Mentoring the next generation is critical for the future success of family businesses, Tri-City business leaders say.
Members of Tri-City area family businesses offered insight about transitioning from one generation to another at Tuesday's REAL Ag 2014 Convention and Trade Show at Pasco's TRAC. About 60 people attended.
Megan Clubb, Baker Boyer Bank CEO & chairman of the board, said the current generation should help the next generation become confident in their ability to make tough calls and take the lead, such as asking for their opinions.
Mentoring should start early, because there is no guarantee how long the current generation will be around to offer advice and support, said Clubb, whose great-grandfather started the Walla Walla bank.
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And not giving family members responsibility may put a business at risk of losing the family members to outside businesses, she said.
But ultimately, it has to be up to the next generation to decide if they want to work in the family business, said Bob Whitelatch, co-owner of Franklin County's Claar Cellars. Both of his sons work with him and his wife, Crista Whitelatch, on the farm her parents and grandfather homesteaded.
Bob Whitelatch said they started out with about six acres of wine grapes when they got into the business in the early 1980s. They have been transforming Claar Cellars to an all-vineyard-and-winery operation.
Bob Whitelatch said he can already tell his sons will make a good team, although he's hoping for a long transition. It's hard to let them make mistakes, but necessary, he said. Still, "I'm reluctant to give up control."
But Jody Easterday, owner and sales supervisor of Easterday Farms Produce Co., said it's important to give family members coming into a business opportunities. For example, she said her father, whose father started the business, allowed his own children to pursue their interests, which led to them starting Easterday Farms Produce Co.
She said they went from about 100 acres of onions 18 years ago to 7,400 acres of onions and three packing houses.
Before family members join a business, a conversation about compensation is a must, said Justin Christensen, director of sales and marketing for R.E. Powell Distributing of Grandview, one of the largest fuel distributors in the Northwest.
It may not be a market wage but family members need to be paid what they are worth, said Christensen, whose father bought the business and expanded it from five employees to more than 400.
Setting expectations for family members within a business is another necessity, Clubb said. Of the 175 employees of Baker Boyer Bank, three are family members.
In the Baker family, Clubb said family members have to get experience working outside the bank after college before they are hired as employees.
Christensen said he and his two brothers who decided to work at R.E. Powell Distributing started out reporting to a non-family member, who was given the blessing to reprimand them and hold them accountable.
He said over time, they've been able to recognize strengths and weaknesses among the siblings. And it's his brother Tony, the second oldest, who Christensen said is taking on the leadership role.
Christensen said his parents are in the process of transferring ownership to their five sons. They each have equal portions of the business, but the two who aren't actively involved in the business have non-voting shares.
So far, Christensen said it seems to be working. The two brothers who don't get to vote are still on the board and get to be involved, but at the end of the day, it's the three who are working in the business who make the final decisions.
With Baker Boyer Bank, the family is in the fifth and sixth generations, Clubb said. About two-thirds of the bank's board are family members.
The general rule is that family members don't sell their stock, but she said there are several non-operating family members who own parts of the business. But family members have bought the shares from other family members who wanted to pursue other interests, she said.
The trade show continues from 9 a.m. to 4 p.m. today. More information is at www.pascorealag.com.
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