Trust in next generation is key in family business

The key to a successful multigenerational business starts with trusting the next generation.

That theme emerged from a series of panels with family-run auto retailers at the Automotive News Retail Forum: NADA.

"It can't be 'I'm really smart and you're an idiot,'?" said John Bergstrom, CEO of Bergstrom Automotive Group in Neenah, Wis. "The relationship Tim and I have is very much mutual respect."

John's son, Tim Bergstrom, is COO of Bergstrom Automotive. Tim oversees day-to-day operations and digital strategy, while John handles much of the corporate legal and financial responsibility.

As the elder Bergstrom transitions his 30-store dealership group to the next generation, he said, he has worked with his son on securing the company's financial future, establishing a culture of caring and mutual respect and giving the next generation space to grow their leadership skills.

"I believe that if you're really going to get this done in a way that can continue in the future, you have to pull back" so future leaders gain experience and practice, Bergstrom said.

It is a sentiment shared by Don Flow, CEO of Flow Automotive Cos. of Winston-Salem, N.C. "Each generation's going to be different, and the worst thing you can do is make someone [be] like me," Flow said.

Flow's son, Eric, is the retail group's president of management services, overseeing operations such as marketing, software and IT systems and the group's subscription program.

"Every generation is going to have a different level of experience and a different level of capacity," the younger Flow said.

Flow Automotive has several principals for a successful multigeneration business. For one, family members can choose to join the business but are not pushed into it. Pressure sometimes leads to resentment.

But once they are part of the business, an incoming family member is given the opportunity to link responsibility, authority and accountability together at a young age to build a sense of ownership and gain confidence.

Don Flow was 27 when his father named him general manager, and Eric Flow was sent at a young age to the "worst dealership we had" to be the service manager, the elder Flow said.

A key to generational transitions — not just for family but for any team member overseeing store operations — is to give the individual responsibility without losing control of the business.

Eric Flow said the company has a saying that contrasts running out of gas in a car with running out of gas in an airplane. The metaphor pertains to the elder Flow wanting store managers to take risks and to know that they can make mistakes. They could make decisions that involve consequences that equate to running out of gas in a car. "If it's a decision where you might run out of gas in an airplane, it means you talk to him," Eric Flow said.

Mike Maroone, CEO of Maroone USA, said that decisions at his retail group are not made unilaterally. He said he consults with the group's business partners that own equity in the enterprise, the store managers, and his two key executives — COO William Knowles, his son-in-law, and CFO John Hoctor, Maroone's nephew.

"There's no major decision that's made without all of us getting on the same page," Maroone said. "It's a little slower than just [me] making a decision, but I think we make better decisions this way."

Maroone came out of retirement in 2017 after nearly two decades at AutoNation, when he bought four dealerships in Colorado Springs, Colo., from Serra Automotive Inc. of Grand Blanc, Mich.

Family members Maroone, Knowles and Hoctor have an "eight-day-a-week conversation," Maroone said.

Knowles said one thing he has learned from working with Maroone is the importance of "culture" — a sometimes vague term but one that is crucial to a successful business. "I don't think you need to over-complicate culture," he said. "It's how you treat people."

Hoctor said he has learned "intense persistence" from Maroone.

"One of the things that probably made him successful through all the AutoNation years, and now continues to help make us successful, is his persistence on anything he views as important," Hoctor said.

Maroone is himself a second-generation retailer who first entered the business working with his father. Maroone recalled that his father also knew how to relinquish his firm control when the time came.

Said Maroone: "He backed off from a very active operator role to a mentor role."