La. Jeweler Charter Schooled

Proper succession planning has always been a management priority for Lee Michael Berg, the CEO of Lee Michael’s Fine Jewelry. For a number of years he has worked with a trusted business consultant to make sure the business model he helped create in 1978 would prosper and persevere.


Cognizant of the inherent risks that come with a generational retail business dealing in luxury products, Lee Michael’s long-time consultant advised him to work with family members to write a family charter in the early 1990’s.  


By 2001 the family charter was completed. The document was written to establish a set of rules on how family members should enter the family business and work in it.


The document has served the family well for just over a decade. But it will be amended in the coming years to accommodate the business needs of the incoming second generation, namely Scott Berg, the vice president of Lee Michael’s Fine Jewelry, and his two brothers.  


Berg family group shot


Lee Michael and Brenda Berg with their sons Ryan (left) and Scott (right)


The family charter, however, isn’t just about family interests. “We’ve got 180 employees relying on us to keep this business going,” says Scott. “The charter is about progressing and evolving the family business for everyone’s sake.”


The 10-page document is mainly made up of two sections, according to Scott. The first section is the perquisites to enter the family business, and the other section is on ownership and working in the business.


One of the initial requirements for entering the family business is a college degree. Once an undergraduate degree is completed, a family member can either earn a master’s degree in business or complete their Graduate Gemologist certificate from the GIA. (Both can be completed should a family member decide to do so.)


When it comes time to test a family member’s schooling in the workplace, they are required to work outside the family business for a minimum of two years. “The family charter doesn’t specify the type of work,” says Scott. “But jobs with another retail jeweler, a company within the gem and jewelry industry, or working in a retail environment or retail sales are optimal positions. The goal is to bring a diverse business knowledge base and skill sets to the family business.”


For non-family members in a family business, nepotism can be real concern, whether it’s real or imagined. To help reduce concerns over such problems, family members can only apply for a position that is open. “The family charter establishes that under no circumstances is a position to be created for a family member, or their spouse,” says Berg.


The family member’s education, skill set and work experience must also align with the qualifications of an open position. And, similar to non-family job candidates, family members must also interview for a position. But, they wouldn’t go through the usual chain of command starting with a human resources manager, then the hiring manager and eventually the company’s executive committee.


Store exterior


An exterior picture of Lee Michael’s Fine Jewelry store


“When a family member interviews for a position, however, they’ll go through an interview with the company’s executive committee made up of 10 people, four of whom are family members, with the other six non-family members being three senior vice presidents, the company’s CFO, another executive, and our HR director,” says Scott.


The first portion of the family charter is essentially a list of requirements and reasons for them, while the latter half of the guiding document is much more detailed in presenting the issues surrounding ownership and working in the family business.


The charter clearly establishes that for a family member to have shares in the family business they must actually work in the family business. And, similar to most corporations, shares in the business go to family members who have invested the most time and effort in to the business.


Much of the language in the ownership and working in the business portion of the Berg family charter is proprietary. Scott could only say that some of the basic rules established in this portion of his family’s charter are meant to avoid some of the common problems many retail jewelry businesses have experienced with poor succession planning that result in a sudden implosion or eventual demise of a generational jewelry store.


Chief among them family members working part-time or outside the family business seeking to establish company shares or voting rights without being involved in day-to-day operations.


Berg family beach shot


The family charter will some day be amended for the third generation of Bergs


The Berg family takes succession planning very seriously. As company’s long-time patriarch, Lee Michael is looking to retire in the coming years. He and family members know very well that roughly 70 percent of family businesses fail when passed from the first generation to the second.


“I’m glad our father had the wisdom and foresight to make this charter a priority many years ago,” says Scott. “It doesn’t solve all the challenges we face in transitioning and evolving the family business, but is does make some of the steps easier as the second generation takes on more of an active role in managing the family business.”


What’s more important than writing the family charter as a family is living it each day as a company so everyone in the corporate structure realizes the benefits of the document. “Employees know the family charter just as well as family members because its principles are practiced each and every day,” says Scott.