WINNING ACCEPTANCE AS THE OUTSIDE CHIEF By JOANN S. LUBLIN Staff Reporter of THE WALL STREET JOURNAL Want to run Jones Widgets, a well-established, thriving enterprise? It sounds like a dream job. But the dream could turn into a nightmare. The reason: Jones Widgets is family owned ... and no Joneses dwell in your family tree. As major corporate layoffs persist, many veterans of big companies are making that risky move, becoming the nonfamily leader of one of America's 12 million family businesses. It's a role fraught with unforeseen minefields that can badly damage an experienced corporate executive's career. Those who fail "are too presumptive and too naive about the dynamics and the emotions of family business that are so different from corporate life," says William T. O'Hara, executive director of the Institute for Family Enterprise at Bryant College in Smithfield, R.I. Certain steps may enhance your chances to succeed as the unrelated chief executive. For starters, know what you're getting into before you accept an offer. Figure out the core values, ownership structure, informal decision-making mechanisms (such as Sunday family dinners) and the most powerful players among family-member shareholders. "If you like the business but hate the family, stay away," advises Dean Rubin, 50, president and chief executive of Rose Displays, a family-owned provider of sign-hanging hardware in Salem, Mass. Before he became its first nonfamily chief four years ago, the executive concluded he could work well with three relatives who held 60% of the company's shares. Mr. Rubin succeeded the founder's stepson after the pair clashed. Extra due diligence will give you a clear picture. Grill customers, suppliers and veteran insiders unrelated to the owners about long-simmering rivalries that may prompt siblings to throw things at each other in the office. Request both the corporate balance sheets and the controlling family's personal financial plans. Easier said than done. Two years ago, a $75 million New England maker of industrial products lost an attractive CEO prospect employed by a multibillion-dollar corporation because family members refused to share financial statements until he took the top job. "They called me up all upset saying, 'Why did he want that?' " recalls Tom Sherwin, head of consultants CEO Resources in Framingham, Mass. "They never showed those numbers to anybody." You'll also need a firm understanding -- preferably in writing -- of your expected duties. During one pre-employment meeting, the seven family members with stakes in Rose Displays promised Mr. Rubin complete authority to make decisions. "Will you truly let go?" he remembers asking them. "I went around the room and they all said, 'Yeah. Yeah. Yeah.'" Try to get written into your employment contract exactly what the anticipated timetable and rewards are for reaching certain goals, such as fixing sluggish deliveries or mentoring the family's younger generation. Unfortunately, small family businesses often don't operate so formally. Two second-generation owners of a $20 million maker of medical-device components forced out their unrelated chief operating officer last year because they opposed his proposed growth strategy. Yet the brothers had told the outsider they favored the approach when they hired him with a handshake in 1998. "The more objective the engagement can be made, in terms of having tangible and written goals and being time bound, the better," the 55-year-old ousted operating chief says. "In retrospect, I was very naïve." He spent a year looking for another full-time job. He presently is an operations manager for a big, publicly held company. The appointment of independent board members represents another way to increase your odds of success. After she took charge of Litecontrol in 1999, Veda Ferlazzo Clark recruited a financial expert, a customer's representative and some other outside directors with help from Bob Danforth, a founder's son and the chairman of the family-controlled maker of specialty fluorescent lighting in Hanson, Mass. Under her leadership, the board also began holding formal meetings where top management presents its detailed annual operating plans. Ms. Clark, 49, believes these good-governance practices give her unusually broad powers for a president and CEO of a family-controlled enterprise. "We have a capital budget and I don't have to ask for the money,'' she reports. "I don't feel constrained by the family.'' Still, the executive wishes she enjoyed closer ties with Mr. Danforth's four adult daughters. His family owns two-thirds of Litecontrol, which is moving toward full employee ownership. "It would be the fool who doesn't engage the family on a regular basis," concurs Mr. Rubin of Rose Displays. Earlier this year, for instance, he stayed late one night to e-mail key family members about a lawsuit filed against the concern that day. "It was a fairly detailed message," he recollects. The most common reply? "Do what you've got to do. We trust you." Derby Management 399 Boylston Street, Boston, MA 02116 Tel: 617-292-7420