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Family-owned, professionally managed - Family Business

Nation's Business - August 1, 1997

Facts that counter a mistaken notion about the quality of management.

Earlier this year, Black Enterprise magazine named BET Holdings Inc., a $133 million-a-year cable television network and publishing business in Washington, D.C., its Company of the Year. In a subsequent article in The Washington Post, BET's founder and chief executive, Robert L. Johnson, was quoted as saying: "The times are changing and the markets are changing so fast. But the [black-owned] businesses, by and large, are the same as they were 50 years ago: family-owned and not run by professional managers."

He said black-owned companies will have to change in order to grow, and he emphasized that in order to compete, they will have to form strategic alliances with one another and with white-owned companies.

I agree with the latter notion. But I have to challenge the former--the suggestion that being family-owned means that a company is not run professionally That's not necessarily so.

A company can be family-owned and professionally managed. Many of the best companies in the country--whether minority- or white-owned--are owned or controlled by families. Included on Black Enterprise's 1997 list of the top 100 industrial and service companies, for example, are Johnson Publishing Co. Inc. in Chicago, a $326 million-a-year company that publishes Ebony and is in broadcasting and cosmetics as well; H.J. Russell & Co., a $164 million construction firm in Atlanta and Earl G. Gravest companies, Pepsi Cola of Washington, D.C., and Earl G. Graves Ltd., the publisher of Black Enterprise, which had combined revenues of more than $85 million last year. These companies all have intense family involvement.

Another on the list is Innovative Logistics Techniques, Inc. (Innolog), a logistics engineering services company based in McLean, Va., that was founded by Verle B. Hammond, a retired Army colonel. When I interviewed Hammond earlier this year for the cover story on leadership in the May issue of Nation's Business, I learned that his wife and two daughters are senior executives in the company and that a son works there, too. It's definitely a family business, and the Hammonds want it to stay that way.

But its growth is a close match with Bob Johnson's company, BET Holdings. BET first appeared on the Black Enterprise list in 1992, when it was 12 years old and had just gone public. Its revenues the year before had been $51 million, and the company had 249 employees. Founded eight years ago, Innolog already has 400 employees. Hammond expects revenues of $43 million this year and twice that much by 2000.

Clearly, a family business--whether white-owned or black-owned--can be professional and can grow. Verle Hammond's daughters have college degrees and bring years of experience to the company. Innolog also relies on many excellent nonfamily managers, does regular strategic planning, and draws on consultants to help it move forward.

Other black-owned family businesses can follow the same path to growth, remaining family businesses but making sure that management, whether it's family or not, is top-notch. They can adopt sound business practices and policies. And they can create a stellar board of directors to help them think strategically

To learn to grapple with the issues inherent in a family firm, members can participate in family-business programs at any of dozens of colleges and universities across the country or attend other educational programs. (Several are listed in the calendar at right.)

Being family-owned and professional is just a matter of being committed to both the family and the business and taking the steps necessary to enhance the success of both.

If you would like to discuss any of the issues raised in this article with hundreds of other Education & Distance Learning enthusiasts from around the world, please feel free to visit the discussion forums & post a message.

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