Four Tips For Family Business Longevity From A Fifth-Generation Manufacturer

Most people hear family business and think of the long-standing ice cream parlor on the corner or the mechanic whose first customers drove Model Ts.

As it turns out, many of them are in manufacturing. In fact, 99 percent of the manufacturers in America are small businesses and most of them are family owned. But it’s not always easy to keep it that way.

Over the next 10 to 15 years, 125,000 family-owned manufacturers will transition ownership as the previous regime retires. Traditionally, 30 percent of family businesses make it to the second generation, 12 percent reach the third, and just 3 percent reach the fourth generation or beyond, according to the Family Business Institute.

For those with aspirations to shirk the trend, there are real advantages to keeping things in the family—most of them stemming from a commitment to longevity that precipitates deeper investments in technology and people.

Marvin, an 8,000-employee window and door maker based in rural Minnesota, stands as a testament to that kind of long-term thinking. They are the rare manufacturer that has made it not just three generations or even four, but going on five. The company has fourth-generation leadership and a fifth generation entering the shop floor.

To get a sense of how Marvin has done it, I chatted with CEO Paul Marvin about how the company has managed to keep growing over the past 113 years. Here’s his advice that other small- and medium-sized manufacturers can apply to their own family businesses.

Tip 1: Connect ownership with the day-to-day.

Young people born into family businesses may feel the need to explore other interests, to see what’s out there before committing to a career at the family shop. While this exploration is healthy, it can eventually lead to a disconnect between ownership and the reality of the business. So, Marvin does something that breaks from tradition: It mandates that all owners must hold full-time jobs at the company by the time they turn 33.

A product of Paul’s grandfather, the engaged leadership policy is codified into the company’s buy-sell agreement. Family members have the chance to complete post-secondary education, gain outside experience, and pursue entrepreneurship. But by the time they hit 33, they must maintain full-time employment. Otherwise, their shares are automatically tendered.

Whether on the shop floor, in customer service, or in senior leadership, they must be “in the foxhole, working and showing up and living the culture,” Paul says. “That’s where the culture of the company is, and you can’t get it if you’re not there day in and day out.”

Tip 2: Facilitate open discussion—beyond the dinner table.

At the office, Marvin family members who carry an ownership stake are merely employees working their day jobs. No more, no less. It’s within the constructs of the Marvin Owner’s Council, chaired by Chief Marketing and Experience Officer Christine Marvin, that they’re able to voice their opinions as part-owners. The council—which is also open to family members aged 21 to 32 who are not yet working at the company—provides a place for learning about the business and for guided discussion about decisions that impact its future. It’s currently made up of six fourth-generation family members and 11 fifth-generation family members.

“As the family tree became bigger and you’re into the second-cousin generation, you’ve got people that aren’t growing up at the same kitchen table,” Paul says. “We needed a forum to have those conversations and curate the culture of the family, what our goals and aspirations are.”

Crucially, those conversations have structure—a set of policies and procedures and governance that ensure everyone has their say. Separately, when it comes to the business, Paul takes on all the tasks and decision-making of a CEO with the full support of the team around him, family member or otherwise.

“In family business, you can either be a business-first family or a family-first business—neither is right or wrong, but you should know which one you are,” Paul says. “We are an unapologetic, business-first family, meaning the business is what ties us together as a family. Our purpose is the business.”

Tip 3: Take a planned approach to leadership succession.

To date, each of Marvin’s CEO succession decisions have been made well in advance, a fact that speaks not only to good fortune but to an intentional, long-term approach. When he was 65, Paul’s uncle, Jake Marvin, announced he wanted to step out of the role by age 70. The non-family members on the board led a search that eventually tapped Paul and put him on an accelerated development plan. He took over as CEO in 2017.

That approach does not stop with the CEO. Marvin has been intentional about melding its leadership team with non-family members. Nine out of 12 senior leadership positions are held by folks outside the family, plus half the board of directors. “That helps ensure we don’t get tunnel vision or enamored with our own ideas,” Paul says. “Continuity and being supported by non-family executives is really important. Succession is not just in the family.”

Tip 4: Long-term thinking means investing in your people.

Whether they share a last name or not, Marvin wants employees around for the long haul. In December, in its latest round of profit sharing, the company announced that $17 million would be spread across its employee base, with a quarter of that allocated based on length of service. Full-time employees received a bonus of up to $5,400.

It may sound cliché, but Paul boils so much of the company’s success to striking that difficult balance between present and future—a balance that is so crucial to today’s manufacturers navigating supply chain disruption and economic uncertainty. That’s where, to some degree, family businesses have a leg up. There are no shareholders knocking on company doors for a quarterly dividend.

“The hardest thing a company can do is execute today while simultaneously investing and planning for not just next year, but for the next decade,” Paul says. “Thankfully, a private company gets to do that.”

Marvin’s story is proof that there are many advantages to private ownership passed down through the generations. Manufacturers who copy from their playbook—connecting ownership to day-to-day operations, creating space for open discussion, engaging in long-term thinking, and investing in their people—may, too, find themselves reaching those elusive third, fourth, or even fifth generations of ownership. If they do, manufacturing will be better for it.