How family values played a role in this company’s growth story

Inovata Foods, a family-run food manufacturing and distribution company based in Edmonton, recently signed a partnership with private equity firm Swander Pace Capital to expand, the latest chapter in its growth history.

Since its inception, the company has matured from a homemade pasta business to a multimillion-dollar leader in the frozen entrée industry. However, the journey wasn’t without its challenges. Founders Steve and Lisa Parsons had to learn on the job through trial and error, accepting gaps in their knowledge and relying on external talent to grow.

They achieved success without compromising their values and by hiring people who integrated seamlessly into their value-driven culture. “We haven’t been a family-run business where family members control all the management positions really ever,” says CEO Chad Parsons, whose parents launched the business 35 years ago.

Complex carbohydrates, such as those found in pasta, were all the rage in the 1980s since they were found to be richer in nutrients than simple carbs.. In 1989, young couple Steve and Lisa Parsons decided to capitalize on the buzz and launched The Pasta Mill Ltd. out of their Edmonton home, specializing in fresh pasta for retail sale and catering.

“They literally unplugged their washing machine and plugged in a pasta extruder,” Chad Parsons says. “My mother drove around in a cheap minivan with a cooler in the back to farmers’ markets selling pasta.”

Lisa Parsons eventually stepped aside to raise the couple’s children, but The Pasta Mill continued to grow, opening a retail location in Calgary and a 5,000-square-foot manufacturing facility in Edmonton. By 1994, the business pivoted from selling fresh pasta to frozen entrées and it was rebranded Inovata Foods Corp.

Steve Parsons expanded into private-label pasta and rice-based frozen meals, acquiring larger facilities and tripling the business’ revenue over the past 10 years. Today, Inovata’s products are found across North America, with headquarters in Edmonton and manufacturing facilities in Kelowna, B.C., and Tillsonburg, Ont.

Chad says Inovata Foods roots all its employee-related interactions – such as hiring, firing, promotions and performance reviews – on the company’s values of respect, engagement, courage, integrity, passion and excellence (or RECIPE).

After a growth phase in 2019, leadership decided to renew its focus on culture and strong team-building, creating the RECIPE purpose statement based on core family values. “Our people and culture being united behind a shared purpose are what makes us successful,” Chad says.

Family-owned enterprises (FOEs) like Inovata Foods are integral to the Canadian economy. According to a report from 2019, FOEs generated $574.6-billion, 49 per cent of Canada’s private sector GDP, employing almost seven million people. Although Steve and Lisa Parsons didn’t have formal business training, they learned in real time, not just from trial and error but from non-family hires, several of whom have stayed with the company for more than a decade.

Salary turnover – also known as the cost of replacing an employee – at Inovata Foods is low, almost zero in the past five years. “We’ve been extraordinarily successful with attracting and maintaining talent,” Chad says. Their success in retention is partly rooted in flexibility around skills and roles, which is a direct result of their “Goldilocks size,” he adds. “We have scale to compete with the multibillion-dollar companies, but a person can still come [here] and make a real, tangible impact.”

Integrating family values into the workplace culture and then retaining them for decades requires consistent effort, Chad says. “You have to be active with the culture to make sure you actually get the culture that you want. We do our best to make sure a person feels respected, cared for and like they’re treated like a human being.”

That type of trust builds loyalty and makes employees feel like part of the family, says Jieying Chen, associate professor in human resources management at the University of Manitoba’s Asper School of Business. On the other hand, the decision on whether to hire outside management, remain solely family run or do a blend of both can cause underlying tension, she says. “At some point, [owners] have to be clear that they need outside hires because the talent pool outside of the family is always going to be larger.”

Despite the demonstrated value of hiring external executives, more than 50 per cent of family business owners still plan to pass the torch to other family members when they leave their business or retire, according to a 2022 survey by Family Enterprise Canada.

FOEs can be more risk-averse, especially during times of stability, but stability isn’t always the best thing for growth and innovation, Ms. Chen says. A 2023 KPMG poll of 285 small and medium-sized business owners found 79 per cent were speeding up their succession plans in response to the fluctuating economy, tax changes and climate change issues. “All these things put organizations into a highly volatile environment, which can be exciting,” she says. “If you are an entrepreneur, you know that opportunities arise from changes.”

Chad Parsons says working with Swander Pace Capital allowed Inovata Foods to create a smooth succession, adding that longevity in leadership is one of Inovata’s strengths. “Our employees have seen Steve engaged in the business for over 30 years and then saw me have a 10-plus-year training program to take over the leadership,” he says.

While Steve intentionally separated family from business when it came to hiring management, he fully integrated the Parsons’ family values into Inovata Foods’ culture. “With the recent partnership with Swander Pace Capital, we are poised to accelerate our growth while staying true to our core values,” he says.

“I’m immensely proud and confident with Chad at the helm.”