How do you keep a family-business going and growing into the 4th generation? On Thursday, April 8th, Family Business Radio hosts Meredith Moore and Pat Romboletti welcomed Ross Kogon, President of Pull-A-Part, LLC who shared some of the secrets. A self-service used auto parts and recycling business with 23 do-it-yourself auto parts superstores across the east coast, this 102-year-old family-owned business, begun by Ross’s great-grandfather who picked up scrap with a horse-drawn cart, is in its fourth generation. An accomplishment achieved by only about 3% of all family businesses.
We invite you to listen to the entire conversation on our podcast and get Ross’ take on succession issues, on-boarding new family member-employees, intergenerational communications, leveraging technology, and growing a vibrant company culture. You will come away with invigorating ideas that are sure to make your family-owned business grow and thrive. And who knows? Maybe even for the next 102 years.
Here are some of the highlights:
We began our discussion by Ross explaining how a family member comes into their family business. He explained that it is a series of steps beginning with the written policy that says each family member-candidate must have a college degree and outside business experience at a professional level for a minimum of five years. Once those requirements are met, then the person must be interviewed by key family members and non-family members who work at the business. “It’s structured enough so that it’s clear the family member wants to be there and they have skills to grow the company. It’s not just a place where family members can be safe,” he said.
He was also quick to point out that this process helps show non-family employees that you belong and you’re not just there because of your last name. “It’s not so much that you, as a family member, are held to a higher standard—it’s that you have a slimmer margin of error in not meeting the standards,” he explained. By the way, non-family members have to go through a similar hiring process, which sends a powerful message to them that they are part of the same team.
Pull-A-Part has opted to use outside advisors, but not outside directors. Outside advisors are sought for their opinions and expertise, which are expressed in regular meetings. Ross values them for their ability to keep the business on track and growing smartly and makes sure they uphold the families predetermined standards and policies. However, the family did not think outside board members served their purpose, despite what the textbooks say, and decided against those relationships.
As for the inevitable conflicts and their resolution, Ross discussed the two mechanisms that Pull-A-Part has in place. First, before undertaking a new project or direction, they sit down and play-forward as many disagreements as they can think of long before there is any emotion attached to it. Then they argue the various merits beforehand and hammer out agreements. When something comes up later, this process gives them the ability to say—“No, wait. We talked about this already and we said…” Ross likened it to putting “a speed bump in front of the anger accelerator.” The other vehicle they use is on the back-end, after a conflict surfaces, when you have the option to write up and present your issues to the board and outside advisors. It’s the “nuclear option” and therefore used sparingly. Ross believes that the process of writing down your position allows you to crystallize your thoughts and evaluate whether there might be other means of resolution that would work better.
When asked about balancing business with family gatherings, Ross was emphatic about habits. He quoted Aristotle who said that excellence is not an act—it’s a habit. In their family, over the years they have practiced the habit of not talking business at family gatherings (a rule helped along by each successive grandmother!). That way, children are tended to, rituals are observed, communications are enriched—and the family stays intact. And by the way, they have a strict family-tradition—the family gathers every Friday evening for Shabbat dinner.
The other important habit for keeping family and business in the proper perspective comes from the family ethos of philanthropy and giving back to their communities. “They are very important to us. We talk about these two things as much as much as we talk business,” he said. Therefore, they are in the habit of talking to each other about something other than business.
Ross ended the discussion by offering three valuable tips for family-owned businesses:
• Have your disagreements in advance by envisioning various scenarios and possibilities. And have your agreements in advance too. Commit them to paper because “it’s not an agreement, if it’s not in writing.”
• Do not force your children into the business. You really only want family members who want to be there.
• Make the family about more than just the business. If the family only becomes about the business, then you leave too much value on the table.
Ross Kogon, President, Pull-A-Part, LLC, Telephone: 404-607-7000