Daughters with the Right Stuff
These young women are passionately committed to the family business. But if it doesn't work out, they have other options.
By Howard Muson in Family Business Magazine
Three years ago at a conference in Atlanta, a daughter in a family business talked candidly about her father's refusal to think about a succession plan. Christine Varney told the audience her father was so adamantly opposed to discussing the subject that she gave him Léon Danco's books about succession, hoping he would read them. He never did. He tried one night before going to bed, but found the issues so disturbing he couldn't sleep.
Christine had been with Daniel C. Baker & Associates—a small, fourth-generation engineering consulting firm in Beaver, Pennsylvania—for 16 years, in charge of employee relations and finance. Most of the firm's engineer-managers were older family members nearing retirement, and she felt they were not doing enough to develop nonfamily employees who might lead the firm's future growth. Employee morale and turnover were problems.
She persuaded her father to let her survey former and current employees to assess their feelings toward the firm, but he would not allow her to ask current employees specifically about the leadership succession issue. The results indicated, however, that the main concern of former employees had been just that.
When someone at the Atlanta meeting asked Christine whether running the company someday was one of her goals, the question clearly struck a raw nerve. Her 40-year-old brother had been with the company one year longer than she had. He was an engineer, and she was not. And this was a company that obviously revered an engineering degree. Christine said she would not know how to approach her father and make her case for leading the family firm.
While many more daughters nowadays see opportunities for themselves in the family business, others like Christine butt their heads on a glass ceiling that is even harder to break through than in some larger, bureaucratic corporations. These daughters must walk on eggshells when attempting to make their aspirations known, especially when there are sons in the business. Frustrated, Christine quit her family's firm last February (see interview below).
“Given two equally dedicated, competent, loyal children, male and female, there is still a tendency to select the male,” says Matilde Salganicoff, an organizational psychologist who has led workshops for women in family businesses since 1984. “Prejudice and discrimination don't die easily. It will be two or three generations before there is equal opportunity about selecting a daughter or son as a potential successor.”
A new, more confident, and well-educated generation of daughters is moving up in family companies, however. These young women are passionately committed to the family business and are vocal about expressing their needs and aspirations. They are expecting their contributions to be recognized and rewarded. But they also know that if things don't work out, they will be welcomed elsewhere, thank you.
Three articulate daughters talked about their progress in family companies at another conference, this one last October in New York City organized by the Family Firm Institute (FFI). What follows is a report from the conference on how they got into the family business, what special talents they bring to it, how they balance their work and family lives, and how they view succession issues.
APPLYING MANAGEMENT 101
Lizanne Galbreath is vice-chairman of the Galbreath Company-New York, a privately owned, full-service real estate firm with 11 regional offices across the country. There was never any expectation that she would join the family firm, which was started in the 1920s by her grandfather, John W. Galbreath, a residential broker in Columbus, Ohio, with $100 and a Model-T Ford.
“I'm kind of a loose cannon and no one really knows what to do with me because I wasn't supposed to be here,” Lizanne told the audience. "I have a younger brother in the business and everybody expected him to run the company.”
After studying history at Dartmouth, Lizanne received an MBA from Wharton and then landed a first job with Chemical Bank in New York City. When she told her father, Daniel M. Galbreath, chairman of the family company, he looked dumfounded and asked, “Why do you want to be a teller?” “Well, it's not exactly being a teller,” she answered. “I'm in the management training program.”
Lizanne values the training she received at Chemical Bank and feels working outside the family company was important for developing self-confidence—and to gain the respect of peers, in case she ever wants to return to banking. When she decided to enter the family real estate firm in the early ‘90s, she was welcomed with open arms and actually moved ahead more quickly than she ever expected.
When Lizanne arrived at the firm, the economy was in a slump and real estate values were plummeting. Meanwhile, the company was completing the construction of a few urban office buildings. She saw plenty for an MBA to do. The Galbreath Company, she told the conference attendees, was being run pretty much as it had been in her grandfather's day—as a sole proprietorship. Yet it had 2,300 employees nationwide. The founder had surrounded himself with “yes men” who were passed on to her father when he took charge in his 50's. Her father was a team player more interested in “doing deals” than organizational structure, she said. He didn't have a strong management team to advise him, and the company lacked fiscal discipline and controls.
Lizanne took part in a $750 million restructuring, under which Galbreath handed over several office towers to bank lenders and shifted its emphasis to management and leasing of properties. As part of the down-sizing, the firm also hired an outside executive as president. “When I came to Galbreath, I pretty much saw what was happening and I didn't agree with it,” she said. “And I kind of ended up on top before I got to work my way up from the bottom. I was working on strategic directions and who was going to be president of the company and, frankly, I didn't know how the elevators in the building worked.”
Her father still kids her about her fancy MBA ideas about structure, but is thrilled to have her in the firm. “When my father and I have a business conversation,” she said, “he thinks it's marvelous and fantastic and he's proud of me—until I disagree with him. Then it's not so marvelous and fantastic!”
Having seen the company through a restructuring, Lizanne views her mission not necessarily as preserving a “family business” but as making the company “a real business, with family members operating in it.” She added: “We almost didn't make it, and the reason was that the controls weren't there, the budgets weren't there. Nobody knew [the crisis] was going to happen and it came up and bit us. And I am determined in my lifetime that that will never happen again.”
Succession in the Galbreath Company remains a question mark, however. Asked how the family has dealt with it, she responded:
“Frankly, it's not dealt with very well. As I said, my brother's younger by three years. He's in Florida, I'm in New York, my sister's in Colorado, and my father's in Columbus—which might say something in and of itself.
“It's tacitly not discussed,” she continued, “which causes a little bit of friction and tension with us, and a lot within the company. I really don't know what the answer's going to be. But I have this stupid, naive faith that it will work out. It might be painful in the process but I think it will work out.”
WORKING WITH GRANDMOTHER
Alexandra Lebenthal is the daughter of a man often seen on television in the New York City area. Jim Lebenthal wears a hard hat and extols all the wonderful things that are built with the tax-free municipal bonds his company sells—roads, bridges, tunnels.
Alexandra never expected to join the firm, founded in 1925 by her grandparents to sell "munis" to individual investors. Now, at 29, Alexandra is a vice-president of Lebenthal & Co. and manages more than $110 million in mutual fund assets for the firm.
Alexandra wanted to be an actress, perhaps because a flair for show-biz runs in the family. Her dad in his younger years had been a Hollywood correspondent for Life magazine, a film producer, and an advertising man. To this day, Alexandra told the FFI audience, he claims he was dragged “kicking and screaming” to his parents' firm.
Alexandra has an older sister and a younger brother, but she recently told The New York Times that when they were kids, she was the only one who paid any attention at the dinner table when business was discussed. At Princeton, most of her friends were looking toward careers on Wall Street. Deciding she didn't have the burning desire needed for an acting career, she opted for Wall Street, too. At the time, she recalls, “I guess I was a snob about retail sales and it seemed like the institutional side of the market was where I wanted to be. I interviewed every place but Lebenthal, and it was funny: People would say, ‘Why aren't you going to Lebenthal?’ It seemed like the strangest question to me.”
Why would I want to go there?"
Alexandra landed a job at Kidder Peabody but two weeks later the securities firm paid a large fine for insider trading. Afterward, she says, it "became less and less of a pleasant place to work." So she knocked on the door at Lebenthal, where she was hired, oddly, by the same man who had given her the job at Kidder Peabody: He had since become president of Lebenthal.
Her first months at the firm were rocky. She started out like every other newcomer: "I had a pile of five-year-old leads, a telephone, and a list of bonds for sale. I called up people and opened up accounts, and it was very, very tough. But I'm glad that I started that way, because I have a better understanding of how the company works and what every employee is going through."
The atmosphere of the company, which was co-founded by her grandmother, had always been welcoming to women. The same was not true of all customers, she recalled. "Some of our older customers would say things like, ‘You seem like a very nice young girl.' After I swallowed and counted to 10, I usually said, "I would hope that you want someone who's more than a young girl handling your investments."
Her real trial-by-fire was yet to come, however. At the time she joined Lebenthal, an aunt and uncle who had been with the firm since the '50s were running it. Jim Lebenthal was concentrating on mass marketing. Her grandfather had died in 1950, but her 91-year-old grandmother was still very much a presence. Anticipating that Sayra Lebenthal might have to retire soon and turn over her accounts to someone else, the family nominated Alexandra to work with her.
"I have very mixed feelings about the year I spent in her office," Alexandra said. "On the one hand, I had an opportunity to have a relationship with her in a way that most granddaughters and grandmothers never have. On the other hand, anyone who works in a family business knows the emotions that can arise between a hot-headed 24-year-old and a tough 91-year-old who's holding on tighter than she ever did before."
After one year Alexandra's mother told Jim: “If you don't get Alexandra out of there, I'm coming down and taking her out myself.” The grandmother stopped working about a year-and-a-half ago and is now 95. Alexandra remains “incredibly proud to be her granddaughter.”
She is obviously made of the same tough stuff. Alexandra handles the marketing, development, and administration of the firm's mutual funds and deals with about 150 customers as well. At the time of the conference, she was in the final stages of pregnancy and planned to take three months off—an adjustment that had her slightly “panicked.”
But she planned to be back at Lebenthal after her leave, as strongly involved as ever. “The business is incredibly important to me and my family will be incredibly important to me. I am determined to make both of them work and be a success.”
Alexandra said she would probably become president of the firm within 10 years, but she is by no means certain about her own future. Besides, her father is not the type to retire. “He's only 65 now—which is young in my family—and he's such a passionate, dynamic person that I can't see him just leaving."
A DAUGHTER WHO PREFERS BUD LITE
Margaret E. Sheehan is an environmental lawyer who prosecuted corporate polluters for the state of Massachusetts before joining her family's business. Margaret is now general counsel and vice-president of L. Knife & Co., a wholesale distributor of Anheuser-Busch beer, wine, and snack foods with branches in three states.
How does a woman get along in the male-oriented world of beer distributors? “I like to think Anheuser-Busch is a forward-looking company that welcomes the leadership of women.”
L. Knife is a 100-year-old, fourth-generation distributorship that has been passed down through her mother's side of the family, whose name was Cortelli, which means “knife” in Italian. Her grandfather changed the company's name when a banker to whom he had applied for a loan told him the Italian name would not be good for business.
Margaret is one of eight children, five of whom work in the company—three sons and two daughters. “The eldest son, who is two years younger than I, has worked for the business for 10 years and views himself as the heir,” she told the FFI conference audience. “I think everyone viewed him all along as the heir, and that was probably true until about one year ago when I came along.”
Having worked for the state for 10 years, Margaret had one daughter and was pregnant with her second. She was looking for a new challenge but wanted a part-time job, which she felt she couldn't get with the government or a law firm. Over the years, her father had made overtures, through others, hoping she would join the family company.
More recently, her father realized that with such a large brood of participating and non- participating siblings, he had better get them together on a plan for the future. He saw “certain risks beginning to appear” among the eight siblings, who were widely divergent in their interests, Margaret said. “We have actors, art gallery owners, and lawyers.”
The father controls the voting stock, and the siblings own all of the non-voting stock. “Some of the sons who work for the business own more shares than the daughters,” she commented, “but that is another issue for another seminar!” Margaret credits her father with having the “incredible vision” to see the need for a succession plan and to hire a family business consultant to help with it.
She came to work part-time for the company because she felt she could help move it into the future “by being a conciliator and using my skills as a litigator and negotiator to bring family members together to work through these succession issues.”
About a year-and-a-half ago, the family held a retreat which, Margaret said, “really opened up a new world for us in terms of being able to work out these issues.” Afterward, a family council was established which meets twice a year. The family also set up a foundation, a decision that Margaret said “was very critical in bringing us all together.” In another bold move, the father put all eight siblings on the board of directors. “I happen to be chairman of the board, mostly because no one else wanted to do it!”
Margaret now meets bimonthly with her father and oldest brother, so they can get to know one another better on a business level and support the father on difficult decisions. Who will ultimately be the successor? “I see my oldest brother and I carving out roles for ourselves in the business. Whether one or the other of us is going to be CEO in the next generation, I can't say. Maybe it will be a nonfamily employee.”
While she feels she was never viewed seriously as a possible CEO in the past, she believes the succession planning has for the first time “brought the daughters into the process, given them a voice.”
“I firmly believe that in the workplace today we are moving from an autocratic style of leadership in which there is one entrepreneur running the show to a more democratic managerial style. I believe there is an incredible amount that a woman can bring to a business, because she is inclined to be more process-minded, open, and democratic in listening to and being more sensitive to employees' needs.”
As for how a top executive in a family company can raise her children while caring for the business's needs, Margaret said the short answer is: Get a good babysitter. You may also have to give up socializing outside the office or playing tennis in order to spend all of your free time with the children. “I hope that my time will come for playing tennis and relaxing and just reading the newspaper on weekends,” she said. “But for now, those are the things I give up so I can have a family.” ▪
Howard Muson is a writer, editor and consultant, and former editor and co-publisher of Family Business Magazine.
SHE HAD WHAT IT TAKES...AND LEFT IT.
After working in her family's engineering consulting firm for 19 years, Christine Varney resigned last February. Jayne Pearl, former senior editor of Family Business, talked to Christine about her reasons for leaving.
Family Business: The survey of company employees you did a few years ago showed that succession was their main concern about the company. How did your father respond to that finding?
Christine Varney: He didn't. We had a couple of conversations about it, but it seemed to be a closed subject. Frustrating.
FB: Did you continue to press your father to develop a succession plan as a result of the employee survey?
Varney: I was a minority shareholder, and he was the majority shareholder and president of the company. I couldn't do anything [about the survey finding] unless he said, "Let's talk about this, let's move on this."
FB: Did you harbor an ambition to run the company some day?
Varney: Oh yes. I decided my personal plan was to do as much as I could do, as much as I was allowed to do. It's not easy to find out what you have the authority to do in a family business. Job descriptions aren't always as clear as they should be. So I took on as much responsibility as I could. As a consulting engineering firm, we were involved in time- accounting and I computerized the accounting system. Then I was working with some employees on education, employee development. I started a safety program. I was able to accomplish some things as far as humanizing and professionalizing the organization. No one stopped me.
FB: The response?
Varney: Seemingly positive. I presented proposals and was given the go ahead. Then last fall at the annual shareholders meeting, my father nominated my brother for the board of directors. I was surprised. There had not been any discussion prior to the meeting about that.
So I met with my father privately afterward and questioned his choice, asked him why. He told me that he would make the decisions, and he wouldn't be consulting me about them.
This year's annual meeting is being held today, which, obviously, I'm not attending. It's ironic that we're talking about this.
FB: On what terms did you leave?
Varney: My father and I met a couple of times after that. I didn't want to walk away without finding out what my future was there, because I enjoyed being in the business. When my father told me my brother would be in control, I chose not to stay and resigned. My father said he was sorry to hear that.
FB: Do you think he was?
Varney: Perhaps he was, but he was not prepared to make any adjustments in his plans.
FB: What are you doing now?
Varney: I am an admissions counselor for adult students at Geneva College, my alma mater. It's not necessarily a career path, but encouraging adults to complete their degrees and to continue to learn is in line with my principles of helping people to grow.
Along with that, I am active in the Pittsburgh chapter of the Family Firm Institute. And next year I hope to begin graduate work in family systems. I'd like to work in the area of communications in family businesses, to help families maintain good, harmonious relationships and thriving businesses. I think family businesses are important, and they are a good place for women to be—under the right circumstances.
It's been a painful year for me, but I don't regret leaving. I made the best choice for me. I chose to get on with my life and not live in limbo any longer.
Source: Family Business Magazine, Winter 1994
Copyright © 1994. Family Business Magazine. Subject to the provisions of the Terms and Conditions of the Family Business Web Site, subscribers to Family Business Magazine may print and distribute copies of this article, electronically or otherwise, provided that (a) such printing and distribution is done only for your personal, informational, non-commercial purposes, and (b) you do not remove or obscure the copyright notice or other notices. For other uses, including reprint permission for non-subscribers, contact Family Business Magazine.