Passing the Reins

The following story is about moving our business to a second generation.  It is really a story about family business, but it is also a story about leadership and taking control.  It is an incredibly long story, and the following is just the first layer in the cake—a cake with dozens of layers.  Alberto Culver thrived until the time came when we sold the business to Unilever in 2011. But that wasn’t always the case.

I am one of my mom and dad’s all-time biggest fans.  And I am incredibly grateful for all their love and trust, for my mom and dad’s decades of effort that put the Alberto Culver Company on the map.  There is no way I ever would have been as successful as I have been or had the opportunities I have had without all that they accomplished with our business.  And to this day, I adore my dad, and he adores me. Having said all that, I worked for my dad and working for him was NOT easy.

Alberto was his child.  And most of the time I think he considered it his firstborn.  For decades, Alberto was very successful, and my mom and dad were featured in national publications and won all sorts of awards—and the stock did well.  All that is wonderful. But in the early 1990s our consumer products business was falling apart, our board wanted to sell that part of our business, the media was no longer intrigued with our story, and, to top it off, our stock was languishing. Our Sally Beauty Supply business was going well, and we kept acquiring businesses for Sally, which gave it an automatic growth engine.

My (then) husband and I had worked at Alberto for many years (I had been there since 1974 and my husband since 1977), and we wanted a chance to run the business.  We had earned the chance, had multiple successes under our belts, and felt it was time—and frankly, the business needed new leadership. My dad was in his early seventies and had no interest in giving up control.  We underwent a board-sponsored two-year negotiated management change. It was very painful but very necessary. Two outside directors participated along with a business psychologist, a family business expert, and my mom, my dad, my husband, and me.

There is a well-known family business educator by the name of John Ward who cofounded a family business consulting group and is a professor at Northwestern University’s Kellogg School of Management.  I had met John and asked him to work with our family. He told me he would never be successful given what he knew about my family. He also told me that my father would likely be the oldest living founder to ever turn over a business to a second generation.  He gave me a booklet called “The Final Test of Greatness,” which is all about letting go. He suggested someone else who he thought might be tough enough to take on my dad. His name is Michael Shulman, and he is from Toronto. Michael had run his own successful business as well as being an experienced family business consultant, and John thought that background might work better with my dad.  We hired Michael, and then we went to work.

I had to take the lead.  They were my parents. Both my husband and I were prepared to leave the business if no change was made.  It was up to my parents. We were tearing ourselves apart over all the problems and disagreements about how to manage and move the businesses forward.  We had spent Sundays together with the grandkids and always had dinner or brunch. We spent holidays together at our family horse farm in Ocala, Florida.  We were extremely close to my family socially, and we worked together every day. Nothing had been easy in those last several years. Something had to change.  I came up with what I called “the three boxes.” My mom and dad could choose whichever box they wanted. Of course, there would be consequences with each.

Box One: Agree to disagree.  My mom and dad would stay in their current roles, and my husband and I would leave the business. Business over Family.

Box Two: Agree to disagree and sell the business.  Recognize my parents couldn’t let go, and we would  put Family over Business and move forward. Life would go on for all of us.

Box Three:  My mom and dad would move up.  My father would become executive chairman, my mom vice chairman, and my husband and I would take over the management of the company. Family and Business continue and hopefully thrive.     

When I tell you that these were two of the toughest years of my life, that is no exaggeration.  The facilitator, with all his family business training, spent incredible hours with each of us individually and with all of us together.  My dad was calling the shots for my parents, and he had an absolute desire to pass on the business to his family. That was a core value of his.  (Of course, in his mind that wouldn’t happen for decades, but eventually he wanted it to happen. As he kept saying. “Experience matters.”) Because that was a core value, because we truly would have left the business, and because our board supported the change, we eventually moved to box three.  It was impossibly hard, but we did it.

My husband and I carved out our roles, which took advantage of our different talents, and described them in a three-page partnership document that was approved by our board.  Because the roles were in writing, it helped to govern all that needed to happen in the years ahead. The first couple of years after the change were not easy as we had to “over-manage” my dad; but within a few years things settled down, the company grew, and the stock appreciated significantly—and we moved forward.  To any of you in family business let me just say I have given a two-day seminar about all of this. I can’t even begin to describe it all here, but the overriding lesson is: communicate, be willing to take a stand (as in we would have left) and have the support of your board. You can make things happen. It is not easy, but we were a public company.  We had an obligation to our shareholders, to our employees, and, frankly, to our family. We had to make the change, and we made it work. Finally!