Business schools open doors to families
After a slow start, programs aimed at helping family-run companies are catching on
One day, college student Adam Stone hopes to manage his family's aluminum-fabrication company in Dayton, Ohio.Skip to next paragraph
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To help him reach that goal, he's taking advantage of one of the latest trends to hit university campuses: the growth of family-business courses.
In the last decade, business school seminars for family executives have expanded from a handful of offerings to at least 120 nationwide. Now, undergraduate programs are starting to become available as well.
Fueling the drive is a better understanding by schools of the need for these kinds of programs, and demand by family businesses themselves.
Within five years, 39 percent of family-owned businesses will experience a leadership change due to retirement, according to the Family Firm Institute in Cambridge, Mass. These "succession events" will create the largest intergenerational transfer of wealth in US history with about $10.4 trillion in net worth transferred by the year 2040, according to economist Robert Avery at Cornell University in Ithaca, N.Y.
As a result, those people stepping up to the plate want to be sure they're well equipped.
"I figure there's a right way and a wrong way to get into the family business, and I'm trying to do it the right way - that's why I'm taking the courses," says Mr. Stone, who returns as a sophomore next month at Stetson University in DeLand, Fla.
For years, such courses were thought unnecessary or unworthy of serious academic study.
"We were considered oddballs, freaks among academic faculty" in the 1980s, says John Davis, a senior lecturer in the family-business program at Harvard Business School. "Most considered us on the fringe for wanting to integrate conversations with family and discussions about business. Now we're seeing faculty from a number of disciplines interested in what's happening here."
Business schools from Harvard to Louisiana State have jumped on the bandwagon in recent years to offer programs to CEOs who answer to 'Mom' or 'Dad.' These executive programs range from classes on "family dynamics" and "conflict resolution" to seminars on topics such as estate planning and social responsibility.
Many believe it's about time such courses were available. At least since World War II, business schools have been stuck on the public-corporation model. Yet more than a third of Fortune 500 companies (Motorola, Bechtel, and Marriott Corporation, to name a few) and more than 90 percent of all companies in the United States are family-operated. Half of US employees work for a family firm.
"In the last 15 years or so, the number of family businesses facing transition between generations has increased and they have been asking for help managing their transitions and educating the younger generation," says Joe Astrachan, professor of family business at Coles College of Business at Kennesaw State University in Marietta, Ga., one of the first to offer a family curriculum in 1986.
At Stetson, however, family business is very new. Its business school began offering graduate-level sem-inars only two years ago.
But it got a jolt last year when it surveyed undergraduate business majors and discovered that 42 percent planned to work in their families' businesses and more than half overall expected to work for a family business.
So this fall the business school is offering a new family-business "concentration" for undergraduates. Greg McCann, who heads the school's Family Business Center, hopes having an undergraduate program as a regular subject will bolster the graduate seminars.