How do you professionalize a family business?
After 25 years he finds it time to professionalize his family business. Gert van Houten no longer sees any opportunities for growth, but he does want to improve, modernise and professionalise the organisation.
It all started with his father, who worked metal in the barn. He bought machines for that and when things worked out a bit, he moved to the area where companies needed steel products. Over the years he had involved the whole family in the company and now his son Gert is in charge of Van Houten Staal with 50 employees.
Continue or sell?
Gert is at a point where he has to choose the next step: “What do I do with my organization? Am I going to continue or am I going to sell the company?”
He knows everything about steel, but less about business operations. That’s why he asks me for advice.
When I come in, it immediately strikes me that the company not only processes metal, but performs many more services in the value chain. Van Houten purchases metal, stores it and manages the stock, processes the steel, assembles, stores the finished product and transports it to its customers. I immediately ask: “How could you use this and offer these services to customers?”
Then I talk to the employees. They are hardly aware that they already have all these qualities. The insight that they can do more than they think they can, gives the whole company a boost.
Family members and their ambitions
Gert’s son works behind a bench, but he’s pretty ambitious. That’s why, in consultation with his father, I gave him a leadership role to learn how to manage a team. A cousin leads the administration department and directs a few people, but she no longer enjoys her work. In a conversation with her it becomes clear that she prefers to do something with animals, so she started working at a petting zoo. Professionalisation also means putting the right people at the right jobs. Finally, it turns out that Gert’s mother is still cleaning the company, simply because it has grown that way. Now the company can easily pay a cleaner, so a cleaner has been appointed.
Sunday morning at the kitchen table
One Sunday, Grandpa’s at the cousin’s doorstep. What does she think, to just leave the company. She is family, isn’t she? The fact that Gert’s mother is no longer cleaning is also not appreciated. So suddenly she’s too good for that job?
The decisions that Gert makes on my advice are not immediately appreciated. Function, qualities and skills are often subordinate to the place in the family. By now I am very much aware that decisions in a family business are taken by the whole family – not just the formal decision-maker. I have learned that the most important decisions in a family business are made at the kitchen table on Sunday morning. Even in a family business with 50 employees. The hierarchy in a family business starts with the immediate family, then the distant family, then the oldest employees and finally the newest employees.
A purely functional approach to professionalisation is apparently not enough for a family business. I usually start with: where does the company stand, in which areas does it excell, what does it add to the value chain, which people are needed in which positions in order to organise all parts properly, and that’s what I ask the people to do. Developing a strategy for a transformation is actually a somewhat distant process: where do we go and how do we do this with which employees and which customers? In a family business, however, family members have certain achievements and behaviours that no longer fit in with the professional organisation. It requires tact and a balanced strategy to professionalize such a company.
The director and the family
When the company was small and Gert’s father did almost everything on his own, it was normal for him and other family members to take tools from the toolbox and use the machines at the weekend. But now that the business has grown, the family members continue to ‘borrow’ things and materials when they need them. When a forklift truck disappears at the weekend, Gert puts an end to it. A professional company with a professional administration can no longer allow this. However, he has opened a workshop for all staff, where everyone can become a member and where everyone can make registered use of and buy materials for purchase. So not just the family.
Gert takes a more professional approach to everything, but in doing so he goes a little too fast for the rest of the family: “This is my company, I do what I want. If I want to buy a machine, place a family member somewhere or approach a customer, I just do it.”
However, the family council acts as a kind of works council. In their view, a family business is there to provide work for the family. If the owner decides something, he must also discuss it with his father: “If you continue to send your own family away in this way, you no longer have to attend the family meetings”.
Nevertheless, the family reluctantly accepts the improvements, because they see that the company is growing and that things are going better.
Work in your company or work on your company?
Professionalisation also means that Gert’s position has to change; he can’t keep doing everything himself. Purchasing has to be done by a buyer, hiring people has to be done by an HR employee. Working in your company means that you try to do things in the best way. Working on your business is a major transformation from a family business to a professional business.
Gert also does sales by himself. The new idea is: all 50 employees can sell. Everyone gets a business card with the assignment: look into your network who needs steel products. At the soccer field of his daughter, an employee meets someone from a large construction company. The construction company processes a lot of steel, but they no longer want to take care of it themselves. They exchange business cards. That Monday, Gert has contact with the construction company and they take over all the steps in the steel chain, except for the processing. Van Houten carries out exactly those steps that the construction company wants to get rid of.
Gert also makes small improvements. With a 20-minute break and a slow coffee maker, employees queue for coffee longer than they can play cards. A second coffee machine suddenly makes the break a lot more valuable and relaxing for the employees.
One morning I ask Gert: “Do your customers really know what you can do?” He once bought a laser machine for one customer that can laser very accurately stainless steel and is fully computer-controlled. He likes to have more customers for this and is looking for a way to show what he can do. He then develops a few business gifts with lasered stainless steel plates, such as business card holders with the Van Houten logo. Of course, every employee receives the same for the new business cards. This gives Van Houten a specific business gift that says much more than a pen or a balloon.
It is new for Gert that an expansion is possible by taking over a company. Together we find a company that has special bending machines for steel tubes for scaffolding construction. This fits in well with Van Houten. This will also enable the company to operate in a new market, which coincidentally also fits in with the large construction company that is now a customer.
Two years later, everyone at Van Houten has more insight into their own strengths and can sell the company’s qualities better. The employees are more involved in the organisation. The various steps in the chain are organised separately and Van Houten offers them separately. The lasered business gifts have been expanded to include more office products, and with the sales attitude of the employees, this has resulted in new customers.
Transforming a family business requires special attention. You balance between respect for family ties and the courage to break unwritten rules. Van Houten is now a healthy, professional family business that is ready for the future.
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