Hiring Family, Friends, and Clients: Pluses and Pitfalls

Family-owned businesses have played a major role in building the O&P industry from its origins as a trade, with craftsmen making artificial limbs and braces, through its growth into a healthcare profession. In the larger U.S. economic picture, family-owned businesses, including O&P companies, comprise at least 50 percent of all firms, provide more than 50 percent of the employment, and produce over half the gross national product, according to several sources. Co-owning a business with other family members or hiring family members can benefit owners, employees, and the community in ways not readily found elsewhere. "Family business leaders focus on the next generation, not the next quarter," notes the Conway Center for Family Business, Columbus, Ohio. "They tend to embrace strategies that put customers and employees first and emphasize social responsibility." According to various business experts and research studies, family members generally share the same core values and have a strong commitment to the business and to the quality of the products and services that bear the family name. In a united family with strong bonds, the members enjoy a higher level of trust and loyalty toward one another and the business. Family businesses are more likely to keep employees, including family members, on the payroll through tough times, and tend to designate a larger percentage of their profits for community and philanthropic work. Since family business owners often use personal finances and take a pay cut when necessary, family firms may better survive economic storms. Trust, Confidence in Family Trust is the biggest advantage of a family business when good relationships exist, according to Séamus Kennedy, BEng (Mech), CPed , president and co-owner, with his brother Cathal Kennedy, of Hersco Orthotics Labs, Long Island City, New York. "I can implicitly trust Cathal to run the business as I would. He might make different decisions, but his intentions would be correct. And in dealing with money, expense accounts, all sorts of things, it's great to have that trust." He continues, "The second advantage is that each of us can take a complete break from the business and know it's in good hands. We go back every year to Ireland where we grew up, sometimes for several weeks, since our parents are still living. I also go to various trade shows and conferences." "It's easy to develop trust," says Greig Martino, CP , vice president of United Prosthetics, Dorchester, Massachusetts, who operates the practice with his brothers, Paul Martino, CP, and Gary Martino; his sister Mary Martino, who has been the CFO for more than 40 years; and Paul's son Christopher Martino. "You don't have to be worried about who's handling the money or if they're wasting componentry or money." The three brothers and Mary are the third generation and Christopher is the fourth generation in the business, which celebrated its 100th anniversary in 2014. The company was started in 1914 by Philip Martino; his son Joseph Martino, CPO, father of Greig, Paul, Gary, and Mary, carried it forward. In 1972, United Limb and Brace was incorporated and renamed United Prosthetics. "It was during this period, under the leadership of Joseph Martino and the management of his children, in which the company experienced its most notable growth," according to the company's website. "Being in business with family and friends has the tremendous upside of loyalty, openness, and trustworthiness," says Edward "Ed" De La Torre , president and co-owner, along with his brother Paul De La Torre, CPO, CPed, chairman, of De La Torre Orthotics and Prosthetics, headquartered in Pittsburgh. Meeting Challenges Despite the upsides, some business decisions affect family businesses differently than they do non-family firms, such as defining roles within the company, resolving conflicts, and succession planning. Making Decisions, Resolving Conflicts Many business experts, including D. Scott Williamson, MBA, CAE , president of Quality Outcomes, Fredericksburg, Virginia, emphasize the need for a chain of command. "A basic principle is 'never create a business relationship where everything is 50/50,'" Williamson says. "In a situation where everyone is equal and no one can agree, you're at a stalemate; the only thing you can do is do nothing. Someone has to be in charge." The business owners interviewed by The O&P EDGE don't follow that mandate; respect, confidence, and close family bonds may be the reasons a more collegial approach works for them, although it doesn't work for everyone. "If there's respect for one another, sufficient information, and good communication, even if there are disagreements, things can be worked through," Williamson says. "If there isn't respect and trust, somebody has to be bought out." "[Cathal and I] generally have the same approach to business, so making decisions together is easy," Kennedy says. "We sometimes do have different points of view, which is healthy. We talk through everything. When one of us feels very strongly about a certain course of action and the other isn't completely convinced, we've decided that if there's that much belief and commitment to an idea, it's worth pursuing. Whoever has the passion rules the day, but if the other person believes it will put the business in jeopardy, then it's not pursued. Each partner gets a veto; a firm yes or a firm no will be respected by both." "My father made us all realize that none of us knows all the answers," Martino says. "In any decision-making process, no one person has all the answers, and we are fortunate enough to understand that. As the third and fourth generations in some of the decision-making processes, we are aware we all need to be part of the conversation." He acknowledges that sometimes disagreements can become heated, "but we're fortunate in that we know when to stop. We're a family, and we take pride in family." When a decision relates to one department, the others generally defer to the one who is most involved there, Martino explains. Major decisions, such as taking on another line of business, are generally made by the will of the majority, "but we want to be sure the decision won't harm any one of us," he says. Points are discussed and debated at family board of directors meetings as well as informally. "We just reason out what's best for the business, and that's pretty easy most of the time." Decision making at De La Torre O&P generally is a smooth process, since it worked out naturally that Paul directs clinical operations while Ed manages the business side. How Ed ended up joining the company is "quite a story," De La Torre says. As children, Paul and Ed worked in the business started by their father Manuel De La Torre, CO. Paul had a strong interest in becoming an O&P clinician and joining his father in the business, while Ed was just the opposite. "I wanted nothing to do with the business; I wanted to do something different." After earning bachelor's and master's degrees in architecture, Ed worked in his chosen profession for about five years, but then his life suddenly changed. "Our business was at a crossroads in 1990. Our father needed to retire; it was a classic case of the patriarch being unable to pass the business on to the next generation. He and my brother were struggling over the issue, so I stepped in and said, 'I'll come in as the businessman, and my brother can focus on the clinical side.'" Although Ed and Paul sometimes have private conversations involving business decisions, "We have a strong management team, and usually major issues, such as expanding the business or opening a new division, are discussed by all of us. We realize that the strength of the company is helped by collective minds working together." When family conflicts become intense and threaten the business or family relationships, though, it's time to bring in business lawyers, consultants, and/or mediators to help calm emotions and facilitate solutions that are acceptable to everyone, says Joyce Perrone , director of business development at De La Torre O&P and consulting partner for Promise Consulting, Pittsburgh. "Fortunately, we have not experienced this type of situation at De La Torre." Generations-Past Meets Future Intergenerational differences can present another challenge. "We're in a time of significant change in O&P, and that in itself is hard," Williamson says. When a child joins the family business, he or she may want to make changes reflecting new opportunities and ideas, while parents may resist changing the way the business has been run for possibly 50 years or more, Williamson observes. "There are many businesses like that in O&P." The Martino family, for example, meets the challenge by taking a balanced view of the old and the new. "We have confidence in the next generation, and the younger generation can bring in tremendous ideas and knowledge," Martino says. "We don't have all the ideas." He continues, "Although we're utilizing and offering new, advanced technologies, we don't forget what got us here. We're able to retain some of the old-fashioned ways of doing business and treating patients. Sometimes we're too quick to relegate things to the past; properly applied, they can be quite beneficial." Hiring Family and Friends "We would be reluctant to [hire family or friends]," Kennedy says. "You never say never; it would depend on the situation, but we would probably avoid that, just to keep things clean and so we can set standards and expectations for performance. We wouldn't want to compromise the friendship or the business." On the other hand, hiring friends and another family member has worked well for De La Torre. Some of the same advantages of working with family members can apply to working with long-term friends. They know each other's personal and professional strengths and weaknesses and their core values, and share close bonds of affection and respect. One of De La Torre's best friends from his college days, Gavin Hassell, CO, CPed, is director of orthotics. "I've known him for almost 35 years; we were in each other's weddings, attended the same church in college, and so on." Hassell also is a pastor in the church De La Torre attends. His brother-in-law, Dan Wilson, CO, CPed, orthotics supervisor and staff orthotist, is an old college friend-all three men attended Virginia Tech, Blacksburg. De La Torre's wife and Wilson's wife are sisters. Besides Hassell, several members of De La Torre's church are employed by the company, including company controller Rob Benedetti, a pastor. Benedetti is also a consulting partner for Promise Consulting. However, De La Torre stresses that the most important factor to consider when hiring someone is if the person has the right skills for the job, whether that individual is a family member, friend, or total stranger. "You have to put the right person in the job so that the company will continue to be successful." "Don't hire a family member or friend just because they need a job if they are not the right person for the job," Perrone advises. "Help them some other way if you want, but don't hire someone who doesn't contribute. The interests of the business need to be put first." Hiring Patients: A Good Idea? In her blog CX [Customer Experience] Journey , Annette Franz Gleneicki, CCXP, lists the advantages of hiring customers, or in the case of O&P, patients: Among other things, they know and like your products (your expertise in patient care and the quality of the devices you provide). They know the staff and probably already have a rapport with them, and they share your values and already feel part of your larger goals. [caption id="" align="alignright" width="195"] "[James Montgomery, who has an amputation,] understands the process because he's received it. He said he loved the level of care that we were able to provide and wanted to be part of a company that provided that care to others." —Matt Albuquerque, CPO[/caption] Although many O&P company owners may shy away from hiring patients, and like any other hiring decision, they may not always work out, some owners have experienced the benefits Franz Gleneicki outlines. For instance, Next Step Bionics & Prosthetics, headquartered in Manchester, New Hampshire, hired James Montgomery, who recently underwent a transtibial amputation, as a prosthetic technician. "He understands the process because he's received it," says Matt Albuquerque, CPO , president. "He said he loved the level of care that we were able to provide and wanted to be part of a company that provided that care to others." Albuquerque adds, "If the patient is someone who really appreciates the care they were given, they're already miles ahead of someone just coming in for an interview." Stan Patterson, CP , president and owner of Prosthetic & Orthotic Associates (POA), Orlando, Florida, is enthusiastic about hiring current and former patients. Out of 23 employees, eight are POA patients with lower-limb amputations. Three are prosthetists: Ronnie Dickson, CP; R. Brice Duba, CP; and Richard Shultz Jr., CP. Karen Hughes is the website/social media manager, and John Class is the coordination assistant for out-of-country clients. Mabio Costa is a prosthetic liner technician, Shawn Whitaker works in marketing team support, and Nate Winters is a marketing specialist for prosthetic foot technologies. When hiring employees, whether or not they have an amputation, Patterson says, "My grandfather told me long ago, 'Don't look just for their skillset or what they've done in the past, look at what they are like as a person.' When you find someone of integrity and character and they have a passion for O&P, that's the person to hire." Balancing Work and Family Life "When my father was alive, he didn't want to talk business, and my mother didn't allow us to talk business at home," Martino says. "Since we've been together 40, 60, 70 hours a week at work, we do need some time apart. It's like a good marriage-there's your time, my time, and our time." He adds, "When we're together, we don't talk business at all. It's a time to laugh, joke, tease, and be together as a family." "When my brother-in-law and his family and my family and I are together, we keep family and work separate," De La Torre says. "We try hard to not talk about the business; there's plenty of time for that tomorrow when we're at the office. We now do this very well, but it took time to master; we didn't do it right off the bat." Succession Planning Careful succession planning is vital to ensure that the company will continue after the death, disability, or retirement of an owner or other key person. However, according to a recent Pricewater house Coopers survey, 73 percent of U.S. family businesses admit to not having a documented and robust succession plan in place for senior roles. Estate planning and business succession planning should be made with the help of attorneys specializing in those areas, Perrone advises. Two important aspects include key person insurance and a buy-sell agreement. Key person insurance protects the company by providing funds to help replace a key executive or employee, explains information from Straus, Itzkowitz & LeCompte Insurance Agency, Richmond, Virginia. A buy-sell agreement, also called a stock redemption arrangement, enables the company to redeem the stock and buy out the surviving spouse or partners of the deceased stockholder. Succession and exit planning should include how and by whom leadership roles in the business will be handled. "The key to avoiding conflicts about who will take over a business is having a well-defined plan in place," the Inc. com Encyclopedia advises. "A family retreat, or a meeting on neutral ground without distractions or interruptions, can be an ideal setting to open discussions on family goals and future plans, the timing of expected transitions, and the preparation of the current generation for stepping down and the future generation for taking over." Looking Ahead With sound planning and organization, strong family bonds, and commitment to their businesses and the patients and communities they serve, family O&P practices can survive and thrive. Miki Fairley is a freelance writer based in southwest Colorado. She can be contacted via email at miki.fairley@gmail.com .

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The O&P EDGE: 2015 Salary Survey

Odds Are…Incidence, Prevalence, and Costs of Commonly Encountered Patient Populations

biodesigns Awarded $1M DARPA Contract

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Certified Prosthetist / Prosthetist-Orthotist (CP/CPO) Gates Prosthetics + Mobility Clinic — Mountain Home, AR

Clinic Manager – Certified Prosthetist Orthotist (CPO) – Rogers, AR

CPO

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