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Family business award winners share many traits

Puget Sound Business Journal (Seattle) - November 20, 2005

by Catherine Pratt

What do firms with products and services as diverse as whitewater rafting, boutique gifts and clothing, telecommunication, world-class composite molds and tooling, hardware and home products, and diversified holdings have in common? Each is a successful Washington-based family business.

Chosen from over 300 nominations and 17 finalists, the 2005 Best in the Northwest Washington Family Business Award winners were announced Nov. 18 at the 12th Annual Washington Family Business Forum in Seattle. The firms range in longevity from five years and multiple generations; to 150 years in business, seven generations and more than 400 family members. The six winners have collectively been in business for 370 years, primarily in the Northwest.

The winners are:

  • New Business (under 10 years): Barker Road Collection, Tacoma;

  • Small Business (under 50 employees): Zoller's Outdoor Odysseys, White Salmon;

  • Medium Business (50 to 250 employees): Rainier Connect, Tacoma;

  • Large Business (more than 250 employees): Janicki Industries, Sedro-Woolley;

  • Heritage Business (more than 50 years): McLendon Hardware, Inc., Renton;

  • 150th Year Heritage Award: Laird Norton Co. LLC, Seattle.

The awards competition was coordinated and co-sponsored by the Family Enterprise Institute at Pacific Lutheran University, a founding sponsor. The other co-sponsors are KeyBank, MassMutual Financial Group and the Puget Sound Business Journal.

A panel of academic experts at PLU's Family Enterprise Institute judged each applicant on the multiple criteria of innovative business strategies and practices, planning for succession, expressing the family's values in the business, family-business linkage, contribution to the community and industry, number of generations involved (except new firms), and business growth and viability.

The purpose of the awards and annual family business forum is to help preserve and promote family business in Washington. This is accomplished through documenting family business history, preserving values, considering the communities we serve and planning for the future.

Family enterprise in Washington has a healthy tradition of young and well-established firms that make a difference in their communities by providing jobs, serving others and impacting the local and global economy.

How to transfer values and success across generations are major issues for family firms. At each generational point there are major decisions such as: Should we transition to the next generation or sell the firm? Is the successor(s) appropriately prepared? Do we have a well-prepared financial and process succession plan in place? Does the next generation have a desire to be involved in the business? What is the role of nonfamily professional managers in the business and how are they compensated? How well are we prepared for changing environments and competition?

A strength of family business is the freedom to take the long view in preparing for the future as compared with publicly traded companies that must more frequently focus on short-term gains. This long view includes planning for leadership transitions and investments that do not have immediate payoff but lead to greater business success than would otherwise have been possible.

One of the major ways that family business leaders can create a desired future is to invite the extended family and enterprise into a dialogue on values, codes of conduct, and goals.
Last year, a PLU survey of more than 100 family firms in Washington found that they are much better at talking about what they value than recording these values or deliberately planning to transfer them across generations.

Not surprisingly, these family businesses value honesty, respect for others, positive interpersonal behavioral characteristics, integrity, fairness and customer focus. What is surprising is that only just over half of these firms have written codes of values, ethics, and conduct. Even when there is a written code, 40 percent of the time it was written by one person alone.

Codes of ethics, conduct, and values are good business. They help preserve values across generations, bring best practices into operation, and improve bottom-line performance.

This is an era of increasing regulatory expectations encroaching on privately held firms. The appropriate use of codes of ethics and values will help to meet customer and service provider expectations while also guarding against family and/or employee misconduct.
The vast majority of firms in the study that did not have a written code felt that these ethics and values were still clearly understood by employees and family. This seems optimistic.
Good business practice informs us that multiple methods of communication and reinforcement create greater levels of buy-in and adherence. It is not enough to just talk or put something on paper. The compliance aspects of abiding by specific codes are long term.

What should family firms do to be more successful today and plan for the future? Creating or revisiting codes of ethics, conduct and values would be a good place to start. Unless family firms work to preserve what matters most, other perspectives will inevitably creep in.

CATHERINE PRATT is assistant professor in the Pacific Lutheran University School of Business and helped create and currently directs the university's Family Enterprise Institute.

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