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Off ic ia l magaz ine of the

Inside: The 2014 Family Business Awards

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6

Massachusetts Family Business

Official magazine of the CONTENTS

12

4 from the board Try, Try Again

5 business profile: kaplan construction Passing The Torch After Nearly 40 Years

8 war and peace The Secrets To A Happy Family Business

10 putting anger to good use Don’t Get Mad: Get Productive

16 2014 Family Business Awards Highlights And Profiles Of This Year’s Winners

21 learning lessons Take-Aways From A Very Public Family Fight

12LESSONS FROM MARKET BASKETThe much-chronicled supermarket takeover expanded the definition of “family-owned.”

4

The highs and the lows of family-owned businesses are the focus of this final issue of 2014. The

cover story takes a new angle on the con-flict at Market Basket, examining the true meaning of “family” in a workplace set-ting. The company’s managers were quite outspoken at an MIT-sponsored con-ference on the outcome of the conflict, which engaged enough of the workforce to jolt the needle on the state’s labor sta-tistics during the months of August and

September. We wish the reconstituted company well.

Then, there’s a smaller but no less representative story that shows a fam-ily business that builds on its strengths. Kaplan Construction, a Brookline-based company that has established a thought-ful generational transition plan. It has quietly grown along with the burgeoning Greater Boston cityscape and is profiled on page 5.

The FBA Awards for 2014 ran the gam-

ut of industries, but the basic storylines were the same. Family relationships are the glue for getting through good times and bad.

At least one of the winners had been a finalist several times over the years and life’s message to try, try again rang true. One company this year had done just that, and its management told the audience at the event that it had made several adjust-ments to its shifting business model that apparently won the favor of the judges. ■

Try, Try Again

Letter from the Board

DIRECTORSJeffrey S. Davis, Mage, LLCAl DeNapoli, Tarlow, Breed, Hart & Rodgers, P.C.Brian Nagle, First Republic Private Wealth Management

101 Huntington Ave., Suite 500Boston, MA 02199fbaedu.com

FAMILYBUSINESSMassachusetts

Official magazine of the Family Business Association. Inc. Editorial | Advertising | Design

A Family-Owned Business Since 1872

280 Summer Street, Boston, MA 02210Phone 617-428-5100 Fax 617-428-5119

www.thewarrengroup.com

PRESIDENTEdward D. Tarlow, Tarlow, Breed, Hart & Rodgers, P.C.

VICE PRESIDENTCatherine Watson, Tarlow, Breed, Hart & Rodgers, P.C.

TREASURERRichard A. Hirschen, Gray, Gray & Gray, LLP

©2014 The Warren Group Inc. All rights reserved. The

Warren Group is a trademark of The Warren Group Inc. No

part of this publication may be reproduced in any form or by

any means, electronic or mechanical, including photocopying,

recording, or by any information storage and retrieval system,

without written permission from the publisher.

The FBA is pleased to have a dedicated and insightful group of advisors in the FBA Advisory Council. The council is made up of 10 family business owners from across the state representing large and small businesses. Some Advisory Council members are past FBA Award winners; some are not. Several are first-generation family business owners, and some have beat the odds by surviving many generational transitions. In January, the FBA Advisory Council will convene to distill its thoughts on the year ahead to provide direction to the FBA regarding the needs of family business. In the meantime, the FBA has been working with corporate sponsors and nonprofit supporters to line up some great programming. Below is a listing of some of the many programs and activities already on the calendar for 2015.

The Family Business Association 2015 Schedule of Events is Taking Shape

March 12Taking Dad’s Picture off the WallIn partnership with the Southern New England Entrepreneurs ForumAt the Advanced Technology Manufacturer Center in Fall River

March 26The Business Valuation Summit – What’s it Really Worth?In partnership with the Cape & Plymouth Business MagazineAt the Cape Codder Resort & Spa in Hyannis

June 18The New England Family Business ConferenceIn partnership with The Warren GroupHosted this year by Babson College in Wellesley

It’s never too early to nominate a family business for the 2015 Family Business Awards for Massachusetts. Applications will be due in August 2015 and, once again, the Awards event will be held in October at the Royal Sonesta in Cambridge. More details will follow, or contact the FBA at (617) 218-2077 for more information.

5

Business Profile

With money received as a wed-ding gift, they bought a table saw and a used filing cabinet.

Their first job was the interior renova-tion of a cheese shop up the street, whose owner they knew. Thirty-eight years af-ter the 1976 founding of the company, now named Kaplan Construction, Ken and Cathy Kaplan have handed the reins to the next generation – their daughter, Jane Kaplan Peck, and Jane’s husband, Nathan Peck.

Ken has become chairman of the board and Cathy has become senior advi-sor (“emeritus,” she terms it). Jane, who joined the company as an employee in 2006, is majority owner and COO; Na-than, who joined in 2012, is president.

The transition was planned for seven years, and launched three years ago. Ken and Cathy had requested that Jane and Nate get at least five years’ experi-ence outside the family company before joining, and the younger couple, now

married for nine years, both have years of industry credentials on the outside. Jane was an assistant project manager at Shawmut Design and Construction and a project assistant/analyst at Leggat McCall Properties, and Nate was senior project manager for the Boston office of Turner Construction. Jane and Nate are also active members of trade associations and nonprofits.

Nate has brought in new technolo-

By Christina P. O’Neill

The House that Kaplan BuiltChanging of the Guard in Brookline

Jane Kaplan Peck, Nathan Peck, Cathy Kaplan and Ken Kaplan.

Courtesy photo

Continued on page 6

6

gies, including building information modeling (BIM), which provides digi-tal imaging of physical and functional characteristics of projects. Jane’s life-long construction industry experience and her professional activity strengthen the financial and operational side. The company is a member of the Associ-ated Builders and Contractors, and Jane serves on the board of trustees for ABC’s Massachusetts Workers’ Compensation Self Insurance Group, among other af-filiations.

If You Lived Here, You’d Be Home by Now

There is also the personal side of the story, starting with the working relationship that Ken and Cathy have established with their hometown of Brookline, which abuts six other distinct Boston neighborhoods, and it’s a high-density, pedestrian-friendly mix of old and new.

An example is the Brookline Teen Center. Kaplan Construction provided years of pre-construction planning to develop the 12,000 square-foot center, which offers out-of-school activities for Brookline’s teens in grades 7 to 12. Built on the site of a former gas station, it’s now an old tech/new tech social oasis.

Cathy said that early on, she and Ken deliberately set up office space within walking distance of home so they could put more of their energy into the busi-ness.

Not everyone can do this – at this point in Massachusetts’ real estate mar-ket, it may the real estate equivalent of advising kids to choose their parents

well – but it seems to be a strategy that should be considered by family-owned businesses doing intergenerational planning.

“People our age are starting to retire,” said Cathy, noting that she remains in touch with many of the former staffers who have worked the front desk over the years.

Ken and Cathy watched Nate and Jane renovate first a condominium and then a house, and that seems to figure into the chemistry between the two gen-erations as much as the younger couple’s outside work pedigree.

Nate and Jane decided to join her parents’ firm rather than continue their career trajectories with bigger firms. For both, it was the opportunity to lead a company in which they have an own-ership stake, and not have to start from scratch.

Getting through the Tough Times

The construction business goes

Nate and Jane decided to join her parents’ firm

rather than continue their career trajectories with

bigger firms.

The Brookline Teen Center, built on the site of a former gas station, serves middle school and high school students with non-school activities.

Continued from page 5

7

through peaks and troughs, including the most recent recession, which began during the financial crisis.

The company is run “very conserva-tively,” said Cathy. During bad econom-ic cycles, it relies on bonuses rather than high salaries. Key employees have been willing to take pay cuts and furloughs, with some temporarily going part-time. But slump time has also presented an opportunity for key employees to take the time to become LEED-certified, a work-intensive process that has long-term good results.

The family’s first accountant, Tom Feeley, partner at Feeley & Driscoll, confirms this. He met with Ken and Cathy in their kitchen more than 30 years ago; Jane, aged six months, was present at the time. More recently, last summer, the new partner from Feeley & Driscoll, Justin Amico, met at Jane and Nate’s kitchen table; their two young children were present.

Feeley said the company evolved over a period of time from residential to commercial jobs and was able to get repeat business. Tom characterizes

Ken and Cathy as focused and smart, with a talent for attracting and retain-ing younger people early on, and that many of those recruits remain today as key people. Their business outlook was

conservative in that they did not over-extend, and their specialty approach in the 1970s through the 1990s served them well, he indicated. A rough patch came from 1988 to 1992, with develop-ers going broke, he said – a situation worse than the more recent recession. But during that earlier time, the com-pany built relationships with clients that would serve it well. When the most recent development surge started, the company’s relationships, built over de-cades, were remembered in the develop-ment community.

Adam DeSanctis’ Woburn-based company, DeSanctis Insurance Agency

Inc., has served Kaplan Construction for its insurance and bonding needs since Kaplan’s early years, when Adam’s late father headed the agency.

“They understand what the insurance

and surety carriers need to continue to provide the programs that allow them to operate their business in today’s con-struction market, and they respond to those needs accordingly,” he said. “It was that understanding of those needs that helped them sustain their ability to bond sizeable projects, in the tough construction climate of a couple years past. Kaplan focused on maintaining consistency, and it has paid dividends.” ■

CHRISTINA P. O’NEILL IS EDITOR OF MASS. FAMILY

BUSINESS MAGAZINE. SHE MAY BE REACHED AT CONEILL@

THEWARRENGROUP.COM.

7

There is also the personal side of the story, starting with the working relationship that Ken and Cathy

have established with their hometown of Brookline.

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8

By Ira Bryck

The Happy Family Business

It took Tolstoy 1,000 pages to recount the tale of “War and Peace,” but a one line to summarize the emotional

landscape of the family: “Happy families are all alike. Every unhappy family is un-happy in its own way.”

Consider that 90 percent of America’s companies are owned and operated by families, and that, according to both ra-dio psychologist Joy Browne and person-al growth expert John Bradshaw, 95 to 97 percent of all families are dysfunctional, and there’s no denying that our economy and work lives are heavily influenced by the classic – yet unique – manifestations

of family business distress.At the UMass Amherst Family Busi-

ness Center and growing up in a fam-ily business, I’ve been both amused and astonished by the abundance of real life dramas, each rich with wisdom, fool-ishness, hope, fear, passion and ennui. While one could view them as stereo-types, every tale of woe is as unique as a snowflake.

What has been particularly fascinat-ing to observe is the relatively rare (but not endangered) Happy Family in Busi-ness. Viewing them as an elite species, I wonder if Tolstoy was on track: is there

an “alikeness” that sets the high func-tioning business family apart from the rest of us?

While not a scientific study, I’d have to say yes, the happy business family possesses particular characteristics that inevitably contribute to business success and a climate of positivity. They make it look so easy and natural. You can really appreciate it when you are the typical family business, struggling with hearty portions of conflict, harmful assump-tions, poor planning, divergent goals … it’s both inspiring and frustrating to see how transcendent and elegant is that

Not as Easy as It Looks

9

Business success isn’t something you just hope for. You build it with a solid financial plan. Start with a Northwestern Mutual Financial Advisor. Together, we’ll design a personalized plan to help your business achieve its full potential, including risk management and business succession. Who’s helping you build your financial future?

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uncommon breed of business-owning family that:• Invests the time and takes the risk

to share their thoughts and feel-ings. Through hard work and natu-ral inclination, they are high in that fashionable yet timeless quality of emotional intelligence, arming the family with ample amounts of trust, goodwill and respect. They bring to their business an inimitable quality of family-ness.

• Understands the need for formal governance structures. They err on the side of professionalism, creating policies to handle such delicate is-sues as compensation, job evaluation, objective outside advice, growth and risk, and transition of leadership and ownership. They define clear bound-aries to separate business issues from personal issues, and, as a result, treat the business like a business and the family like a family.

• Appreciates the formidable chal-lenge of being a family in business and embraces it. They read the lit-erature, attend the forums, have the discussions that inoculate them from creeping dysfunction. They further immunize their family by insisting that only interested, capable, neces-sary family members need apply, ex-plaining that the business is not the family’s welfare office or employ-ment agency.

• Benefits from that certain je ne sais quoi, known in Yiddish as “mazel” (luck). My father swears by it; “to succeed in business, you gotta have mazel.” Thomas Jefferson looked at this magic factor and concluded, “I find that the harder I work, the more luck I seem to have.” My guess is that while the highly functioning family business would describe themselves as lucky, they would describe them-selves first as working very hard.

My experience has shown that the vast majority of family businesses mud-dle through, trying to make the best of the situation. They feel that all the recommended formality and structure feels stilted and uncomfortable. How-ever, these are the “best practices” that

have brought success to families graced with many qualities others wish they

had! If they are doing the work, how likely is it that you will have their suc-cess with no effort? So even if it feels

like “fake it ’til you make it,” once you start experiencing family business own-ership as a competitive edge instead of a ball and chain, you’ll be proud of what your family business was able to accom-plish. ■

IRA BRYCK IS DIRECTOR OF UMASS AMHERST FAMILY

BUSINESS CENTER, AN INTERACTIVE, NON-COMMERCIAL

LEARNING ENVIRONMENT FOR FAMILY-OWNED BUSI-

NESSES. CONTACT HIM AT BRYCK@CPE.UMASS.EDU OR

(413) 545-4545.

Happy families are all alike. Every unhappy

family is unhappy in its own way.

1010

By Ellen Frankenberg

Have You Had a Good Fight Lately?

It’s a familiar syndrome: Generations ago, the company’s founding brothers got into a nasty squabble that wound

up in court, dividing their generation into two camps. Years later their fight has van-ished from conscious memory, but their children and grandchildren still instinc-tively tiptoe around major issues that they should have settled years earlier.

Fear of internal fighting is one of the greatest problems of business families. Yet conflict is a normal part of family life. Those you love the most can make you much angrier than a stranger. Especially in a family business, complicated expec-tations are deeply embedded in a small circle of human beings. Sooner or later they’re bound to blow some opportunity

on which your emotional and financial se-curity depends.

This can actually be a blessing. The things that anger you – that you’re willing to fight for – provide clues to your deep-est values.

A “good” fight gets you beneath the var-nish of mere pleasantries, providing the opportunity to learn what matters most to

Ten Rules for Using Anger as a Source of Energy for Change

11

another person. Anger can be a source of energy for change, especially when it trig-gers deep feelings about what is fair.

The ability to approach problems from different viewpoints and to disagree face to face can lead to solutions that no indi-vidual would have ever concocted alone. It isn’t pain and conflict that you want to avoid – it’s the unnecessary emotional pain of unresolved conflict (the kind that’s based on misunderstandings that were never even discussed).

Different families define conflict in dif-ferent ways. My Italian friends blow up regularly in the kitchen (why is it always in the kitchen?), and three minutes later they’re hugging and laughing together. My Scandinavian relatives seem to handle anger with cautious silence: They’ll put on another pot of coffee, without ever saying directly what line was crossed. (“What did I say that was wrong?” whispers the new daughter-in-law privately to her husband.)

Some family conflicts fester because serious long-term problems, like alcohol-ism or abuse, were never acknowledged and treated, so they continue to dominate family life, like an elephant in the living room. These problems usually require professional intervention from outside the family before any day-to-day conflicts can be resolved.

But most entrepreneurs are stymied by ordinary conflict. They’ve been so busy building the business that they didn’t spend much time developing conflict-resolution skills. As families expand geo-metrically, with siblings and cousins and in-laws joining the fray from different perspectives, business families need to de-velop “Rules for Fair Fights.” This kind of written agreement, developed within a family forum, can provide enough safety and predictability so that individuals feel free enough to disagree, without fear of getting fired or disinvited to the next fam-ily reunion.

Here are 10 “Rules for Fair Fights” that I’ve collected from several business fami-lies.1. No name-calling or put-downs. (The

purpose of a fight is to resolve an issue, not demean each other.)

2. No violence, including throwing paper wads or cell phones. (Even if not aimed at anyone in particular.) Confront by

describing the facts (which are not de-batable) and then by naming personal feelings (which are also not debatable). “When you showed up an hour late for the meeting with our best customer, I was re-ally angry.”

3. No fights in front of employees. (Or children or customers or bankers.)

4. No fighting when someone is under the influence. (Or when it’s so late in the day that fatigue and frustration will take over.)

5. Make an “appointment” for a fight within 24 hours of a disagreement, so the conflict doesn’t fester for days, months or years. (Sometimes a restau-rant can be a good venue for tough conver-sations that won’t be interrupted or get out of control.)

6. Keep your fights up to date. (Don’t keep rehashing the same past failures as weap-ons, regardless of the current issue.)

7. Avoid triangles. (Any two people in a healthy family can resolve differences be-tween them directly; when a third party acts as a “go-between” or buffer, the odds of miscommunication increase 300 per-cent, and conflict is prolonged instead of resolved.)

8. Don’t pretend that you know other people’s motives. (“You didn’t show up on time because you don’t care what hap-pens to this business.”) That will only trigger defensiveness and more anger in response. Just give the facts, please.

9. After you’ve expressed your anger, let go, forgive and drop it. (If you still can’t let it go, head for the nearest driving range and knock the daylights out of a bucket of golf balls to release your physical tension.)

Rules like these can prevent family con-flict from disrupting a business. They can even bring family members closer togeth-er. If your family hasn’t yet developed its own rules, ask your relatives to fill out my “conflict IQ check list” (see below). It will help you see how much work remains to be done before you can have a good fight, and then make up again. ■

Reprinted with permission from Family Business magazine.

ELLEN FRANKENBERG, PH.D., IS A FAMILY BUSI-

NESS PSYCHOLOGIST IN CINCINNATI. CONTACT HER AT

ELLENFRANKENBERG@GMAIL.COM OR (513) 729-1511.

1. We deal with conflict directly, rather than venting about the problem to a third person.

YES NO SOMETIMES

2. We block conflict when it involves personal attacks, name-calling or put-downs.

YES NO SOMETIMES

3. We don’t let major conflicts fester for more than 48 hours.

YES NO SOMETIMES

4. We tolerate conflict when it gener-ates different approaches to a prob-lem.

YES NO SOMETIMES

5. Even if the leader must make the fi-nal decision, we first give everyone a chance to be heard.

YES NO SOMETIMES

6. Periodically, we evaluate the quality of communication that each person demonstrates in our meetings.

YES NO SOMETIMES

7. We can confront each other directly by first describing observable facts and then naming personal feelings.

YES NO SOMETIMES

8. We regard conflict as a normal part of working together.

YES NO SOMETIMES

9. We sometimes develop compromises that are “good enough” to be sup-ported by all team members.

YES NO SOMETIMES

10. When serious conflict persists, we set aside enough time and energy to work through it successfully.

YES NO SOMETIMES

YOUR SCORE: 10-9 yeses: Awesome. 8-7 yeses: OK. 6-5 yeses: Scary. 4-3 yeses: Deep trouble. 2-1 yeses: Start over.

Your conflict IQ

12

The unprecedented nine-week work stoppage was of a scale so large that it dented Mas-

sachusetts’ August and September em-ployment figures and brought sales at a multi-billion-dollar supermarket chain almost to a halt. Nearly 25,000 non-unionized workers protested the June 23 firings of CEO Arthur T. Demoulas and two other top executives by Market Basket’s board of directors. The oust-ers had been led by Arthur T.’s cousin and archrival, Arthur S. Demoulas, who had been fighting a lengthy, bitter legal battle over control of the family-owned business.

On July 12, workers at the Burlington store placed pamphlets titled “We are Market Basket and we need your help!” in customers’ grocery bags. It was the beginning of a long summer of protest by Market Basket employees, ranging from executives and managers to ca-shiers, drivers and warehouse workers, many of whom put decades-long careers at risk. Employees held rallies; custom-ers joined in by boycotting stores, uti-lizing social media and taping receipts from competing supermarkets to the windows of near-empty Market Basket stores.

“It was a unique labor revolt,” the

MIT Sloan School of Management not-ed in a September article titled “Lessons Learned: What the Market Basket Pro-test Offers Leaders and Managers,” “one that contained a single specific demand: Give us back our CEO.”

The nationally heralded employee movement came to an end on Aug. 27. The warring factions on the board of the $4.3-billion Market Basket ap-proved a $1.5-billion buyout by Arthur T. and his sisters – who controlled 49.5 percent of the company – of the 50.5 percent owned by Arthur S.

The family of workers had prevailed.Will the lessons learned from the

By Steven Jones-D’Agostino

A Tale of Two Families

Market Basket Widens the Concept of a ‘Stakeholder’

Eight Market Basket store directors, including the four who took part in the final panel discussion, stand on stage following the forum.

13

Market Basket movement result, years from now, in better ways to run both family- and non-family-owned business-es located in Massachusetts and else-where across America? Will they help to improve relationships between manage-ment, labor, customers and vendors of those companies? When it comes to the U.S., at least, the jury is still out.

A Reactive, Instinctive NatureThe Market Basket family extends

well beyond the biological and employ-ee members of that clan. One of them is Jim Fantini, a longtime Market Basket bakery-goods vendor who voluntarily maintains the independent MyDemou-las.net website, plus the various associ-ated social-media pages.

During a Sept. 25 forum at MIT, titled “Lessons from Market Basket,” Fantini and four Market Basket manag-ers were invited to make an unscheduled visit to the stage at the end of the event. They received a standing ovation from the packed-house audience.

“Close your eyes for a second if you’re having trouble grasping what happened here,” Fantini encouraged the MIT forum attendees. He likened Mar-ket Basket to a revered house in a strong community that had come under threat. Fantini included himself in that Market Basket house, because his own family’s 112-year-old business, Fantini Bakery in Haverhill, began to grow significantly as a result of becoming a Market Basket vendor in the early 1960s. In the late ’70s, the Market Basket management team at the time even helped save the bakery when its very existence came un-der threat.

“Market Basket held the fate of my family in its hand,” Fantini told the MIT gathering. “They could have said, ‘You’re a weak supplier. You’re contract-ing instead of growing with us. … There are others who offer what you do.’ But they made a decision … to keep [Fantini Bakery as a vendor] because they were loyal to [my father] … .”

As a result, Fantini revealed, he’s nev-er regarded himself to be only a vendor of Market Basket. “I’ve considered my-self a part of the Market Basket family,” he added, “and I’m a major stakeholder in what this company means – not just

to my family, but my neighbors’ fami-lies, and everybody else around me.”

Fantini referred to the employee movement a generation later to save the Market Basket family. “This family, in-cluding the [current] ‘meh’ generation, who didn’t really care about the house, suddenly woke up and realized what

they had in their home,” he said.Fantini was not surprised, he said,

that most of Market Basket’s 2 million customers supported the employee movement. What he did not expect, he said, was the “overwhelmingly great” re-sponse by shoppers to the protest. “Cus-

13

“I’m a major stakeholder in what this company means – not just to my family, but my neighbors’

families, and everybody else around me.” — Jim Fantini, principal, Fantini Bakery

Continued on page 14

MIT Professor Thomas Kochan (standing) addresses the audience during the Sept. 25 “Lessons From Market Basket” forum at MIT, which included Market Basket managers, seated in the first two rows. Seated behind Kochan are members of the first panel discussion.

Moderator Curt Nickisch of WBUR (far left) converses with Christopher Mackin (second from left), CEO of Ownership Associates. Also shown are MIT professors Deborah Ancona (second from right) and Robert McKersie (far right).

14

tomers were saying to us, ‘Go back to work. We’ve got this for you. Go back to protect yourselves,’” Fantini recalled. “And they meant it.”

There was, according to Fantini, “no planning” behind the Market Basket employee movement to restore Arthur T. as CEO. The initiative stemmed from “a reactive, instinctive nature to protect this family and this culture,” he said.

“The last guy Arthur S. wanted to sell

to, in the whole world, was Artie T.,” ob-served Mark Lemieux, director of Mar-ket Basket’s Londonderry, New Hamp-shire, store. “And we made him do it!”

Mark Owens, director of the Stratham, New Hampshire, store, has

worked for 34 years at Market Basket. Often during the protest, he said, people asked him why he risked his job to sup-port the protest.

“I think what people don’t get is, my job was gone – my job was never going to be the same,” Owens explained. “We

would never be paid as well [as manag-ers], we would never have employees who were paid as well, and we would never have our profit-sharing if the oth-er side got their way. It was going to be [more] revenue to shareholders. I didn’t risk my job – my job was over the day [Arthur S.] took over.”

A Union of TrustMarket Basket’s tight-knit and fairly

unique management-employee culture made for interesting moments during the nine-week protest. Store directors often found themselves caught between the proverbial rock and a hard place.

While Chris Sturzo, director of the Market Basket in Rochester, New Hampshire, tried to keep his store open for business during the protest, he also supported the employee movement that

“I think what people don’t get is, my job was gone – my job was never going to be the same. … I didn’t

risk my job – my job was over the day [Arthur S.] took over.” — Mark Owens, Market Basket store director

Moderator Curt Nickisch of WBUR (standing, far left) converses with Chris Sturzo, (seated, far left), director of Market Basket’s Rochester, N.H., store. Also shown seated, left to right, are: Mark Lemieux, director of Market Basket’s Londonderry, N.H., store; Cindy Whalen, director of Market Basket’s Epping, N.H., store; Mark Owens, director of Market Basket’s Stratham, N.H., store; and Jim Fantini, principal of Fantini Bakery in Haverhill.

Continued from page 13

15

urged customers to stay away. There were moments when he had to tell part-time workers there were no shifts for them.

Despite the inherent conflicts Sturzo faced, he said, he sought to keep team spirits high. “Me staying positive really helped the rest of the crew,” he said. “I was like a big cheerleader every day, say-ing, ‘Listen, we’re going to get through this thing. Don’t worry what the papers say – just focus. Artie T. won’t let us down.’”

For nearly six weeks, Sturzo recalled, most of Market Basket’s customers shopped at competitors’ stores.

“The competition had [those custom-ers] in their hands,” he observed. “They didn’t do anything to keep them.” Un-like the competition’s staff, he noted, the Market Basket family connects with its customers. Referring to competitors, he added, “There’s a huge disconnect. They didn’t take care of [Market Bas-ket’s customers], they didn’t lower their prices [and] they didn’t do the customer service that we do.”

Owens, of the Stratham store, reported that 95 percent of his customer stopped shopping at his store during the pro-test. “I don’t know how anybody gets 95 percent of people to do anything,” he declared. When the Stratham store re-opened once the protest ended, he re-called, 70 percent of its non-perishable groceries were still on the shelves. Be-cause customers returned post-haste and en masse, he added, “That lasted about a day.”

Sturzo gave a heartfelt tip of the Mar-ket Basket hat to the chain’s customers, who paid out of pocket and experienced inconvenience and disruption. “And when they came back, we couldn’t be-lieve how happy they were. We knew they were happy, but they were really happy!”

An earlier panel of the MIT forum fo-cused on the implications of the Market Basket movement for organized labor. During the final, impromptu panel ses-sion, Sturzo recalled thinking to himself at the time, “We don’t need unions at Market Basket.”

“But you know what?” Sturzo added quickly, “We actually have a union at Market Basket. It’s a union of trust. We

trust Artie T., and I think that’s what got us through this. He never led us down a wrong road, and that’s how we pre-vailed.”

‘We’re the Exception’Marshall Ganz, professor at Harvard

University’s John F. Kennedy School of Government, was one of the several other panelists during the forum. Be-cause he spent many years as a union or-ganizer, he brought both academic and labor perspectives to the discussion.

For Ganz, the real lesson to be learned from the Market Basket case has to with control. As he sees it, too many American business leaders are fixated on maintaining control at the expense of

alienating their workers.When, under leaders such as Arthur

T., “control is not the issue,” Ganz not-ed, a business has distributed autonomy and interdependence throughout its operations. When, under leaders such as Arthur S., “it’s all about my control over you, that’s where you have the real fight,” he continued. “And then the union comes along and says, ‘No, you can’t have control over us – we’re hu-man beings. And so you have to make us partners – deal with us.’

“In most other countries,” Ganz con-cluded, there is “a combination of pub-lic and private arrangements that enable unions to enter into much more of a partnership relationship with employers and with the public. That’s not the case here [in the U.S.]. And so we’re the ex-ception.” ■

To watch the “Lessons from Market Bas-ket” forum on Sept. 25 at MIT, visit webcast.amps.ms.mit.edu/fall2014/Sloan/25Sep.

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Cindy Whalen, director of Market Basket’s Epping, N.H., store, responds to a question from the moderator.

“The last guy Arthur S. wanted to sell to, in the

whole world, was Artie T. And we made him do it!”

— Mark Lemieux,

Market Basket store director

16

FBA Awards

2014 Acknowledging the

Best Among Us

Community Excellence Award: The Dover Rug Company Inc. Pictured, Hasan Jafri and Ali Jafri.

Small Business Award: MacNeill Engineering. Pictured, Mark MacNeill and Harris MacNeill.

17

By Christina P. O’Neill

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W ith nearly 400 people in at-tendance, on Oct. 23 at the Royal Sonesta Boston, the

Family Business Association of Mas-sachusetts celebrated deserving fam-ily businesses from across the region for their tremendous accomplishments. Congratulations to all the winners!

The Family Business Awards for 2014 were presented to the following compa-nies:

Small Business AwardMacNeill Engineering, founded in

1931 by a stockbroker who had become unemployed after the Crash, the com-pany rummaged discarded equipment and began seeking work. During World War II the company made parts for the newly-invented radar system, along with tank parts and machinery for bullet cast-ings. It diversified into an alliance with Wilson Sporting goods, creating a more durable golf spike, and has gone on to create many sports products since.

Mid-Sized Business AwardStavis Seafoods Inc. Under leadership

of the third generation, the company has quintupled in size both physically and financially. It has become one of the first seafood distributors to develop a company-wide sustainability statement educating consumers about seafood sus-tainability and what the company does to support it.

Large Business AwardWinston Flowers, founded in 1944,

has a worldwide presence and is a well-known supporter of the nonprofit orga-nizations of New England, contributing donations approaching $1 million annu-ally.

Endurance AwardPresented to a company with an illus-

trated ability to overcome adversity, this year’s winner of the Endurance Award was DirtyGirl Disposal Inc., a Millbury-based company founded in 2009, a waste-hauling company empowering women to

Endurance Award: DirtyGirl Disposal Inc. Pictured: Katherine Fairbanks (second from left) and her three children, Megan (left), Rachel and Jared Carlson.

Continued on page 18

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Continued from page 17

work as commercial truck drivers. A brain-child of Katherine Fairbanks, president and CEO of Millbury Rubbish Removal, the new company started off slowly, but in 2013, tripled its previous-year revenues. Katherine’s three children assist with day-to-day operations of both companies.

First-Generation AwardWineland-Thomson Adventures is an

adventure travel business. Its mission is to improve local communities and to allow its guests to connect with Tanzania’s cultural heritage, with the least impact on water consumption and the most eco-friendly impact on the local landscape.

Margery Piercey (left) of Wolf & Company with Donna Kelleher, CEO, Next Generation Children’s Centers.

Large Business Award: Winston Flowers. Pictured, Theodore Winston and David Winston.

Bernie Rubin (facing camera) of Bernie & Phyl’s Furniture accepting the Comcast Spotlight Award.

Generation Award: Wineland-Thomson Adventures Inc. Pictured, from left: Judi Wineland, Nicole Wineland-Thomson, and Rick Thomson.

Medium Business Award: Stavis Seafoods Inc. Pictured, from left: Jacob Stavis, Emily Stavis, Amanda Stavis, and their father, Richard Stavis.

18

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Continued on page 20

Renowned FOCUS

©2014 wilmington Trust Corporation and its affiliates. All rights reserved.

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For more than a century, we’ve guided business owners as they focus on the future and secure their legacies.

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WBZ’s David Wade served as moderator. Family Business Advocacy Award: Cape Cod Magazine. Pictured: Publisher Robert Viamari.

Leo Vercollone, CEO of VERC Enterprises, served as keynote speaker.

19

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Community Excellence AwardFounded in 1989, The Dover Rug

Company supports more than 50 lo-cal, national and international charitable organizations. For the past 20 years, its outreach program has taught thousands of elementary school students the art and history of rug-making. The company has been the recipient of many industry awards.

Marketing Excellence Award

Named in honor of Ed Tarlow, FBA founding director, the Ed Tarlow Mar-keting Excellence Award for unique mar-keting creativity was awarded to Johnny Cupcakes Inc. Despite the name, Johnny Cupcakes is a T-shirt company, which be-gan in 2002 when John Earle started sell-ing limited-edition T shirts from the back of his car. Since then, he has opened five retail locations, a warehouse and an online retail presence. The company’s approach to family business is similarly unique – Earle employs his parents, his sister and his cousin.

Comcast Spotlight Hall of Fame Award

Awarded annually at the discretion of the FBA’s board of directors in recogni-tion of longevity, excellence and achieve-ments, the 2014 recipient was Bernie & Phyl’s Furniture. Started by the Rubin family in 1983, Bernie & Phyl’s has grown from a small storefront into one of the most successful furniture retailers in New England with eight stores in Massachu-setts, New Hampshire and Rhode Island.

Regional Family Business Advocacy Award

Awarded at the discretion of the board of directors to an exemplary supporter of family business for continued assistance to and education of family businesses, this year’s recipient was Cape Cod Plymouth Business Magazine. Cape & Plymouth Business is the only monthly business publication serving Cape Cod, the Islands, Plymouth County and the South Shore in Massachusetts. ■

Family-owned businesses have the opportunity to learn business les-sons from the battle over the Mar-

ket Basket chain, which threatened to bring a $4.6 billion grocery store business to its knees. The conflict, though now re-solved, should serve as a cautionary tale, prompting family business owners to grasp that business risk extends into qual-itative factors and extend well beyond quantitative numbers.

Family business owners need to devel-op a comprehensive business analysis that looks beyond the financial statements to identify possible non-financial business risks that could impact ongoing opera-tions. Even a company that has great fi-nancials can stumble if it fails to recog-nize areas of vulnerability that aren’t easily quantified.

In the Demoulas family battle, for ex-ample, these non-financial factors started at the top, with the company’s CEO, Ar-thur T. Demoulas. His removal resulted in labor unrest, interruption in the ven-dor supply chain, and customers who began to shop elsewhere, all with the po-tential to put a successful company into bankruptcy.

From an internal perspective, a fami-ly-owned business should recognize the need to evaluate and understand the im-pact of qualitative business risk factors. Factors including dependency on key management, dependency on key vendors and reliance on a particular customer or customers can dramatically, and almost overnight, affect the company’s value.

From a business valuation perspective, historical and prospective financial state-ments are relatively black and white – but the ability to understand the impact and risk associated with key business driv-ers poses the real challenge. If a business owner thinks that there is no company without him or her, this should be a big

warning flag as to the sustainability of company value.

This can also lead to the risk that per-sonnel issues can overwhelm business considerations. Failure to keep family an-tagonisms out of day-to-day or long-term

decision-making can undermine even the best financials. Company image, personal good will, management style and site lo-cation also play a qualitative role in deter-mining a company’s value.

By Marc Bello

Is Your Company at Risk?

Beyond The Numbers

Take-Away Lessons from the Market Basket Saga

21

Continued on page 22

22

Protecting Longevity What can a family-owned business do to

help protect a company’s longevity? De-velop a plan that can identify and address qualitative business risk by addressing three items. First, establish an organization chart, look at roles and responsibilities of each po-sition, and develop a contingency plan if an individual were to depart the company. Sec-ond, when evaluating suppliers, look at the marketplace, understand where and how to obtain product and a backup plan if some-thing happens to a current vendor. Third, evaluate your customer base. Determine if there is a dependency on a key customer, the demand for your product and service

and develop a strategy to branch out to ex-pand your customer base.

Sometimes a company that faces adver-sity and rises to the challenge may end up

in a better place. Only time will tell how the resolution of the Market Basket crisis will affect the company’s long-term viability. But what has been proven is the company’s loyal following, which may attract new cus-tomers.

In conclusion, it is important to consider

all risk factors, which include not only capi-tal management, but also reliance on key vendors and diversification in the customer base. From very small to very large, family-

run businesses with a strong business plan can incorporate these non-qualitative fac-tors to positively impact financial results and company value. ■

MARC BELLO, CPA, IS A PARTNER AT THE BOSTON

ACCOUNTING FIRM EDELSTEIN & COMPANY LLP.

Edward D. Tarlow, Esq.Chairman, Family Business Practice

etarlow@tbhr-law.com617.218.2000, x2011

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