You are on page 1of 13

Entrepreneurial Studies 627

CONTINUING A LEGACY;
LEADING A FAMILY BUSINESS

Syllabus

Len Middleton
734.763.9226
lenm@umich.edu
TABLE OF CONTENTS

WEEK 1: COURSE INTRODUCTION .................................................................................3

DYNAMICS OF THE FAMILY BUSINESS ..........................................................3

WEEK 2: SECOND AND THIRD GENERATION ISSUES..................................................4

FAMILY/WORK RELATIONSHIPS .....................................................................4

WEEK 3: NON-FAMILY MANAGEMENT ...........................................................................5

SUCCESSFUL FAMILY BUSINESSES ..............................................................5

WEEK 4: GOVERNANCE AND SHAREHOLDER RELATIONS ........................................6

WEEK 5: MANAGING SUCCESSION ................................................................................7

EVALUATING THE BUSINESS ..........................................................................7

WEEK 6: BUILDING THE NEXT GENERATION ................................................................8

SELLING A FAMILY BUSINESS ........................................................................8

A CAREER IN A FAMILY BUSINESS ................................................................8

IMPORTANT LESSONS FROM THE COURSE .................................................8

ASSIGNMENTS .......................................................................................................................9

SUPPLEMENTAL READINGS ..............................................................................................10

STUDENT INFORMATION SHEET - PREPARE FOR FIRST CLASS SESSION.................11


Family Business Course

COURSE INFORMATION

Instructor: Len Middleton


Office: E2412
Phone: 763-9226
Email: lenm@umich.edu
Office Hours: By appointment or before/after class
Location: TBD
Course Prerequisites
This course is for MBA and BBA students who are interested in learning more about family
business issues. The course will help those students who have worked in a family business, will
be returning to their family-owned business, want to do family business consulting, or will be an
entrepreneur and would like to understand how to transfer a family business to the next
generation. The course does not require the student to come from a Family Business setting,
but would like to understand the complex issues in these types of companies.

Course Objectives
This course explores the strategic, operating, financial, family, and career issues found in
family-owned and managed companies or privately-held firms. The challenge of the course is to
provide the tools to be successful, whether as part of a family business, work for one, or want to
be a consultant to a family business.
The fact is that 66% of all first generation family businesses fail to survive to be passed to the
second generation. Of the family businesses that survive the second generation, only 10%
survive for the third generation. 1
This course does not focus on legal and tax issues around a family business. The focus is on
developing the individual needs of the students and their particular situation.
Cases, readings, assignments, and class discussions are focused on the unique challenges of
managing a family business. The course topics will include:
• Family business dynamics and conflicts
• Preparing to take charge
• Financing the family business
• Non-family members of management
• Second and third generation issues
• Family business governance (the use of boards and family meetings)
• Succession planning
• Selling a family business
• Practices of successful family companies
• A career in a family business

1
US Small Business Administration 2005

Ross School of Business page 1


Family Business Course

Course Readings
Course Materials – Required Cases and Readings – CTools Site
Generation to Generation by Gersick, Davis, McCollom Hampton, & Lansberg, 1997

Grading System
Grading will be based on:
Participation – 20%
Cases Study Analysis - 20%
Self Evaluation – 10%
Final Project – 35%
Final Key Take-Away Paper – 15%

Assignments
All assignments will be due at the beginning of class. Each assignment is scored on a five point
system (1 is poor and 5 is excellent). I will try to include written comments as well. If you have
questions, I encourage you to email them or stay after class.

Class Sessions
This outline describes the course content as accurately as possible. However, it may be
necessary to modify the content of a session in order to meet the availability of a speaker or to
tailor the course to the best interests of the students.

Attendance
Because of the practical nature of this course, an important part of your learning will take place
in the classroom. If for some unavoidable reason you must miss a class, please let me know in
advance and in writing.

Preparation
It is necessary that you be fully prepared before class and actively participate in the classroom
discussions. If for some reason you are not fully prepared, please advise me before class so
that you are not inadvertently embarrassed. I urge you to attend all classes, even if you are not
prepared.

Participation
This course requires active participation for you to be successful. It is important to learn from
colleagues and to help them learn from your experiences. I will be evaluating class
participation. If you are concerned with how you are doing, just arrange to talk with me. Please
display a name card.

Office Hours
I encourage you to speak with me after class or make an appointment if you would like to meet
at another time.

Instructor
The instructor has grown up in a large, privately-held family business and has experience
working with other family businesses as a consultant.

Ross School of Business page 2


Family Business Course

Monday, October 31

WEEK 1: COURSE INTRODUCTION

DYNAMICS OF THE FAMILY BUSINESS

Topics:
Course and syllabus review
Family issues, competition, and norms
The first rule of a family business
Discussion on family business backgrounds and experiences
The 3-circle model
Family business systems and development issues

Readings:
• Introduction and Chapters 1-3 in Generation to Generation
• Introduction to Management of the Family Business, 9-805-155
• Definitions and Typologies of the Family Business, 9-802-007
• Analyzing Family Business Cases, 9-800-021
• Emmet Stephenson: Profile of an Entrepreneur, 9-898-049
• Trinity Crystal, 9-898-066

Handout:
• Worksheet for the 3-circle model

Class Discussion: Emmet Stephenson


1. What are the traits of a successful entrepreneur?

Class Discussion: Trinity Crystal


1. Give a brief overview of the case
2. How did this situation develop?
3. What are the family dynamics?
4. What would you do differently?

Assignments Due:
1. Fill out the Student Information Sheet on the last page of the syllabus
2. Be prepared to discuss your family business experiences or why you are interested
in family business issues

Ross School of Business page 3


Family Business Course

November 7

WEEK 2: SECOND AND THIRD GENERATION ISSUES

FAMILY/WORK RELATIONSHIPS

Topics:
Pros and cons of sibling relationships
Dealing with nepotism and non-performing family members
Power and control between different generations
Next generation leadership - cousin consortium relations
Developing procedures in family business environment
Assessing family work relations
Negotiating with the family - reducing conflicts
Performance evaluation of family members

Readings:
• Siblings and Succession in the Family Business, 98108 HBR
• Chapter 6 in Generation to Generation
• Performance Evaluation of Family Members, N2-898-032
• Working with Relatives in the Family Business, 9-902-424
• Conflicts That Plague Family Businesses, HBR 71206
• Sam Steinberg A & B (Condensed), 9-392-044
• The Pellegrins A&B, 9-899-009
• George Barker, 9-804-094

Class Discussion: Sam Steinberg A & B


1. What issues do Sam Steinberg and his family face at the end of the case?
2. What could Sam do to improve the company and the family at this point?

Class Discussion: George Barker


1. How would you deal with the unsatisfactory performance of a sibling?
2. Can the family issues be resolved?

Guest Speaker: TBD

Assignment Due: The Pellegrins


How would you assess the work relationship between Jonathan and George in 1976?
If you were George Pellegrin at the end of the case, what would you do?

Ross School of Business page 4


Family Business Course

November 14
WEEK 3: NON-FAMILY MANAGEMENT

SUCCESSFUL FAMILY BUSINESSES

Topics:
Selecting and evaluating the non-family CEO
Dealing with nepotism and non-performing family members
The role of the board in monitoring the CEO
The common factors that lead to success
Leadership roles and support characteristics
Traits of successful family businesses and good business practices

Readings:
• The Outstanding Outsider and the Fumbling Family, HBR 89511
• Business and the Facts of Family Life, 89610
• The Graham Family and the Washington Post Company Case, 9-498-0311
• Katherine Graham, 9-801-276
• Stevenson Industries, 9-802-086
• Prime Designs, 9-800-198
• The Raiser Organization, 9-804-028

Class Discussion: Stevenson Industries


1. How do you resolve the issues

Class Discussion: Prime Designs


1. How would you evaluate the situation and the nonfamily management?

Class Discussion: The Raiser Organization


1. What is the best strategic direction for the company?
2. What are the implications for the business, family, and the role tradition should play?

Video: Katherine Graham

Due Assignment: The Graham Family and the Washington Post Company
1. At 76 years old, should Katharine Graham have retired as Chair of the Washington
Post board at an earlier age? When is the time for the next generation to take over?
2. How would you assess the family and the company's ability to move forward?
3. What are the critical success factors? Does the Post break any rules that you would
think are important to its long-term viability?
4. Define the legacy that has contributed to the success of this family/company.
5. Where is the Post today?

Ross School of Business page 5


Family Business Course

Friday, December 2
WEEK 4: GOVERNANCE AND SHAREHOLDER RELATIONS

Topics:
Corporate family boards
Rights, roles, and responsibilities of shareholders
Family meetings, family councils, and board meetings

Readings:
• The Board of Directors of the Family Firm, 9-800-025
• Responsibilities and Rights of Shareholders In The Family Firm, 9-801-264
• Chapters 7 - 9 in Generation to Generation
• Effective Governance of the Family Business System, 9-802-200
• Governing the Family-Owned Enterprise, HBR 98107
• J. Perez Foods (A), N9-801-147
• Hancock Land Co. and Hancock Lumber Co.
• Scott Family Enterprise (A): Defining Fair Process for Cousin Owners, 9-KEL-124

Class Discussion: Governing the Family-Owned Enterprise


1. What is a good structure for governing a family business?
2. What were the key take aways from this article?

Video: Hancock Land Co. and Hancock Lumber Co.

Due Assignment: J. Perez Foods (A)


1. How did the shareholder issue start?
2. If you were Jaime Perez, Jr. at the end of the case, what would you do to resolve this
family shareholder conflict?

Ross School of Business page 6


Family Business Course

December 5

WEEK 5: MANAGING SUCCESSION

EVALUATING THE BUSINESS

Topics:
When is it time to retire or not
Planning for retirement
Career stages of the owner and next generation successor - creating a timetable
Review the Family Business
Due Diligence process

Readings:
• Working Yourself Out of a Job, 9-897-042
• When the CEO Can't Let Go, 95509
• Transferring Power in the Family Business, HBR 76401
• Chapters 7 - 9 in Generation to Generation
• Veltvest Corp, 9-901-054
• Atherton Clothing Company (A), N9-801-101
• Consolidated: C,G, and O. (SEE the CTOOLS SITE FOR THE CASE)

Class Discussion: Veltvest


1. Will you be able to give up control?

Class Discussion: Atherton Clothing Company


1. What would you do as Zachary Cohen at the end of the case?

Class Discussion: Consolidated C. G. & O.


1. How would you approach your father/grandfather?
2. What if he is not interested in retiring? What can be done?
3. If this is not resolved, how will it end up?

Guest Speaker: TBD

Assignment Due: Self Assessment (See CTools site for handout)


Assignment Due: Atherton Clothing Company
1. What would you do as Zachary Cohen at the end of the case?

Ross School of Business page 7


Family Business Course

December 12

WEEK 6: BUILDING THE NEXT GENERATION

SELLING A FAMILY BUSINESS

A CAREER IN A FAMILY BUSINESS

IMPORTANT LESSONS FROM THE COURSE

Topics:
Selling or keeping a family business
The career in a family business
Building trust and credibility
Developing business skills
Career planning for family members
The successful characteristics of a family business
Continuous learning and education
The next generation leadership
Important lessons to take away from the course

Readings:
1. The Management Development Plan in a Family Business, 9-800-009
2. Chapter 9 and Conclusions in Generation to Generation
3. Ben Fiorentino: Selling a Family Business
4. Francisco de Narvaez at Tia: Selling that Family Business, 9-401-017

Class Discussion: Building the Next Generation


1. How will you prepare for the future?

Class Discussion: Ben Fiorentino: Selling a Family Business


1. Could you sell the family business?

Video: Francisco de Narvaez at Tia

Assignment Due: Key Take-Aways Paper


1. Make a list of the most important lessons you learned from this course.
2. Consider how you will implement these lessons when you are in a family business
situation.

Ross School of Business page 8


Family Business Course

ASSIGNMENTS

I. Case Study Analysis


Prepare and submit the following assigned case questions:
1. The Pellegrins
2. The Graham Family and the Washington Post Company
3. J. Perez Foods (A)
4. Atherton Clothing Company

II. Self Assessment of Family Business Skills and Goals


This assignment is a self-evaluation of your skills and goals. You will prepare a paper on
your own abilities and shortcomings.

III. Final Project – Options (pick one)


1. Develop a framework or model on a family business issue. You can choose from the
many topics discussed this semester.
2. Create a succession plan or framework for a family business. How will you one day
pass a business to your children.
3. Write a case study on your family business.

IV. Key Take-Aways


Write a paper on the key take-aways from the course.

Ross School of Business page 9


Family Business Course

SUPPLEMENTAL READINGS

Magazine
Family Business: The Guide for Building and Managing Family Businesses
http://www.familybusinessmagazine.com/

Books
Perpetuating the Family Business by John Ward, 2004
Effective Succession Planning by William Rothwell, 2001
Succeeding Generations by Ivan Lansberg, 1999
The Family Business by Russell Alfred, 1997
The Successful Family Business by Scott Friedman, 1998
Working with Family Businesses by Dennis Jaffe, Sam Lane, Leslie Dashew, and Quentin
Heisler, 1995
Wars of Succession by Roger Fritz, 1997
The Family Business by Roger Alfred and Russell Alfred, 1997
Family Business, Risky Business by David Bork, 1993
Keeping the Family Business Healthy by John Ward, 1997
Preserving the Legacy by Bachmeyer and Snyder, 1998
Keeping the Family Baggage Out of the Family Business by Quentin Fleming, 1999
Wars of Succession by Roger Fritz, 1997

Honor Policy
We, the members of the University of Michigan Business School community, students, faculty,
and staff, commit ourselves to do our work and perform our duties honestly. We understand that
in striving for excellence in performance, our personal and institutional integrity is our most
precious asset, and accordingly, we will not knowingly act in ways which erode that integrity.
Because we are an academic community, honesty in our academic work is vital. Accordingly,
we pledge neither to cheat nor to tolerate cheating. We pledge to share community resources,
such as facilities, library materials, and computing hardware and software, in ways that are
responsible and that comply with established policies and with the principle of fairness. We will
treat each other with respect. We will honor the dignity and value of each member of our
community. We will fulfill our commitments to each other. We will extend these same courtesies
to our guests.
We value both cooperation and competition as means to high achievement. We are free,
indeed encouraged, to cooperate to assist each other's learning, except in those instances
when student members of the community are directed or expected to work individually. We will
compete for the purposes of stimulating high competition that is constructive, and which is
professional, not personal, in nature.
Finally, we accept adherence to the Honor Policy as a condition of Membership in the
University of Michigan Business School community.

Ross School of Business page 10


Family Business Course

STUDENT INFORMATION SHEET - PREPARE FOR FIRST CLASS SESSION.

Name:

Phone: Email:

Name of Family Business:

Industry:

Amount of experience in a family business (years):

Future career:

What would you like to learn from this course?

1.

2.

3.

4.

Please attach Vita

Ross School of Business page 11