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Thursday, Mar 28, 2024

Charters Keep Family From Making Business Personal

A few years ago, North Hollywood-based Pacific Title Archives, a family-owned company that preserves film, videotape, records and works of art, was in a rough spot. The company’s four owners two sisters, a son and a father were butting heads, putting the interests of family and business at odds. Company President Peter Hubbard, who took over the operations from his dad, was struggling to keep up with running the company and wading through sensitive family issues. It seemed the line between family and business was completely blurred, Hubbard said. “For me, there was no rest,” he said. “People called at all hours.” Fed up and discouraged, Hubbard decided to call in a family business consultant, Marta Vago, to create a family charter a simple set of ground rules for how a family business should work and what roles family members should have in managing it. Almost a year later, the charter is just about finished, although the benefits are already evident, Vago said. “Now there is a framework in which conversations can take place,” she said. The experiences of Hubbard and Vago with family charters were the topic of an Oct. 19 seminar hosted by the Family Business Center at California State University Northridge. “Family charters at the most basic level are the rules of the game,” Vago told the crowd, a mix of about 40 center members and CSUN students, gathered at the CSUN University Club. “It provides a blueprint for how family members deal with one another both inside and outside of the business.” In her experience, that usually means figuring out every connection family members have with the business and which are effective from which family members should be hired to who should receive stock options to who can and can’t play a role in management. Many family businesses never answer those questions, which often makes it difficult for family members to understand where the business is going and who’s running it, Vago said. Clearly defining what roles family members play and what they should expect to receive is vital, even though it may elicit strong responses, she said. “Conflict is inevitable,” Vago said. “But the business is in the business of staying in business. It needs what it needs. It’s a matter how the family can manage that conflict and (create) growth.” Of course, in some situations, that’s easier said than done. Nancy Gump Melancon of the Santa Clarita sanitation company Andy Gump pointed out that some family members may be resistant to charters because they can limit influence or bring in outsiders. “Families can have a lot of pride,” she said. “But it only takes one strong family member to work through it.” The key, Vago said, is to separate the family side and the business side. Business talk should only happen at work; family talk only at home or through regular meetings for that very purpose, she said. In the case of Hubbard, his family wasn’t on the same page when it came to business, which ultimately hurt the company, he said. Now the charter clearly indicates how they must work together to see eye-to-eye. “The family gets together and it sort of diffuses a lot of the situations,” he said. In their case, Vago said the charter helped preserve the business and the family. “Either the business will crumble or family relations will be strained,” she said. “You maintain your car; why wouldn’t you want to review you business?” Family Matters The meeting is the second in a series of discussions hosted by the Family Business Center, formed in 2000 to help family-owned businesses in the San Fernando and Santa Clarita valleys and parts of Ventura County. The next is Nov. 16 and focuses on dealing with deceitful employees. For more information on upcomming seminars call (818) 677-2438 or visit csun.edu/fbc.

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