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(Ian Waldie/2003 Getty Images)
(Ian Waldie/2003 Getty Images)

Exit: John Warrillow

How a family company survived seven generations Add to ...

If you’ve ordered a steak in a restaurant lately, there’s a good chance it was supplied by Macgregors Meat & Seafood Ltd., a $100-million-plus Canadian business that has survived and thrived through seven generations of family ownership.

Consulting giant McKinsey & Co. estimates just one-third of family businesses make it to the third generation of family leadership. The Macgregor/Wicksons clan is up to seven and counting. To find out how the Macgregors have pulled it off, I recently caught up with the current co-presidents, brothers Duncan Jr., 38, and Don, 43, and discussed their success and some of the ins-and-outs of running a family company.

Question: What exactly does co-president mean? How do you and Don divide up the responsibilities? What issues can you decide unilaterally, what decisions need to be made with Don, and what needs to be discussed with your father?

Duncan Macgregor: I can only relate what co-presidency means to us. It is a way to outwardly say that the leadership of Macgregors is shared in this, the third generation of our family. We’ve always been taught by Duncan Sr., first and foremost, that titles are cheap. We needed to give ourselves titles, and this was one convenient way to do so. I oversee the operational side of the business, working shoulder to shoulder with our VP of operations and keeping my pulse on daily operational issues. Don looks after the sales and marketing side of the business, with our food-service sales team reporting to him and working closely with our CFO.

As far as decision making goes, although Don and I may have tough decisions that we make together or with Duncan Sr.’s input and advice, Macgregors’ important business decisions are made mostly by our executive team, which includes the three of us, our VP of operations, our CFO/controller, our VP of national sales and our VP of HR. Duncan Sr. has not been involved in the day-to-day operations of the business for some time, although his presence in making strategic decisions is something that brings consistency, history and confidence to Macgregors. This team approach has played a key role in our success. Each of us on that team have had decisions go in the opposite direction of what we perhaps thought was best — and nine times out of 10, the direction ends up in the best interest of Macgregors.

Q: Can you describe the culture of Macgregors?

DM: Our culture is a testament to the efforts of our dad, Duncan Sr. — he is the builder and entrepreneur of Macgregors’ culture. We care, literally, and we share, literally. Each month, we make our staff aware of how Macgregors is doing financially and how this ties into our profit-sharing program specifically. We have an open-door policy when it comes to the management of Macgregors, and our hope daily is that our staff will provide the feedback we need to be better. We put our best efforts forth to share information with our staff continually — good news or bad — and to be as transparent as we can.

Q: That all sounds nice, but is it real? In a typical year, how much, on average, of an employee’s total annual compensation would be profit sharing versus regular salary? How much detail do you share with employees about your financial results?

DM: We have two significant compensation programs in place for our staff in addition to base wages/salary. One is our “variable wage raise program” — on average over the past 10 years, this has added 15 per cent to our staff’s wages, whether salaried or paid hourly. This program is based on gross margin performance (sales less the cost of product). The monthly benchmarks are based on last year’s performance and attempting to beat those benchmarks — it’s a scale capped at 19 per cent. This year, after 10 periods, our staff have realized the 19 per cent in all but one period. The profit-sharing pool is 16 per cent of pre-tax earnings spread evenly over all eligible staff. A full share is paid out to staff who have accrued two years of service at Macgregors. A partial share is based on an employee’s service after one year. Our staff can direct this any way they wish — put it into an RRSP program, cash, whatever.

Q: How is the senior leadership team aligned to what is in the best interest of Macgregors? I assume they enjoy a part of the same profit-sharing plan — or do they have equity in the business?

DM: In terms of our profit-sharing plan, our senior managers earn the same share as everyone else, assuming eligibility. But since they can have a direct impact, we do have a separate bonus plan for this group based on their responsibilities relative to profitability. No one outside of our family has ownership or equity in Macgregors. We are a fairly lean operation in terms of senior management, with competitive, fair and attractive compensation packages that keep talent here and attract them when needed. I think it’s fair to say this given we don’t have people leaving.

Q: Sounds as though you run Macgregors with a strong moral compass. Can you share an example of when your values trumped what would have been more profitable (or easy) in the short term?

DM: In this business, it is extremely easy to buy forward or at the right time in the market relative to raw materials — in particular beef. One can buy product at the low of the market, age it, freeze it, hold it for months, bring it out when the market is high, defrost it and sell it as “fresh.” It’s easy to do, and loads of money can be made. But Macgregors doesn’t participate in this game.

Tomorrow I ask the Macgregor boys about the toughest part of working for your father.

Special to The Globe and Mail

John Warrillow is a writer, speaker and angel investor in a number of start-up companies. He writes a blog about building a valuable – sellable – company at www.BuiltToSell.com/blog.

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