As a 16-year-old “golf cart boy” in Georgia, Troy Gunden said, he and his coworkers would see how muddy they could get the carts before washing them and test how long they could drive a cart on just two wheels. He was late to work and focused more on having fun than on doing a good job.
“We were terrible employees,” Gunden, now 41, said Wednesday afternoon during the Saint Joseph’s University’s Family Business Legacy Speaker Series, part of the university’s Initiative for Family Business & Entrepreneurship.
Gunden, an executive vice president and the third generation at his family’s Herr Foods Inc., said his poor work ethic as a teenager should be an example to others that maybe you don’t want your family member entering the business too young. Gunden said he’s been to talks about family businesses and the discussion tends to be about how to pass your company to the younger generation, so he wanted to offer advice on how to be a good descendant and position yourself for success when you rise up the ranks.
”I’m glad my uncles didn’t see what I was doing in Georgia, they didn’t see this side of me,” he said. “If I was working in that family business, think about these employees, they have long memories. And they’re going to remember that 16-year-old kid when you’re 26 or when you’re 36.”
Gunden and his uncle, current Herr CEO Ed Herr, who also spoke at the event, know they are in a lucky position: Just 12 percent of these companies transition to the third generation, compared with more than 30 percent that make it to the second generation, according to the Family Business Alliance. And 3 percent remain active into the fourth generation and beyond.
In terms of transitioning though, Gunden spoke candidly about the difficulties that face younger generations when preparing to be a future leader. He spoke about struggling with knowing it is a blessing to be able to work in his family’s business, but wanting to know that his promotions were not just due to his bloodlines, but also because he was worthy.
“Nepotism is definitely an issue for second and third generations,” said Brian Brogan, director of the Initiative for Family Business & Entrepreneurship, after the 75-minute program. “So anything that will help upcoming generations to combat that and gain trust from employees as a family member is empowering.”
Ed Herr’s father, James Stauffer Herr, had worked on his father’s farm, watching hens lay eggs. But after seeing an ad in the newspaper, he bought a Lancaster-based potato chip company for $1,750 in 1946, Herr recounted at the event. Back then, Herr said, his parents would leave a three-pound tin of potato chips on doorsteps and if they came back weeks later and the tin was empty with some money in it, they knew to bring more.
That small business, with his parents making about 20 pounds of chips an hour, is now about a $300 million company based in Nottingham, Pa., making five or six tons of chips every hour. The Mid-Atlantic region, which includes Philadelphia, is about 62 percent of Herr’s business.
“Philadelphia, as you know, is a great snack market,“ Herr said. “It’s a blue-collar town. We’re thrilled to do business in Philadelphia.”
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Herr said his generation prepared for the transition from second to third generation with some key advantages, including a culture that celebrates family and shared values; interest from the third generation to continue their grandparents’ work; leadership track programs so succession planning is in place in advance; a family employment policy covering compensation, discipline in the family, structure, and responsibilities; and a family constitution that includes topics such as relationships, values, succession and governance.
“My mother was a master at convincing people that work was fun,” Herr said. “I remember as a kid I didn't know if I wanted to work or play because work was so much fun.”
There will always be employees who attribute a descendant’s success to being born into the company, Gunden said. So it is important for descendants to show up early, leave late, volunteer for jobs no one else wants to do, and be intentional about building up a good reputation. Gunden estimated that he worked about 12 different jobs at Herr’s, with his first being as a route salesperson with shifts starting at 3 a.m., delivering chips to the shelves.
“The world of nepotism, you know it’s out there and it’s one of the things that a family member descendant has to wrestle with,” Gunden said. “But you can beat it with hard work.”
The second generation had set up a sort of life plan for the third generation if they wanted to work at Herr’s, and it came with a few prerequisites, including having outside work experience. It’s important to work at that other job long enough to get promoted and build confidence, Gunden said. ”If you have that experience and that confidence from the outside world, that will actually help you once you get to your family business.”
Gunden said a measure of success for his career will be if his generation sees a strong fourth generation running the company one day.