In a Cousin Consortium, each stockholder must be educated and involved in the decision-making process in order to maintain harmony and avoid conflict. Listen to the Darleys as they explain how they keep their 3rd generation cousin consortium running smoothly through mutual respect and transparency.
In my opinion it is very important that the ownership structure mirror the management structure of the business and because of that we are what is known today as a cousin consortium. So a cousin consortium basically is a term that is used in family businesses generally in a third generation, sometimes in a second-generation business, where there is a number of different cousins who have ownership in the business. As the company continues to grow, and more cousins get added, you know, the ownership and the management continue to get more complex. Today our company is primary owned by the third generation, there are sixteen stockholders of the third generation, nine of whom work in the business.
In order to make sure that they are properly represented, you have to have a transparency, you have to have consensus building in your decision-making, you know, an autocratic style of a single President and CEO making decisions in a family business with such diverse family ownership just simply does not work today. In my opinion, a cousin consortium comes very naturally if the ownership is somewhat equally divided.
As you get into those, you know, very diluted type of ownership structures you really need to educate and involve in your decision-making process what is going on in the business if you want to keep harmony. It is really important that you have a management style and a board of directors that is incredibly transparent and that really allows everyone in that generation to have a seat at the table, or a say in what is going on in the business, and buy-in as you move forward.
My father ran the business for forty years and he ran it all by himself, which is much different than how the company is run today.
The company was very profitable under his reigns. A lot of the growth, that really came later. The stock was held in four people’s hands while he was president of the company, there did not seem to be a lot of drive for growth as there was plenty of company profit for the four shareholders at the time.
We realized early on that if we wanted to have the same type of lifestyle that our parents enjoyed that we needed to you know, grow this pie, or grow this business in order to allow there to be enough food for all the horses at the trough. And my father was very cognizant of that as well, and one of the things he did is in about 1980 he set up different divisions in the company so that each family member coming into the business would have a place where they could go and they could shine and they could, you know, have their own area of the business to grow.
The way the company is structured we have so many different areas that people can work very independently and work together as a team, but I think it helps minimize some of the conflicts.
Because the company is diversified, we have been able to make decisions which are based on mutual respect for each other, allowing people in their respective divisions to make decisions where needs be and to allow the major decisions to come down to consensus opinion on a lot of the issues.
So it is really critical that there is transparency and that everyone has an opportunity to be heard and to voice their opinions and then collectively, we certainly disagree at times, but we will do that somewhat behind closed doors, and then we will come in to our very professional board of directors, united as a group, having aired all of our differences and get their guidance and thoughts as we move forward.
Now in our generation, we also realize that there is sixteen in the third generation, there is already thirty-four coming up in the fourth generation, four of whom already work for the company. So we are really trying to run the business as a very professional business. We realize that as a family most of our wealth and most of our income on an annual basis comes from this business, and everyone really works well together and that is just not lip service. And it is based on the foundations and the values that were instilled in us as young kids by the second generation and we are hoping to do the same with the fourth generation.