Western Michigan University Professor Laurel Ofstein says many students who have worked in their parents’ companies take her Family Business Management class. She says they sometimes come away with a much stronger feeling of “I can do this.” And sometimes they come away thinking “this is not for me.”
Ofstein a professor of Management in WMU’s Haworth College of Business told WMUK’s Gordon Evans that her primary area of interest was entrepreneurship, and was asked to teach class called “family business management” while a PhD student at the University Illinois-Chicago. Ofstein says when she learned how family businesses work, she was hooked. Ofstein’s studies were also the subject of a story in Encore Magazine’s January issue.
Ofstein says it’s rare for a family business to grow into a multi-national corporation like Stryker, but she says as a family business grows it often become “professionalized.” If the company becomes big enough, Ofstein says people from outside the family often end up in leadership positions.
As businesses pass from one generation to another, success is not guaranteed. Ofstein says only about 30% of family businesses make it to the second generation, 12% to third and 4% to fourth generation and beyond. But she says the West Michigan has a little higher percentage.
Ofstein says the next generation is more likely to succeed if they get outside work experience. She says they can bring experience from another company back, and make sure that they want to be part of the family business. Ofstein says working for another company in the same field may also get them an honest performance appraisal to evaluate their skills.
Ofstein says a business should change from one generation to the next. She says the original generation works hard to make the business and establishing relationships. She says for the second generation to grow the business, new ideas are needed, and they have to manage a larger group of people. That requires a different set of skills.