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Family Values

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Back in the go-go 1990s, when corporate CEOs had personal sushi chefs, private limousines and Italian leather couches shaped like baseball gloves, the Mars brothers stood out. Forrest Jr. and John would fly coach to business appointments, take cabs and carry their own luggage. One brother (it has never been revealed which one) even learned needlepoint so he'd have something to do while waiting in airports.

As leaders of one of the world's largest candy manufacturers, with annual sales of roughly $15 billion, they could afford to live the high life. Instead, they continue to insist on a business environment of frugality and accountability. They even have to punch in on time like everyone else. Due to the family's eccentric ways, the McLean, Va., company (run by John and sister Jacqueline since Forrest Jr.'s retirement in 1999) has earned the nickname "The Planet Mars"—a chapter heading in Joel Glenn Brenner's book The Emperors of Chocolate.

They don't seem so out of touch these days. Lavish excess and rapacious behavior in the business world—perpetrated on a scale not seen in America since the days of the robber barons a century ago—have damaged consumer trust. And in the new environment, analysts say, family-owned and family-run businesses, which tend to be regarded as more old-fashioned and ethical, are well-positioned to reap the rewards.

"We do know from long-standing research that family businesses are perceived in the marketplace as being of higher quality and more trustworthy," says John Ward, professor of family enterprise at Northwestern University's Kellogg School of Management. "They are increasingly confident and willing to advertise themselves as family businesses. Now is as good a time as any for this message."

Not that being family-run is always an indicator of moral virtue. (Witness Adelphia Communications, which was mired in scandal last year over allegations of greed and abuse of power on the part of John J. Rigas and his two sons.) Nor is it necessarily a boon to the business itself. Families are often accused of holding power too closely at their companies, preventing risk-taking and innovation. And their privileged, often reclusive lives can be far removed from the world of the consumer. For example, one former creative at Backer Spielvogel Bates tells a story about using "Satisfaction" by the Rolling Stones in an ad for Mars in the 1980s, only to be met with disdain at the client. It turned out Forrest had never heard of the song.

But in many ways, families appear more accountable to consumers. Their name is on their products, giving them more of a tangible personal stake in the company's performance. And individual family members are more likely to stay with the business for life, building a heritage that can ring true with a public that considers family values to be a cornerstone of American life.

"Family-owned businesses are very good and very consistent about the way in which they define and display their values. They are personal commitments," says Andrew Robertson, president of BBDO Worldwide and CEO of BBDO North America, whose clients include Mars (founded in 1922 by Frank Mars, the grandfather of the current owners) and Wrigley (founded in 1891 by William Wrigley Jr. and run today by his great-grandson, who shares his name).

Those personal commitments appear to have protected family businesses somewhat in the recent climate of scandal. S.C. Johnson, the packaged-goods maker that was founded in 1886 by Samuel Curtis Johnson and is now run by the fifth generation of Johnsons, commissioned a study last June on consumer trust in corporations. In the study, fielded by Benenson Strategy Group of Princeton, N.J., 62 percent of respondents said their level of trust in large family-owned companies had remained the same after the corporate scandals, while only 24 percent said it had declined. Conversely, just 33 percent of respondents said their level of trust in public companies was the same, while 61 percent said it had declined.

Given those figures, and under the right circumstances, companies should treat their family-owned or family-run status as a marketing asset, business experts say.

Some are already doing so. S.C. Johnson, whose products include Raid, Pledge, Drano and Ziploc, unveiled an ad campaign in November 2001 that featured family members, and extended it this past November. Ford Motor Co. launched a family campaign last February, and it too expects to extend the theme, including a commercial tied to its centennial this June. E&J Gallo Winery has introduced the Gallo family's next generation in recent ads. And while it is not putting the family front and center these days, Hallmark, which used founder Joyce Hall in ads in the past, is focusing on its heritage, including the 51-year-old Hallmark Hall of Fame.

The benefits of such a strategy are clear. "Consumers believe there is a higher quality-control element at a family-owned company because the owner has a sense of pride in the product he is putting out. The owner is not just a hired gun," says Matt Losordo, evp of Rogers Cowan, a New York PR firm and family-owned-business specialist whose clients include S.C. Johnson.

What many of these companies are able to do, Losordo says, is take the kind of grassroots feeling inspired by local merchants and apply it to their larger corporate cultures. If done properly, he says, the core family values can become woven throughout a company's entire communications structure, affecting everything from how it treats its employees to how it services its customers.

Business experts consider S.C. Johnson, based in Racine, Wis., a prime example of this. "Managing the company in a highly ethical way is part of the glue that keeps the family involved in the business and keeps employees and stakeholders really loyal to the family," says John Davis, professor and faculty chair of the families and business program at Harvard Business School.

S.C. Johnson's history of community involvement, charitable activity and warm relations with its employees is well-documented. The company says it began giving 5 percent of pretax profits to charity in 1939, long before most other companies did. It consistently makes Fortune magazine's list of the 100 best companies to work for (currently ranking 29th) and 50 best companies for minorities to work for (currently 37th). And it says one-third of its workers have been with the company for more than 30 years.

Succession issues, which can undo family companies (due to infighting or, in the case of Milwaukee's Schlitz Brewing, lack of interest among the heirs), were settled peacefully at S.C. Johnson. When Sam Johnson, now 74, retired as chairman in 2000, his son H. Fisk Johnson, now 44, took over. The eldest son, Curt, 47, heads JohnsonDiversey, a separate company that provides cleaning-maintenance and hygiene products. One daughter, Helen Johnson-Leipold, 46, runs Johnson Outdoors, a separate recreational-products business. The other, Winifred Johnson Marquart, 43, is president of the Johnson Family Foundation.

Despite its success through the years in cultivating a family culture internally, S.C. Johnson did not publicly promote its family roots until late 1998, when the tagline "A family company" began to appear in commercials and on product packaging. The next step, to put Sam Johnson himself in the ads, was proposed by Helen Johnson-Leipold, who in the 1980s worked at Foote, Cone & Belding, the company's ad agency since 1955.

Rogers Cowan's Losordo says the best strategy in creating such commercials is to link the essence of the family member's personality to his or her ideas about the business. The Sam Johnson ads, which broke in 2001, follow that formula. "In many ways, taking care of one's home is just like taking care of a family, and we've never lost sight of that," Johnson says in one spot.

It's one thing for family members to reinforce trust in good times. It's a taller order for them to try to rebuild trust after a scandal or during a bad patch. Ford, which is not family-owned but is led by William Clay Ford Jr., the 45-year-old great-grandson of Henry Ford, faced this kind of challenge.

After the Ford/Firestone tire scandal, former CEO Jacques Nasser appeared in Ford's ads. But amid other unwelcome business developments, including the loss of market share to General Motors, Bill Ford himself turned up in commercials, aiming to personalize the company.

The "Ford on Ford" campaign, created by J. Walter Thompson, Detroit, the car maker's ad agency of 60 years, featured TV spots in which emotion—including Ford's personal feelings about the company—plays a major role. "If I could have one car for the rest of my life, I would have a red Mustang convertible," he says in one ad.

Some warn that such a strategy can seem transparent. But Janet Pines, worldwide director of strategy and insights at FCB, New York, says it was the right thing to do at Ford. "They really had to rebuild trust," she says. "I understand the strategy, and it makes sense."

The key, says Harvard's Davis, was that Bill Ford came across as believable—that he felt like "the real deal."

It's not a risk-free strategy, however. Suggesting that one's personal and corporate values are the same, as many family businesses do, can backfire if those personal values ever appear to be compromised.

"When there is a problem, there is nowhere to run," says Paul Argenti, professor of management and corporate communication at Dartmouth's Tuck School of Business. "Look at Martha Stewart. You don't want the only source of brand equity to be you."

The Busch family in St. Louis has faced such a dilemma. While they own only about 1 percent of Anheuser-Busch, August A. Busch III and his son, August A. Busch IV, are very much the public face of the business. Busch IV, 38, has played a crucial role in helping develop the company's award-winning advertising—created primarily by DDB, Chicago, and Goodby, Silverstein & Partners, San Francisco—and has appeared in Budweiser's "Heritage" campaign.

But back in 1983, when he was in college in Arizona, Busch was involved in a car accident in which a woman died. He has denied alcohol was involved, and he was never charged with a crime. But incidents like these can damage a family-run business, and Busch IV did the right thing, most experts say, by addressing the issue directly.

"That's a chapter that's never gone, that I will always remember," he told BusinessWeek recently. "But I honestly believe that, as painful as that memory is, that experience will make me a better keeper of responsibility for our products."

"It is much better to come clean and own up to your foibles and demonstrate some humility," Harvard's Davis says. "That is the way you deal with it. You own it."

Mark Rozeen, svp and director of research at New York PR firm Golin/Harris, agrees. "Precisely because family businesses rely heavily upon trust, it is even more imperative to not only stand up and assume responsibility but to manage the process honestly, straightforwardly and openly," he says.

Sam Johnson did so without being asked. In 1998, he decided to take the same trip to Brazil that his father took some 63 years earlier to find the Carnauba palm tree, which provided the key ingredient in Johnson's Wax. The adventure was captured on film, and in one of the interviews in the finished documentary, Johnson speaks candidly about his problem with alcohol and his sometimes strained relationship with his father. The movie was shown to S.C. Johnson employees two years ago, and it aired this past December on the Hallmark Channel. Rather than causing a scandal, it prompted messages of sympathy and thanks from the public, say S.C. Johnson executives. The project was never meant as a marketing vehicle, but it managed to "express the humanism and humanity of the organization," Northwestern's Ward says.

Even if they don't appear in their own advertising, many top executives at family-run businesses are heavily involved in developing the strategy. Don Hall Jr., 47, the chairman of Hallmark, for example, is not comfortable in front of the camera but is a constant presence behind it. And he has instituted some unusual marketing procedures at Hallmark that he learned from Leo Burnett, Chicago, the company's agency for the past 14 years.

Six years ago, when Hall was chief creative officer of Hallmark, he asked Cheryl Berman, chairman and chief creative officer at Burnett, if he could work on another Burnett account to learn more about advertising. His ensuing creative assignment was to sell the craving for McDonald's french fries, with Burnett's creative-review committee critiquing the work.

It was a tricky situation for Berman. "I was wondering, What if I really hate what he does, would I be tough on it?" Berman recalls. "I was tough on him, but the spot he did was pretty good."

Hall remembers what he learned from the experience. "I was enlightened to the way the agency deploys talent and approaches business problems," he says. The result: Hall installed his own creative review committee at Hallmark that critiques all company ads.

The involvement is also intense, to say the least, at Gallo. No advertising gets the final nod until it goes through the dreaded "boardroom presentation." During the two-hour drive from the San Francisco airport to Modesto, Calif., agency creatives have plenty of time to think about the scene awaiting them, in which family patriarch Ernest Gallo gathers all the winery's marketing personnel together and instructs them to voice their opinions.

Tom Bedecarré, CEO of AKQA, recalls presenting launch ads for Gossamer Bay wine in the '90s. Albion Fenderson, Ernest Gallo's close adviser and evp of marketing at the time, endorsed the younger, hipper, edgier approach the the agency was presenting.

"If we don't produce this, I would feel so bad about it I would want to shoot myself," Fenderson told Gallo.

"Do you want to borrow my gun?" Ernest replied.

"It was like Nero. Thumbs up or thumbs down," Bedecarré says. "Ernest is the boss, the board and the corporate culture rolled into one. But we always prefer an entrepreneur decision maker at the top rather than a marketing director trying to second-guess the CEO. You may not have agreed, but you knew what he wanted or didn't want."

Gallo, who will turn 94 next month (his brother Julio died in 1993), is still heavily involved in the company's decision making. After moving away from putting family members in his ads, he has returned to that strategy, with a focus on the third generation. Chief winemaker Gina Gallo, 35, appears in the company's latest work, from London agency Mountainview, which emphasizes the award-winning Gallo of Sonoma brand. And Gina has become something of a wine icon in the process. "I share my grandfather Julio's two biggest passions: family and our family's wine business," she says about her work.

Fundamentally, it may be that passion, passed through the generations, that gives family-owned and family-run businesses an edge. "When our consumers learned we were a family company, it reinforced all those things you look for regarding your product, like consumer trust and loyalty," says Cynthia Georgeson, an S.C. Johnson representative.

But it's more than that, too. It has to do with the kind of vision and dedication that only familial bonds inspire. As Georgeson says, "We are making decisions for the next generation, not the next quarter."