More than half of the businesses in New Mexico are owned by families. They employ from two to more than 500 people. Their collective economic impact on the state is impressive.
Unfortunately, there were few services available to assist them in the unique and sometimes daunting operational challenges they face. For a variety of reasons, fewer than 15 percent of these businesses endure to the third generation. Can that number be raised? And if so, what will the process require?
A small dedicated group of family business owners and professional advisers recognized this void and decided to establish the New Mexico Family Business Alliance in 2005. Its mission was to provide educational opportunities to family-owned businesses via breakfast meetings, dinner presentations and an annual daylong symposium.
In 2014, Douglas M. Brown, dean of the Anderson School of Management, presented his vision of a family business center affiliated with the University of New Mexico through the Anderson School of Management. Many colleges and universities around the country host such centers, but this was a first in New Mexico. Anderson brought faculty experts in family-owned businesses; the Family Business Alliance brought highly talented directors who also had a vision of something bigger and better for the business community.
The organization was renamed the Parker Center for Family Business, the logistics were worked out and the UNM Board of Regents approved the affiliation in August 2015.
Running any business can be challenging, but when familial relationships are added to the mix, operational decisions can be disruptive or confrontational. The educational mission for the Parker Center is to offer programs in succession planning, governance, ethics, compensation, communication, estate planning, consensus of business goals, family psychology, philanthropy, family culture, finances and a variety of other enemies of continuity. Many of these topics are unique to family-owned business.
Father, age 80, was the CEO and son was heir apparent to succeed father. Son, approaching 65, had worked in the business for three decades and frequently asked when father was going to retire. One day, son visited his dad’s office to tell him he was turning 65 next year and was retiring. Father just couldn’t understand his son’s decision and furthermore, worried what was going to happen to his company.
Company B had two sons and a daughter-in-law working in the business. Mother was CEO and had no succession plan in place. While on vacation both parents were killed in an accident. Who was going to manage the company? Employees, concerned about their jobs, quickly started looking for job security with the main competitor. The business was rapidly spiraling into disaster.
Company C was run by daughter-in-law after patriarch retired. During the estate planning exercise, matriarch was concerned about how equality could be achieved with another daughter not involved in the business.
Company D was led by a couple without their children involved; however, a nephew was working in the business. Nephew’s parents had a minority interest in the company. The managing couple’s daughter decides to join the family business without experience in the business but demands the same salary as nephew, who had worked there for 10 years. How do the parents create a compensation plan that keeps daughter involved without creating confrontation with nephew and his parents?
Situations like these actually happen in family-owned businesses when proper planning and communication is missing.
A leader who doesn’t know what (s)he doesn’t know can destroy a business. The Parker Center has recently implemented two membership programs that address these dynamics.
The Family Business Connectors offers benefits including discounted rates for educational programs. The Next Generation Peer Group comprises six to eight noncompeting businesses which meet monthly to discuss the challenges and successes they are experiencing. Each member is bound by a confidentiality agreement; the facilitator is an expert member of the Parker Center board of directors or a faculty member of Anderson.
Upcoming Parker Center events include:
May 9: Dinner featuring Paul Moya, an entrepreneur who grew up in Albuquerque’s South Valley on his family farm. His presentation will focus on Next Generation strategies for family businesses.
June 22: Event in Las Cruces with farming and ranching businesses as the focus of the daylong symposium.
Nov. 2: Twelfth annual all-day symposium in Albuquerque focusing on developing the next generation of leaders.
For more information, visit parker.mgt.unm.edu or contact Robin Otten at firstname.lastname@example.org or 505-730-2141ï»¿
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