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December 13, 2004
My guide to running the family business
I am now in my 27th year at my family company. I have particularly enjoyed building the business in close partnership with my father, who founded the firm in 1952. My brother and sister both work at Edelman, while my mother maintains a very keen interest in the progress of the enterprise. My brother in law and one of my cousins are also employed by Edelman, along with 1,800 others around the world. I want to tell you how I came to work at Edelman and to offer some advice for those who are heirs to a family business, considering their career options.
I was exposed to the family business from the earliest stage of my life. My parents hosted an annual party for Chicago media, with three hundred reporters mobbing our residence. Dinners at home often included clients or spokespeople. My most memorable dinners were with popcorn king Orville Redenbacher and former Miss America Phyllis George (what self respecting 12 year old wouldn't enjoy that). The most humorous dinner was with a woman nicknamed Miss Manners, our spokesperson for Ore Ida frozen fries, who taught President Nixon's daughters how to improve their table etiquette. As I pushed my peas onto my fork with my knife (and other tricks I don't choose to reveal for fear my kids might read this blog), Miss Manners sat quietly and finished her dinner by complimenting the Edelman children, much to the consternation of my mother.
As I was graduating from business school in 1978, I was convinced that I wanted a career in product management. I was on the verge of accepting a job as assistant product manager at Playtex (fantasy job for 23 year old guy). My father called and said that he had received an offer to buy Edelman from the advertising agency DDB (now part of Omnicom). He told me that he was not ready to sell, that he wanted me to come to the firm and that I could do something else in a year if I was not happy. So I turned down Playtex and accepted a job for $25,000 a year at Edelman, beginning after Labor Day. My long planned six week vacation around Europe with my then girlfriend beckoned. Exactly a week before graduation, my father called to tell me that Edelman had won the Continental Grain account, that I understood commodity futures, and that I had to report for work in Chicago the following Monday. I had just learned my first lesson about family business-business first, unless it is a family matter, which should take priority. Leisure is not an option if you are taking the business seriously.
I have learned a few other lessons along the way about family business. I was sent to New York as part of a grand plan to learn about the firm. I was very fortunate to have a non-family mentor, Dick Aurelio, a former journalist and deputy mayor of New York City. He ripped apart my copy, showed me the value of networking with opinion leaders, and took me along as he worked on the Nestle infant formula boycott, Hooker Chemical's environmental disaster at Love Canal and Pan Am's acquisition of National Airlines. You need a role model and teacher who brings no emotional baggage to the process.
Dick left for a job at Time Warner and my father made two consecutive bad choices as successor. In desperation, he turned to me, age 26, to be interim manager until he could find somebody else. There were only about a dozen of us, including the indomitable Jody Quinn, so I guess he figured there was not much to lose. In any case, a bunch of twenty "somethings" built a business that today ranks as the second largest in New York City. The third lesson for family business, then, is to give a family member a chance to sink or swim with his or her own unit.
My career progressed to the point that I was named chief executive officer in 1997. In the last seven years, we have substantially increased the size of the company, but we also had to endure an unprecedented reversal of fortune as the tech bubble popped in 2001, followed by the disaster of September 11. I had to make some tough decisions, including a reduction in our employee force and closure of some offices as the business ebbed in 2001-2. I did this in close consultation with my senior team but acted only after persuading my family, most notably my father, that this was the right strategy to pursue. The fourth lesson is that you may have the title of CEO, but you have the responsibility as head of a family enterprise to act collectively.
My last lesson is that family business owners have a choice to make: either lead from the front, or hire a professional manager and let that person get on with it. If you are willing to make the personal sacrifices, if you can act as a role model, if you can inspire confidence in those around you, by all means go for it. If you feel in the least ambivalent, or if you prefer a less hassled lifestyle, make the family the investor and not the operator. Either model can work well, but decide on one or the other, because lack of clarity leads to disaster.
I conclude with a thought about my father, who founded the company. My relationship with him as a teen was not easy. I remember clearly coming home with a 770 (out of 800) on my American History achievement test. His comment, "I thought you were perfect in American history, what did you get wrong?" I have come to understand him from working together for 27 years. He hardly celebrates his victories and mourns his defeats. He is a man committed to his company, to excellence, to outstanding service to his clients and to family. He drives a seven year old car and wears suits from Brooks Brothers. He gives generously to charity and serves on several non profit boards. He is truly the blacksmith in Longfellow's immortal poem, "His brow is wet with honest sweat, He earns whate'er he can, And looks the whole world in the face, For he owes not any man. Onward through life he goes; Each morning sees some task begin, Each evening sees it close. Something attempted, something done, Has earned a night's repose."
Richard
Posted by Edelman at December 13, 2004 9:06 AM
Comments
Great post that talks about running a PR firm, and the issues that running a family business bring to the quotient.
The family business back in Michigan went through some of the same issues you brought up, but on a much smaller scale.
If you ever are looking to adopt a son, I'm open to a new family.
Posted by: Jeremy at December 21, 2004 3:56 PM
Dear Richard,
I read your post with pleasure and actually emailed that poem to my father. We too have a family business and now at 27, 5 years since I started, I'm finally learning what it really means to run a business, a family one. So reading what your wrote was yet another helpful piece of information.
It was also an eye opener. It was good to see the human side of the business. We hired Edelman for our PR needs several months ago, primarily working with your London Office. It's been quite a ride :) I'm looking forward to 2005.
Thank you.
Lana Romanov
Pose Tech Corporation
Posted by: Lana Romanov at December 22, 2004 12:08 PM
I happended to view Edelman website, and to know the history of the company. I totally agree with your comments regarding to the relationship and communicatoin as quoted: “I am convinced the future of business is not about selling. It is about building and sustaining relationships with multiple stakeholders through dialogue, credible sources and relevant experiences”; “We measure the depth of impression and strength of stakeholder relationships, not just the advertising criteria of message frequency and recall.”
I am touched by your comment, and I totally agree with the points. Organization is a complex system, which has open, non-linear, self-organizing, and co-evolution relationships among agents. Managing an organization is to manage the linkage of relationships, both internally and externally. To match external variety with internal variety gives organizations the chance to improvise, to prepare for the uncertainty of the future. Both internal and external varieties are created when organizations rely on reliable, more and different communication linkages. Under this circumstance, organizations can develop the capacity to make the shift from knowing the world to make sense of the world, from forecasting the future to preparing the organization to meet unknowable future, and controlling the system to unleashing the system’s potential.
Edelman is a unique public relation company, to help clients to manage the internal & external relationships. I am inspired to communicate with you about some ideas of relationship management, after looking at the website of Edelman, and hope you agree with me. Additionally, I hope you are not surprised by this spam-looking email. J
Like the song says, I wish you a Merry Christmas, I wish you a Merry Christmas, and Happy New Year! J
Aili Zhang
MBA04
McCombs School of Business
Posted by: Aili Zhang at December 23, 2004 9:01 AM
...a terrific narrative...honest, straightforward, insightful.....typical of you, based on what I know...more such sharing from time to time would be well received, I'm sure.....cheers....
Posted by: Bill at December 29, 2004 3:19 PM