Behind Every Good Woman is Another Good Woman October 2024
“Dominated by male heirs for several generations, the Vollrath Company is now owned by women who are committed to safeguarding — and building upon — a family legacy from which they once felt disconnected.”
“Jacob J. Vollrath founded the firm, originally called Sheboygan Cast Steel Company, a century and a half ago. The men of the family led the company for generations after its founding, but since 2016 the multinational family firm has been women-owned and directed, and ably assisted by a non-family chief executive officer and senior executives of all genders.”
“Back in 1874, rapid advances in industrialization made mass production efficient and profitable. Sheboygan Cast Steel carved out a niche producing railroad equipment, small cast parts for the furniture industry, cooking ranges and agricultural implements. A few years earlier, Jacob’s granddaughter Lillie (daughter of his son Andrew), had married John Michael Kohler, co-founder of the eponymous plumbing fixtures and faucets company that still bears his name.”
“Lillie died in 1883, leaving behind six children. Four years later, John married Lillie’s younger sister Minnie. This sequence of marriages established a link between the Kohler and Vollrath families, weaving a complex tapestry of family dynamics and business decisions that would influence the company’s trajectory for generations.”
“With the baby business booming in the extended Vollrath household, the direction of the firm also was changing. By 1900, the family decided to focus exclusively on cookware in its many forms, and the rest, in terms of dominant market niche, is history. The family story, of course, is a bit more complicated.”
Why Is Vollrath Owned by Kohlers?
“Until the 1930s, Lillie’s descendants headed the Kohler Company, not the Vollrath Company. But after Walter Kohler Jr. (grandson of Lillie and John Michael) returned from distinguished service in World War II, it was clear that there were no leadership opportunities for him within the Kohler Company, then controlled by his uncle.”
“Walter Jr. divested his shares in Kohler and acquired all outstanding shares in Vollrath, reclaiming his generational Vollrath heritage and doubling the profits along the way.”
“As the Vollrath Company transitioned through generations, Kohler men sought to carve out their own distinct paths. Terry Kohler, Jacob J. Vollrath’s great-great-grandson, steered the company as CEO for a decade. His tenure was marked by dedication, but his deep passion for sailing eventually led him to pursue new ventures. Terry left the firm to own and operate North Sails, a leading sailmaker, marking the first time that the Vollrath Company would be helmed by professional managers rather than family members.”
“Terry had hoped his three daughters — Leslie, Michelle, and Danielle — would “marry well,” bringing a suitable male successor into the fold. It didn’t happen, and the Vollrath legacy and the Kohler name were left in the hands of his daughters. Their late introduction to the responsibilities of ownership, shaped by their father’s closely held approach, posed unique challenges and a steep learning curve. It also instilled a determination to improve stewardship of the family firm.”
Transitioning to an Independent Board
“Terry’s assumption that his daughters would marry well meant that, effectively, he had no real succession plan. When he pointed his sails elsewhere, it was time to seek a new solution. Enter Paul Bartelt, the first non-family CEO of Vollrath.”
“I looked past the status quo and started to understand how the ‘business of the family’ could impact the ‘business of the business,’ realizing that the lack of planning could result in quite the dumpster fire,” Paul says.”
“It takes time to develop effective generational shareholder education, independent fiduciary board best practices, coherent generational planning, transparent setting of shareholder expectations, integrating long term family objectives with business objectives, and so on,” he notes.”
“The list is long,” Paul says with a laugh, “but with the patriarch not wanting to change, there really wasn’t going to be much traction. Terry essentially said, ‘You guys will need to figure it out when I’m gone.’”
“Succession planning in a mid-market company is always a challenge because talent isn’t going to sit around for years waiting for elevation to the next level, Paul counsels. One of the downsides of the culture we have built at Vollrath, if you can call it that, is that folks really don’t want to leave, so spots don’t open up as much as they might at other companies.”
G7s Take a G3 Approach
“While. . .non-family senior executives steer the ship at Vollrath, the five owners focus on the culture of the business and the ongoing role of the family.”
“My generation, G7, is effectively G3,” explains Torri. “We are disconnected from the original wealth creator and are grappling with how to continue to build on an existing legacy and connection to a growing enterprise.” For generations, adds her aunt Danielle, women were told that family members are a threat to the business rather than the soul of the enterprise and a unique differentiator.”
“When leadership looks to us for our vision for the future, we are looking back to what our predecessors laid out for us and forward to all the possibility of what we can do as a unified family,” Torri continues. “If one thing unites us across generations, it’s our love for the Sheboygan community. As a next-generation owner, I have a deep commitment to remaining the best employer we can be for all of our people, in all the communities where the Vollrath, Pujadas, and Stoelting family of brands operate. We are looking at a legacy that we are not necessarily a part of, but we now own together — as siblings, as women and as the next generation.”
“How did this change happen? Danielle, Leslie and Michelle, who passed away in 2018, all lived well into their adult lives before ever being schooled as future owners. Terry finally brought his daughters into the fold via the family office/holding company when they were in their forties. Even so, there was a strong objective to insulate the enterprise from the influence of the family.”
“Growing up, we never heard about Vollrath,” Torri says, “but we were quite familiar with North Sails, despite it being a much smaller enterprise. In fact, I never really knew much about Vollrath until we moved from Florida to Wisconsin when I was in high school. We had our very first family meeting in 2008, which ended terribly with most family members swearing off further attempts. But this is where the seed of NextGen education and family involvement started.”
“My attending Stetson [University] as a family enterprise major, kind of accidentally, and getting pulled into [Family Business Magazine’s] Transitions conferences is really what took family engagement from idea to action,” Torri recounts. “We started doing family meetings in earnest as my grandfather aged, and it really began to dawn on us that we needed to figure out what family ownership looked like without him to be the guiding force.”
“For a while, the future owners tried to do this collaboratively with Terry, but he was not particularly interested in grooming anyone. “For the better part of the decade, we were basically biding time to take emotional ownership once Terry passed,” Leslie says. Ownership was split equally among sisters Leslie, Michelle and Danielle. Estate planning turned out fine and went without a hitch, but the cascade of emotional issues and unforeseen unfinished business was quite challenging.”
“Shortly before Michelle was diagnosed with terminal cancer, Leslie and Danielle purchased her shares. Danielle has no children, so once again Vollrath will pass to one branch.”
Building a Foundation Based on Governance Best Practices
“Ownership was transferred via a generation-skipping trust by Walter Jr. to Terry’s three G6 daughters. Fifty years ago, few women held leadership positions in business, and the G6 girls were not encouraged to join the company at any level other than high school internships at lower levels of the company.”
“In the mid-1990s, Danielle started the journey back to her roots in Sheboygan, with regular travel to learn more about the family business and family connections. “During this time,” Danielle remembers, “there were increased opportunities to participate in learning about the family business, financials, all culminating in my sisters and I participating on the Vollrath board of directors. I took as many opportunities as practical to learn more about the family business, connecting with our sales team and executive team.”
“Danielle eventually became chair of the Vollrath board after Terry’s death in 2016. “Discussions of transitions and future management of the family office and Vollrath board began around 2015, and before our father’s passing, I had been designated for the opportunity of taking over the chair position on the Vollrath board, and my sister Leslie to manage as CEO the family corporate office, also known as Windway Capital Corp.”
“One of my first goals after taking the chair position at Vollrath was developing a truly independent board of directors,” Danielle says. “Up until then, it was what I called the ‘friends and family’ board. We now have four independent directors, the CEO and three family directors. It has been quite the journey.”
What About the Future?
“Danielle says, “As we transition to the next generation, we are a small family of shareholders, all of whom participate on both boards, so everyone gets information mostly as first-hand communication.”
“It’s that high level of trust, family values, commitment, and communication that will carry Vollrath forward through the years, the five owners agree. Given their passion — and their ages — the company appears set for another half-century of enlightened ownership by these dedicated and knowledgeable women.”
“And no one knows what the next generation will bring.”[i]
What lesson can we learn from these intelligent and dedicated women? (Refer to italic and underlined print above)
- As the number of family members grows, complexity and conflicts also grow, even more so in blended families.
- Terry, the sailor, had relied on hope rather than planning and it could have sunk the ship.
- A leader who procrastinates the succession planning and is happy to drop the hot potato on those who will inherit the problem is a recipe for disaster.
- Terry hired a professional, non-family member, CEO because he had not prepared the next generation.
- Limited opportunities for all family members to be personally involved in the operations can create conflicts and must be addressed. Criteria for employment, salaries, and roles and responsibilities must be in place early and well documented and communicated.
- Inability to be involved in the day-to-day operations of the business does not have to limit involvement or responsibility for the success of the business and the family if a family office exists (see #9).
- Minimizing any family member’s role in the family enterprise is a bad mistake. The goal should be to help every family member discover their purpose and achieve it even if that purpose is outside the business.
- Do not minimize the history of the family and the family enterprise. Promote it!
- Having a family office in place is a valuable enterprise for educating and involving all family members.
- Not sharing and promoting the family’s history and operations for years can create family conflicts and turmoil.
- Deal with the difficult NOW! Do not avoid conflicts, and do not give up.
- The current generation may be the problem to a successful succession and prosperous future for the business and the family. This is where outside professionals can be valuable (see #13).
- In succession planning it is NOT the legal and financial issues that are a challenge, it is the people and their emotions that cause difficulties, and legal documents CANNOT solve those problems.
- Succession planning should be done sooner than later and should be ongoing.
- A family office and a family business should always have non-family directors who can be completely independent and impartial toward any one family member or group of family members.
- Good communication must be frequent and consistent to build trust, and trust is critical.
Every high-net-worth family is essentially a business and should be structured and treated as a for-profit enterprise. Traditional estate/succession planning that simply divides by the number of heirs is a formula for disaster and destruction of family relationships and the wealth. Equal is not fair! Secrecy leads to mistrust as the Vollrath family learned at their first family meeting. The value of a family office is it offers training, education, communication, involvement, shared values, influence, community involvement, philanthropy, opportunities for all family members to flourish, and purpose if solving the above 16 items are the family’s primary objectives.
[i] Vollrath at 150 by Scott Chase, July 18, 2024, Family Business Magazine, Vollrath at 150 – Family Business Magazine
Kip Kolson is the president of Family Wealth Leadership, a multi-family office and family coaching firm, and author of You Can Have It All; Wealth, Wisdom, and Purpose—Strategies for Creating a Lasting Legacy and Strong Family. You can order your copy at Amazon. Click on the FWL website below to learn how we help families create a legacy, or email kkolson@familywealthleadership.com or call us at 949-468-2000 to arrange a call or meeting to discuss your family’s situation.
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