Until recently, the 106-year-old Irwin Seating Co. shared a trait with many family owned businesses: It lacked a formal succession plan that detailed the company’s transition to the next generation of leadership.
The reasons were many, said Win Irwin, the chairman and CEO of the Grand Rapids-based manufacturer of seating for stadiums and movie theaters. Chief among them: Irwin didn’t know whether any of his children would be joining the family business that he’s led since 1984 and that was founded by his great-grandfather.
But three of his five sons did end up eventually joining the company, but only after first working outside the family business. Today, Graham serves as vice president of product and business development, Coke works as the central region sales manager, and Andrew joined as the focus factory manager.
“In all three cases, the boys that are in the business have made a purposeful decision to come back to the business,” Irwin told MiBiz.
In several ways, the Irwin Seating story mirrors the findings of the second-annual Family Owned Business Survey conducted by Grand Valley State University’s Family Owned Business Institute (FOBI) and supported by professors at the Western Michigan University Haworth School of Business.
Of respondents to the survey released today, 81 percent said they lacked a formal succession plan for their companies.
“(Respondents) see succession as important, but they don’t necessarily have a written plan,” said Dr. Joseph Horak, the director of FOBI, which is housed in the Richard and Helen DeVos Center for Entrepreneurship and Innovation at GVSU.
Most companies probably don’t even develop a verbal succession plan, he speculated.
The lack of any kind of succession plan poses a serious challenge for companies that are thrust into leadership transitions because of sudden and often tragic events, said Laurel Ofstein, assistant professor of management at WMU.
“A lot of times, succession happens because of a sudden death,” Ofstein said. “These things that have been unspoken come on the table.”
In addition to succession planning, the survey considered multiple factors involved in family owned businesses, including ownership structure, financial success, their impact on community and profit distribution. The survey was sent to 690 family owned businesses and generated 156 responses.