The Rewards and Awards of Family Business

Five outstanding Maine businesses received top recognition by USM's Institute for Family-Owned Business. Presented with beautiful hand-designed awards by Maddy Corson, Vice Chair of the Institute, first place in the smaller division went to Volk Packaging Corporation of Biddeford, owned by Doug and Ken Volk, and first place in the larger category went to the Lewiston Sun Journal, owned by the Costello Family, Jim Costello, Sr., CEO. Honorable mentions were presented to Hancock Lumber of Casco, Barber Foods of Portland, and Thos. Moser Cabinetmakers of Auburn.

In her presentation to Volk Packaging Company, Corson noted that it is truly representative of what a family-run business can and should be. "Now in its third generation, this company, like all small-to-medium-sized independent businesses, must constantly find new ways to manage in today's highly competitive, often global, and increasingly consolidated marketplace. Brothers Ken and Doug Volk, and Ken's son Derek, of Volk Packaging in Biddeford are doing just that."

The ingredient that sets them apart, according to David Ott of Peoples Heritage Bank, is their creation of an outstanding workplace environment. "The Volks have fostered a unique sense of equity and extended family among their employees. Look at any issue of their quarterly company newsletter and you'll see the typical 'what's new with business' items and the customer focus pieces. You'll also see at least half of the space is devoted to employees - pictures of outings, family weddings, and people just having fun."

"This focus on communication, work ethic, pride, and maintaining a sense of humor in the workplace has resulted in great longevity among their staff, and it's at the heart of Volk Packaging's continued business growth, success, and independence," Corson said.

Regarding the Sun Journal, Corson described it as an anchor as well as a leader in its community. "It's also a model for succession planning and the healthy, productive integration of the family into the business management. The Costello family of the Lewiston Sun Journal is one of the few remaining voices of independent journalism in the country. Now in their fourth generation, their success is built upon enduring family, business and community values."

Corson reported that the judges felt that, "Jim Costello, Sr. has put a strong management team in place with Jim Jr., David, Steve, and Maureen playing key roles in operations, marketing, sales, and human resources. The Costello family really leads Maine's family-owned businesses in their ability to effectively integrate family and business. Just a few of the methods they use to accomplish this include systems for managing conflict and communicating with family members who are not part of the business, as well as with non-family members who are involved in the business. Strong corporate citizens, the family and the newspaper have also been active supporters of many community initiatives including Chamber events and the United Way."

The judges for the Maine Family Business of the Year Award included Kenny Nelson of Nelson and Small, Janet Cole-Cross of Kindred Services, Inc., and Off-Site on Broadway, Theresa McCann of Direct Mail of Maine, Roger Hewson of the Paragon Institute, and Jim Baker, former treasurer of Gannett Communications. All have had extensive experience in family firms.

Why Family Businesses Are Important

Keynote speaker of the event, Frank Blethen, CEO of Blethen Maine Newspapers, said that he is often asked me why family businesses are so important and why he has such a passion for them. The audience of over 100 family business members was clearly appreciative of Blethen's strong remarks.

"The answer is easy... Family businesses are the heart and soul of our local communities. Nationally, we are the conscience of America's business community," he pointed out.

Blethen said that we are in the midst of an era of tremendous consolidation of almost every traditional industry in America. Most of our industries are now controlled by faceless, and often soulless, institutional investors. These "public companies" place maximizing short-term earnings as their number one - and often only - reason for existing. Often with little regard for community service, employees, or the communities they do business in.

"This is in stark contrast to family-owned businesses, which hold other non- financial values equal to, and often greater than, maximizing short-term earnings. It's family-owned businesses that give us a sense of community, that make community building and quality of life their highest priorities. It's family businesses that care about creating jobs. And we care about our employees, our schools, our social services, our arts, and our environment. It's family businesses that give our communities vibrancy and excitement.
Simply put, we give our communities their personality, and we determine the quality of life in our communities."

Blethen continued, "We create more jobs than public companies. In fact, most of the job creation in America today comes in the small and family business sector. We pride ourselves on creating jobs. While the faceless, institutionally-owned public companies pride themselves on cutting employment!

Most innovation and creativity in American business today comes from the small business sector. When public companies want innovation and creativity, how do they get it? They buy us!

We build companies and we do it for the long term. And we have wonderful diversity that serves our communities very well. Diversity in size, generations, skills, products and industries. We range from first generation "mom and pop" operations; to sophisticated multi- generational corporations.

Shared Journey

But no matter what our size or what our generation; we are all bonded

• by a shared journey
• by shared challenges
• by shared joys
• by a shared sense of family and community

No matter what point a particular family is at in this journey, we all share a legacy-- building something of value for our children and grandchildren, and making our communities better and more interesting places to live.

Most importantly for the Blethen family, we demonstrated the power of a family-owned business model based on values. Today, we define ourselves as a 'values-based journalistic/community service family business.'

The main thing I would like to share with you tonight is what I call the nine universal principles of family business success. These are principles I've experienced, read about, and observed that exist in almost all family businesses that are successful over time.
They seem to apply no matter what the size of the business and whether they are formal or informal." Blethen then listed these principles as:

1) Core Values

To succeed as a business and as a family, there must be a share sense of purpose and shared values. And these values and the sense of purpose must be real. They must connect with your actions. Both family and non-family employees must believe in them, and feel they reflect who you are and what you do.

2) Core Values and Business Strategy Connection

This connection is essential if family and employees are going to believe in your values and are going to conduct themselves accordingly.
There is incredible 12owe in this connection.
The most successful family businesses I know are the ones with clearly understood and embraced core values that drive and empower their business strategies.

3) Inclusion

Everything I have learned about family businesses indicates that the first step down the path of trouble is when there is a family member - a shareholder - who is not included.
At the Seattle Times Company, we have developed a philosophy and elaborate procedures to include all family shareholders. We have active outreach programs to communicate to them and to draw them in, in a variety of ways. Not everybody is going to have a career, or will be involved in management, but we want to find ways that they know they are valued and included.

4) Harmony

Successful family businesses must constantly nurture family
harmony. They spend a great deal of time on this. Always looking for ways to bond the family around core values, shared experiences, and a sense of family identity.

5. Fairness

Nothing tears a family business apart more quickly than the reality or the perception that some members are being treated unfairly.

In our case, we have established specific procedures that use outside directors to evaluate my performance as publisher and CEO. And, non-family senior management evaluates the performance of all other family members with overview from outside directors.

6) Celebration

Successful family businesses are constantly looking for ways for family members and senior non-family employees to celebrate and to bond over shared experiences.
In our case, newspapers are a special Public Trust. This has provided us an excellent tool for family identity and celebration.

Winning three Pulitzer Prizes in the '90s gave us a way to not only engage the family, but to thank them for their values and their support. Acquiring newspapers in Yakima, Washington and Maine provided us an opportunity to create significant on-going family celebration. "Coming home" to the Blethen family's 300-year old ancestral roots and to our founder's, Alden Blethen, birthplace is a celebration that both the family and the state of Maine benefit from immensely.

7. Communication

This is a hallmark of any successful family businesses. Lots of it.
Ø Lots of value reinforcement.
Ø Lots of simply linking people together.

8) Openness, Candor and Honesty

These are essential if you are going to have trust and build confidence.

9) Stewardship-

Stewardship is a strong element in all family businesses that endure. True, all businesses and all business leaders have Stewardship responsibilities:

• to their owners
• to their communities and
• to their employees.

But, Blethen said, the degree to which a business, and its leaders, understand and embrace Stewardship is a very wide continuum. At one end are faceless public companies as controlling owners; and at the other end are the best of our family businesses, large and small.

"As I shared earlier, at The Seattle Times Company, we define ourselves as "a values-based, journalistic/community service family business." In that context, we focus on the contrast between Stewardship vs. Ownership.

We constantly remind each other, and our next generation, that we inherited a Stewardship - we did not inherit an Ownership.

Our responsibility is to maintain and enhance that Stewardship for future generations of Blethens and of the communities we serve. The family is entitled to some financial return, but the business itself is not ours to discontinue, sell or dispose of.

We embrace the notion that newspapers are Public Trusts, and that consequently, our definition of Stewardship may be even more restrictive than many other family businesses."

President Richard Pattenaude of USM, and Chairman of the Advisory Board of the Institute, Shep Lee, helped benefactor Corson dispatch the awards with enthusiasm.

The pepped-up audience filed out of the Marriot as if headed for the second-half after a Knute Rockne harangue. "This evening was the quintessential highlight of our five-year tenure," effused Shep Lee.

Contact: Tom Juenemann, 780 5935

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