All over the world, family run businesses play a critical role in our economy and or society. Research done by the European Commission shows that family businesses make up more than 60% of all European companies and account for over 40% of employment in Europe. In North America, family-owned business plays an equally big role, where over 80% of businesses are considered to be family-owned. Until recently, nearly all the businesses in India were considered to be family owned businesses.
While these statistics relate to businesses in general, family-owned businesses also play an important role in the labeling industry. “Family businesses are a dynamic part of our membership – in both the traditional FINAT association and the more recently established FINAT Young Managers Club (YMC),” says Kurt Walker, president of FINAT. " We wanted to capture how two generations work together to make a labeling business successful for today – and for the future.”
FINAT interviewed two generations of FINAT/YMC member families representing companies in Europe, in North America and India:
- Slovakian based Purgina is run by Stefan Kilarsky, his son Radovan and his daughter, Dana. Dana is also president of the FINAT Young Managers Club (YMC).
- The German-based company Hagmaier Etiketten & Druck is run by Thomas Hagmaier, his son Rodolfo and his daughter Veronika.
- Elvira Vidal and her daughter Bibiana manage Rotatek in Spain,
- Harveer Singh Sahni and his son, Pawandeep, from Weldon Celloplast Limited in India,
- ETI Converting Equipment is based in Quebec, Canada. It is run by François Bayzelon and his son Maxime.
Heritage: The Foundation of Successful Businesses
Despite their different backgrounds, each company interviewed shares one common value: the importance of honoring their company’s heritage and ensuring that it lives on for future generations.
Handing over a successful business to the next generation is a vital part of how these family-businesses operate. In fact, it is a large reason they have been successful.
Pawandeep says, “The most important benefit of a family business is its principles and core values. For any company to grow, these have to be passed in the hands of someone who has understood the benefit of this from childhood.”
For all these FINAT family owned businesses, it is this value of heritage that drives the growth and sets the goals for the company. The result is a focus on long-term success even if that means sacrificing short-term gains.
The balance of long-term success over short-term gains was the experience at Purgina. The newfound entrepreneurism that came with an open market shortly after the fall of Communism in Eastern Europe resulted in an explosion of growth for the company during the 1990s. Purgina’s business grew at an exceptionally fast rate – from 1.3 million euros in 1991 to 6 million euros in 2000.
Stefan says, “It was too much growth too fast, and the company had to put the brakes on in 2000.” They then restructured so that they could serve fewer but better qualified customers. This way of doing business reflected the value of the company and ensured steady, manageable growth for years to come.
This focus on long-term growth is not just good for the company; it benefits the industry as a whole.
As Bibiana says, “The opportunity to mix different generations with different backgrounds and ideas is very important to a business. It’s also good for the industry because there is a continuity of the next generation coming to keep the business going. Without further generations on board, many of these companies are forced to close.”
The Right Person for the Right Job
Finding the right people for the right job is critical to the company’s success – even if the right person is not a member of the family. For these companies, success means giving people responsibility based on their skills and ability, rather than on their role in the family.
Stefan and Dana say that at Purgina, they welcome the mix of family and non-family employees, though it is critical to build a good working relationship with non-family members. “The most dangerous situation in a family business is that all members of the family think they have a patent on everything. All good people from the outside need to have the feeling that they can be successful and have a future in the company.”
Thomas stresses that for both family and non-family members, the emphasis needs to be on finding the right person for the right job. Right now, his son Rodolfo and daughter Veronika work in the business. “What future role the children will play in the business remains to be seen," he says. "What is being done now must be proven. My goal is to gradually delegate more and more responsibility to my employees and to my children. But that isn't easy. Gaining experience takes time, and more responsibility isn’t for everyone.”
In the end, the families say it’s about balance. Employees from outside the family provide welcome perspective and strengths that are of value to the company. But at the heart of the company, what sustains it through the good times and the difficult times, are the family members.
Innovation and Value Adding Services
Innovation is a large part of what has helped these family-owned businesses to experience steady growth in a changing industry. All the families agree that as the next generation takes on more responsibility, they will bring new ideas and energy to their organizations that will undoubtedly lead to more innovation.
ETI is an example of a company that was founded on innovation. After leaving his previous company, François spent two years developing Cohesio technology. Cohesio enables printers to manufacture their own PS labels or their own rolls of PS material. This development led to the formation of ETI, which has continually evolved and grown under his leadership.
As ETI plans for the handover, François’ son Maxime is actively selling and hearing what the market needs, and bringing new ideas to how the company can grow and prosper in the future.
All of the interviews showed that the next generation has its own ideas of what innovations come next for the business. Some see adding new services, developing new solutions, or expanding into new markets. While their ideas are often tempered by the older generations desire for thoughtful growth, there is no doubt that in time, the next generation making their own mark on their company.
Qualities of a Successful Transition
In his interview, Harveer shared a quote from the Sikh religious scriptures that says, ”In this journey through the world, nothing is stationary, everything moves on.” Harveer added that, “Change is inevitable, and our generation has to accept that. When we do, transition will be painless, satisfying, and smooth.”
His philosophy on change is one that is echoed by other families. An openness to change – for both generations – is good for the business and good for the family. Yet, any time you have one generation letting go of their responsibility and the next generation picking up responsibility, there are bound to be disagreements. It’s how these disagreements get resolved that will make a difference for the family and the business.
As Thomas says, “The foundation for bringing the next generation into a business is trust. There will always be some conflicts with the younger generation, but finding time for each other and doing things that create a bond can help avoid serious conflicts.”
"Trust and respect at Purgina goes both ways," says Dana. "Listen to the 'experienced generation', use your gained knowledge of today, listen and most importantly, discuss the issues together."
According to Maxime, for their business, the transition is seen as a benefit for both generations. “I am still benefiting a great deal from the experience of my father. I still have much to learn, and I am glad to have him by my side. And as for him, everything I do means he has to do less, so he can spend more time on activities outside of the business.”
Doing less is also something that Thomas is looking forward to – eventually. “In five year’s time, I can imagine being slightly less involved in the day-to-day running of the business and having a more advisory role. But at the moment, I can't imagine a life without labels.”
The tradition of having two generations successfully involved in the management of a business extends also to Lejeune Association Management, the professional services company that oversees the FINAT association.
FINAT is currently managed by Jules Lejeune. He took over the business 15 years ago from his father, Mans Lejeune, who previously ran the FINAT association and had done so for 28 years. Jules also has two sisters, Astrid and Lisanne who look after other associations within their company. Jules says, "Our family business and FINAT have a 40 year history of working together, so these stories are especially close to my heart."