to mentor his sons for several months.
"There's an emotional element and I thought it was best to have somebody external or get them to travel overseas. [Tim and Nick's] entire employment history has been at Hummingbird Coffee, you just need that exposure to other people and other businesses to see how the coffee industry works."
Being the boss' son means you have to prove yourself more than anyone else, Nick reckons.
"You just have to work harder than other people in the company would. There's always going to be a tendency for people to feel a little bit hard done by, but it's about the hours that have been put in and the knowledge we've tried to acquire by working longer hours, on weekends and public holidays. That hopefully mitigates the issues people have."
When Forres McPheat contemplated his exit from Filtercorp - the manufacturing, sales and engineering company he started in 1977 - he orchestrated a careful transition.
For son Blair, now general manager of a spinoff company, it's been an unusually long apprenticeship.
Like Nick Cowper, he started in the family firm at school age, but Blair's involvement actually began at age nine.
"I'd been coming out to work with dad in school holidays and I used to love it. When I left school I booked to go to polytech but Forres lost a sales rep and I stepped in until tech started in March. By then I had a car and money was coming in and I had a girlfriend and I thought I'd delay it for a year, but the rest is history. I've never left."
Blair's the born salesman; brother Kevin (Filtercorp's general manager) has his head in the detail. Kevin puts this down to his training as an apprentice mechanic and completing the best part of a New Zealand Certificate of Engineering.
Forres' transition to chairman began six years ago when Blair and Kevin bought into the business and became directors.
"I gave them access to all the financials and the way the company operates," says Forres. "[When I] stepped into the role as chairman, they were both completely au fait with how the company works."
Now there's an operations manager for department heads to report to, freeing Forres and his sons to plot the company's growth. That means scouring international trade shows for new products and a focus on export.
Father and sons aren't scared to reinvent. Once Filtercorp became dominant in the local filter bag manufacturing scene, it broke into the ventilation market and now offers full turnkey projects.
It was Blair's idea for a flexible connector that prevents materials leaking on their way from factory chutes to sifting processors that was good enough to patent and make a separate business from. That company, BFM Fitting, now has 19 distributors globally and sells in about 100 countries.
Forres reckons Kevin and Blair are his two hardest workers. He cites a section in former Avis CEO Robert Townsend's book Up the Organisation that says if you're important enough to have a reserved carpark, you should get to work first.
But Blair and Kevin say their work ethic doesn't come from fear of resentment by other staff.
"If you ask anyone who owns a business, [the owners] are always the hardest working ones, or they should be, anyway," says Kevin. "It's a 24/7 job. A lot of that comes back to the pride in yourself, it's your make up in the first place."
Forres has always tried to give his sons new business challenges.
"Every time they think they're at the top of the mountain they find there's another step. Kevin looks after some key accounts in New Zealand and some key export accounts because I don't believe in general managers who sit behind their desks."
And he waited until the company was in fit shape to be inherited.
"You can't run the place into the ground and say, 'here you go boys, I'm out of here, sort it out and keep me in the manner to which I've become accustomed.' The books all have to be on the positive side before you say you're not coming in on Monday."
There's growing recognition our family businesses need support and interest in a local association is building, Shepherd says.
"There's a realisation they are the backbone of the economy. As much as incubators and startups and all of those really interesting and potentially sexy businesses are fascinating, what's holding our economy up is the SME (small and medium enterprise) sector, which is predominantly privately owned, by families."