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Deep roots Featured

10:06am EDT July 22, 2002

First of three articles on family business dynamics

When Richard DiPaolo Sr. enters the conference room at his North Columbus company, RDP Foodservice, there is not a rustle or a word.

His sons, Dick and Paul DiPaolo, and grandson, Mark Mizer, all vice presidents at the company, lean back in their chairs, almost as if to make more room for any words the elder DiPaolo is about to speak.

Yet the air is not so thick that the younger generations feel prohibited from adding their own thoughts-even if it means interrupting the family patriarch.

It's a delicate balance for the family business: respecting the founder without stifling the dreams of the new generation.

Family employees of Johnstown's Tech International-with three active generations-must walk that line every day, too, at home and at work.

"It's difficult, but it's the way I want it," CEO Pauline Chambers Yost says of having no separation between work and family.

In fact, the line is so blurred that if you ask family members at Tech what their titles are, you may find them searching for an answer.

"Uncle Mike, grandson Mike, those are the real titles," says Michael Chambers, the company's executive vice president.

His point is clear. Family businesses are like no other. Their roots run deep, tracing a history of family leadership along with company growth. When challenges surface-as they inevitably will-the stakes are higher, too, because in a family business every decision is personal.

This is the first of a three-part series taking a close look at the dynamics of these two Central Ohio families and how the three generations in each manage to work it all out: bringing new blood into the business, working together and making plans to grow the companies for their respective descendants.

A firm foundation

When Richard DiPaolo Sr., 80, was growing up, children were expected to join a family business.

There was no question that he would help his mother and father, Luisa and Paolo, run their grocery store. When his mother died, it was even more imperative that he join with his father.

"I wanted to be fair with him. He had some tough times. To me it's family, OK?" he says, leaning forward in his chair. "It's family."

Soon, though, DiPaolo Sr. wanted to try his hand at owning a business, so he founded DiPaolo Food Distributors next door to the grocery store.

It was no surprise to him that his sons would join him, first working part-time in their youth and eventually becoming full-time vice presidents. He admits he would have let them follow their own goals, but from his generation's standpoint, joining the family business was the expected move.

"I didn't realize my grandsons would be involved down the road," he admits.

The way a family member enters a business-whether willingly or through family persuasion-could have an effect on the business down the line, says Thomas Davidow, a nationally recognized family business expert and co-founder of Genus Resources Inc., a consulting firm in Needham, Mass. Davidow also helped set up the Family Business Center at Franklin University.

"If there was a self-sacrifice in entering the business, there's a level of expectation that there's going to be a level of appreciation for that. The reality is never going to meet the expectation," he says. "On the other hand, if you choose to enter the family business, you take responsibility for your choice. And if you're not getting what you want, you can address it by seeking evaluations or having some sense of appreciation of what you're doing in some explicit way-but you're not going to have this excess need of appreciation that comes with self-sacrifice."

"I think one of the hardest decisions that capable second- or third-generation folks have to make is: Do I want to do this? Do I want to put up with all of these family entanglements?" echoes Edward Hertenstein, an attorney with Kegler, Brown, Hill & Ritter and board member of the new Family Business Solutions program at The Ohio State University's College of Business.

Paul DiPaolo was 20 when his father's business was starting to blossom, and he chose to join it after first attending college, at his father's encouragement, and spending time in the service.

His brother, Dick DiPaolo, started working part time for the company after college. Then, after interviewing with such heavy-hitters as Firestone and J.C. Penney he decided the money was better and the loyalty too strong for him to turn down an opportunity to join the family business full-time.

The brothers made their decisions by looking ahead: Paul wanted to help grow the business so he could turn it over to the next generation; Dick decided the family business could provide the best future for him.

At Tech International, Yost seems to have had more of a hand in controlling whether the generations to follow would join the company.

Yost, like her mother before her and daughter after her, initially owned a beauty shop. After 10 years, though, she decided to help her parents with their growing business. When her father died in a boating accident, she and her husband Frank Chambers bought the company from her mother. Frank ran the company until his passing in 1972, when Pauline took over. Her current husband, Walter Yost, serves on the company board.

Pauline never had any question that her son, Gary, who died about four years ago; her daughter, Cheryl; and the grandchildren would join the company.

"I started training them at a very young age the importance of Tech, and I never for one minute expected anything but every member of my family to come into the business," Yost says matter-of-factly.

If they weren't interested, she'd let them try their own thing, but eventually all returned.

Michael Chambers, Yost's grandson and heir apparent, is one of them.

"I had some hidden aspirations of things I wanted to do in life, but really when it's a family business you're born into, your whole life has been primed to work in the family business," he says.

He's purchased a large personal property so he can fulfill his wishes of working with nature-he once thought he might pursue a career in that area, perhaps with the national park system. He even left the family business from 1989 until 1992 to run his own tire-recycling company, which he eventually sold to a Florida business. Then he was drawn back to Tech.

Working elsewhere before joining a family business is wise, Davidow says.

"If you are only in the family business and that's your only point of reference, you have no notion of how a business operates and you can have expectations that are unrealistic," he explains. "In addition to that, if you've succeeded in the outside world, you're going to have a level of confidence that you're going to bring to the family business that you would not otherwise have."

Any experience gained outside a family business will count later inside, too, adds J. Richard Emens, a lawyer with Chester, Willcox & Saxbe LLP and founding director of Franklin's Family Business Center.

"Rather than just being the boss's kid given the favored job, they chose to come back into the business, and the boss urged them to come back in and the people in the business respect them more," he says.

To come to agreement on family issues that relate to the business, Yost and her family say they have sought the counsel of Davidow and Emens, who along with Hertenstein, declined to directly comment on Tech and RDP. In general, however, these experts say one way to address such issues is to form a family council, which could include family members working in the business or holding shares of it, as well as relatives who work elsewhere but could be affected by the family business. For example, a family council could set requirements for how each generation must enter the business.

"It also takes the pressure off running the business if you do have a separate council to handle issues that are part family, part business," Hertenstein says. "It lets business meetings be business meetings."

Tech International has a family council, but it also relies on flexibility to open doors for family members interested in joining the business.

"Not everyone likes to do the same thing, so we have diversified to fill all of my family members' best assets and love of work," Yost says.

Her daughter, Cheryl Poulton, for example, heads up a subsidiary, Technical Rubber Co. Investment Corp., which enables her to develop properties-a longtime interest of hers.

"All in all there's no greater reward than working for yourself or working for your family's business," adds Michael Chambers. "Even when the times are tough, it's still your times, it's still your stress vs. working for an outsider [where] you can't control your destiny. You can't manage your future the way you can if it's your own family business."

No line to draw

Family roles carry over into the business hierarchy at RDP and Tech, with elder family members playing the part of boss and the younger generations worrying about letting down their parents Those relationships and the constant contact make the line between work and personal life almost nonexistent.

"It's pretty hard to be mother, grandmother and boss," Yost says, "because you have to separate your feelings. You lead by your heart with your family, but you lead with your head in your business. We find it very challenging because they look upon me as mother and grandmother, and then when I put on my boss hat I'm a totally different person."

The younger generations, should they make a mistake, are not only under scrutiny of their boss but also in danger of disappointing their elders. Talk about pressure.

"It would be tough growing up in this world if you were [Hall of Fame quarterback] Bart Starr's son and you wanted to play football," Michael Chambers says, explaining how "without a question" he worries about letting his grandmother down.

He deals with it by communicating openly and honestly with her.

"I am willing to make mistakes as long as she is willing to accept that they were with good intentions," he says. That type of communication is key, but hard to develop, especially in multigenerational family businesses.

"The older generation either lived through the Depression of the '30s or shortly after it through World War II, raised at a time when parents told their children what to do and didn't communicate," Emens says. "It makes it much more difficult to be willing to sit down and talk about these things because it isn't the way they were raised. You need families to get there, and typically the family businesses in third and fourth generations have overcome this lack of communication."

Another challenge: defining the line between work and personal life.

"Basically when I leave here in the evening I try not to even think about this place," says Paul DiPaolo. "Even though it's with you 24 hours a day, seven days a week, you try not to think about it."

Dick DiPaolo, on the other hand, doesn't mind some commingling.

"I don't distinguish so much between home and work and vacation," he says, adding that it doesn't bother him to make phone calls or do company work on a laptop while he's out of the office. "I enjoy being here just as I enjoy being at home, so I don't draw a line between the two."

"It's very difficult not to be consumed by the family business," Davidow says. "It's your life, it's your source of relationships, and it's also your source of income."

To prevent overwhelming anyone, set rules so family members know when they can or cannot discuss the business, and plan some time when family members are not together, Davidow suggests.

Yost says she prefers constant contact because it allows family members to attack a Tech business problem immediately to keep it from festering.

"To me there is nothing as important as a family and strong family relationships and ties," Yost says. "To me that is the ultimate [goal]. To have each member of the family happy and succeeding means more to me than all of the businesses that I own."

Next month: Making operational decisions among three generations.