In a state dominated by family-owned companies, success can be a tricky business.

As family-owned firms grow and are passed down through the generations, conflicts and complications arise that can threaten their existence. Top executives at six family-owned businesses in Maine met Wednesday to share their strategies for avoiding common pitfalls.

They participated in a panel discussion at Husson University in Westbrook that was sponsored by the Portland-based Institute for Family-Owned Businesses, which estimates that roughly 80 percent of all businesses in Maine are family-run. The panelists were Gene Geiger of Lewiston-based promotional products distributor Geiger Inc.; Kevin Hancock of Casco-based Hancock Lumber Co.; Michael Barriault of Lewiston-based beverage distributor Central Distributors Inc.; John Isaacson of Auburn-based Lee Auto Malls; Robert Moore of Bangor-based oil and propane supplier Dead River Co.; and Steven Cote of Bridgton-based Chalmers Insurance Group.

They tackled questions about a number of problems common to family-owned companies, particularly those related to growth and succession.

Family dynamics add a layer of complexity to the trials and tribulations of the family-owned business executive, they said. Family members may be owners, board members and/or employees, which creates inherent conflicts. Concerns about favoritism, entitlement, sibling rivalry and the influence of spouses only increase the level of difficulty, they said.

It’s important for top executives at family-owned companies to focus on the needs of the business and not get drawn into family squabbles, Barriault said.

“As a leader, you have to keep your head above the BS,” he said.

The panel was evenly split between executives whose forbears founded their companies and those who were brought in from outside the family. Geiger, Hancock and Barriault are descendants of their company’s founders, while Isaacson, Moore and Cote are not.

Members of each group said they could see certain benefits and drawbacks to their situation.

For those whose businesses bear their names, there is a sense of family pride that drives them to succeed, but they said it is also possible to lose a sense of individual identity.

Non-family executives said their mere presence can inspire other managers who know that a different last name does not limit their prospects within the company. However, they said the shadow of a semiretired patriarch may yet loom over them, making it more difficult to exercise executive authority.

“Family members don’t retire easily,” said Isaacson, who is a shareholder in Lee Auto but not a member of the founding family.

Each of the six companies represented on the panel has taken a slightly different approach to dealing with the challenges of balancing family and business interests.

Some said they rely on outside advisers to resolve family disputes or mentor younger relatives within the company. Others said they have placed iron-clad policies in place that leave little room for argument or misunderstanding.

Geiger said problems often arise when family members who work within the company feel as though they are not getting their fair share.

“Managing compensation and perks and things is really tough,” he said.

And when it comes time to choose a new leader, there may be pressure to place a family member in the top spot who isn’t ready for the job, Cote said. Family-owned businesses should not preclude themselves from looking outside the family for a new president or CEO, he said, even if it is just a temporary move until the right family member can be properly groomed.

“Any time there’s going to be a succession, you should at least think about it,” Cote said.

The panelists said that while strong executive leadership is important, so is making sure family shareholders have a sense of involvement and an understanding that their input matters.

“As soon as owners start thinking of themselves as investors, it’s the beginning of the end,” Moore said.


Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.