By Kathy J. Marshack, Ph.D., P.S.
Let’s say you have worked for the same boss for 15 years. You are a loyal, hard worker who takes pride in your contribution to the company. You have a fair boss, who pays you well and trusts you to handle your responsibilities like a mature adult. You have good benefits, including a tidy retirement that has been generously matched by your employer. If you call in sick or just want an extra day off occasionally, your boss assumes you have a good reason. To top it all off, everyone else in the company is treated the same way, so you have a happy group of coworkers. Of course you are looking forward to retirement, because work is not your whole life, but for now you couldn’t find a better place to work.
Then one day, you receive a letter in the mail from your boss. He announces that he has sold the company and plans to retire. You had heard the scuttlebutt but weren’t sure if it was true; now you know. The letter goes on to reassure you that your boss has negotiated for all employees to keep their jobs; nice guy again. You sigh, because at 52 you’re not quite ready to retire. Then you pull the bonus check from the envelope. For all your years of service and dedication your boss is rewarding you with one million dollars . . . tax-free!
This fairytale is real, believe it or not. Bob Thompson of Belleville Michigan surprised his 550 workers with similar letters. All told, Bob divvied up $128 million among his employees. Bob’s “share the proceeds plan” included paying hourly workers who already have pension plans, $2000 for each year of service. Salaried workers, without pension plans were given annuities they can cash in at age 55 or 62. Those annuities range from $1 million to $2 million. Thompson even included some retirees and widows in his plan. And to insure that employees actually reached the one million mark, he paid the taxes on these gifts, which amounted to $25 million.
Bob Thompson sold his 40-year-old firm for $422 million, but long before he grew this big he and his wife had planned the gifts. Years before he had already included a number of employees in his will. Bob is not a man who has always lived with money. He started the road construction business in his basement with $3500.00 and the support of his teacher wife.
Although over the next forty years, the money did roll in, money wasn’t Bob’s goal. He said, “People work exceedingly hard for us. It’s a tough business, and this is a demanding company. Some people make a lot of money in the stock market, but we’re dependent on people, so it would just not be fair not to do it. They’ve allowed me to live the way I want to live.”
In addition to the gifts to employees Thompson plans to gift even more to other entities. “It’s sharing the good times. I don’t think you can read more into it. I’m a proud person. I wanted to go out a winner, and I wanted to go out doing the right thing.” Yes, I agree Bob Thompson is a winner, but he’s more than that. As an entrepreneur he took his responsibility seriously. He used his talents to evolve a business to the level where he could give even more back to the community who supported his growth. This stage of development is called Stewardship.
A business, like a child (and adults for that matter) goes through stages of development. Given the right mix, the business will complete its evolution at stewardship. According to psychologist Will McWhinney there are three stages of growth for a family business. The first stage is that of Entrepreneurship. Entrepreneurship is the stage of early innovations, niche formation and creativity. Because of the entrepreneur’s determination and charisma, there is high cohesion and commitment from all in the company.
The next stage is Ownership during which there is a need for stability and security to nurture the family. During this stage the family business structure becomes formalized and institutionalized.
The third stage and the one that Bob Thompson epitomizes is Stewardship. Stewardship results when the business is well established, the children are grown, and the founder has developed beyond the need to use the business for his expression of personal power. As the business expands, there is more structural elaboration, adaptation, and possibly decentralization.
Stewardship offers the family business the opportunity to give something back to the community. At the developmental stage of stewardship, family businesses often establish charitable foundations or employee stock option plans, but the family firm has even more to offer. Because family-owned firms are microcosms of the society at large, how the family manages its wealth and influence can have a major impact on society. You must go beyond simple economic theory to understand this influence. The values of the family and the culture of the family firm can have tremendous social impact not only on the quality of commerce, but on the total community.
Naturally many people want to know what Thompson’s employees plan to do with their windfalls. Some have indicated that they will buy new furniture or a new car. Others are spending it on much needed braces for a granddaughter or care for a mentally handicapped child. Still others are putting aside money for college tuition and retirement. But there are a few who say they’ve been inspired to help others. “Of course, that’s what I want to hear,” says Thompson.
Stewardship is a wonderful stage of life for a family business because it offers the entrepreneur the chance to be proud of his or her accomplishments and go out like a winner, as Bob Thompson has. And it puts the entrepreneur and the business in the important position of modeling for others in the community not only how to be winners, but how to do the right thing. Bob Thompson’s idea of winning is sharing the wealth. For him, stewardship is using his wealth to improve the lives of others. But beyond the money, stewardship involves changing the lives of people forever.
Kathy J. Marshack, Ph.D., P.S., Licensed Psychologist and Consultant to Families in Business, is also the author of ENTREPRENEURIAL COUPLES: Making It Work at Work and at Home. Dr. Marshack is hosting a seminar for entrepreneurial couples on October 15th and 16th and a free breakfast roundtable on November 5th. Call for details at 360-256-0448 or www.kmarshack.com.
