Ludwig Lobmeyr – son of the founder of the legendary Viennese imperial glass and crystal purveyor passed down over six generations – had no children. But he did have a nephew, Stefan Rath, who took over the company in 1902. Still thriving today, the company is now run by his great grandson and great-nephews Leonid, Andreas, and Johannes.
“Austrians act from a combination of northern thoughtfulness and southern emotionality. We don’t give things away easily,” Leonid Rath explained.
Lobmeyr is among the many family businesses in Austria that have been handed down through several generations.
According to the WKO (Austrian Chamber of Commerce), family businesses account for about 88% of all businesses in Austria. Jürgen Kreindl, director at PwC Austria and family governance adviser, calls them “the backbone of our domestic economy.”
Their success comes as no surprise to family business expert Yann Georg Hansa, partner at KPMG Austria: It’s “because they’re family businesses!” he said. They “carry their own family values of tradition and innovation into their companies, along with looking out for their own employees and long-term strategies.”
Elisabeth Kastler, a family business adviser at Bankhaus Spängler – itself a seven-generation company – emphasizes the importance of the long-term.
“They’re not just about short-term profit or quarterly reports,” she said.
The fundamentally familial character of these businesses counteracts the corporate detachment other companies demonstrate, especially in loyalty to their employees.
Stefanie and Philip Hahn, the third-generation sister and brother managers of Radel & Hahn air-conditioning in Burgenland, had to step into leading positions after their father died unexepctedly six years ago.
“Our employees already knew us personally,” Philip said. “I don’t think it would have worked if it had been some new face stepping in out of nowhere.” And loyalty counts for a lot. Despite the recent crisis, Radel & Hahn have not let go of any of their over 140 employees.
Rudolf Krickl, a partner at PwC Austria, underscores how “Austrian family businesses are spread out all over the country, taking responsibility for their regions and providing jobs.”
Keeping up With the Joneses
However, contrary to what one might assume, longstanding family businesses are not only about sticking with what works. Constant innovation and reinvention are essential, too.
Back in 1902, Stefan Rath not only had to continue the family legacy, he also had to take it somewhere new. He ultimately succeeded in placing Lobmeyr design into the Modernist movement of the time.
“All six generations faced challenges, because each previous one came to a point where they no longer understood their own times,” Leonid said. “So each generation had to come up with their own concepts, ideas and approaches to stay alive.”
For Wolfgang Köchert, who runs the k.u.k Imperial Viennese jeweler in the sixth generation with cousin Christoph and brother Florian, innovation is tradition.
“Our so-called ‘change’ was to return to the source, offering only our own original pieces.” Earlier generations had expanded into watches and jewelry from other brands. This, the Köcherts decided, blurred their identity.
Alex Zahel is the fourth generation to run the Zahel winery and Heuriger in Vienna with his uncle, Richard. Since joining the firm in 2012, he has played a large part in innovating their business, launching an international division that exports to 20 countries and earning the extremely strict Demeter biodynamic certification for their organic wine.
Addressing a general international decline in alcohol consumption that has accompanied the “huge health trend” of recent years, “We’re trying to attract younger people through strategies like this biodynamic qualification,” he said.
Who´s Next ?
Even though Zahel is one of several family wineries successfully handed down, a 2017 study done by the WU Research Institute for Family Business (FOFU) showed that the wine industry in Austria is actually facing one of the lowest rates of interest in the next generation.
Hermann Frank, director of FOFU, has identified that succession overall is becoming a growing issue. Over the last 10 years, the number of family companies successfully handed down to family members has fallen by about 25%.
“The younger generation is better educated and less interested in working more than 40 hours a week,” he said.
This concern has led to an increased number of advisory groups, like PwC and KPMG, offering outside assistance to family businesses to help guide them through succession plans. One of Hansa’s most frequent recommendations is to encourage potential successors to “prove themselves” somewhere else first before taking over the family business.
This was the case for Leonid Rath, whose father had been “kicked out” of the business by his brothers (“He was a perfectionist,” Rath explained), which led to a decision to send Leonid himself to “another job” before considering joining Lobmeyr.
“At the time, I was enraged,” Rath recalled, “But I ended up having a great time for two years at another job, and came back to the company with a fresh perspective.”
Frank of FOFU also recommends discussing the ins and outs of the business operations at home, focusing on opportunities and problem solving, not just complaining about the problems – to pass on what makes the business an exciting challenge so as not to discourage potential successors.
Communication is a key factor in the successful handover of family businesses, as well as among family members running the business day to day.
“Our entire existence depends on this school, we put our heart, soul, passion and lifeblood into it.”
Matthias Roland, CEO and third generation owner of the Maturaschule Dr. Roland
Christoph Köchert acknowledged the difficulty of the peculiar situation of working with family members.
“You’re thrown in with players you didn’t necessarily choose and then have to figure out how to get along with them,” he said. “In a way, you’re kind of ‘spliced together.’”
Matthias Roland is the third generation to run Dr. Roland, a Maturaschule that prepares high school students for their school leaving qualification tests needed to enter university, along with his father Peter and wife Antje. “It’s not always easy to not bring work home, so sometimes we have to discipline ourselves and say, ‘Work is not the only thing we have in common,’” Matthias Roland said.
But their dedication to the company is also what makes it worthwhile to both family and staff, who are all on full-time contracts, a company policy.
“Our entire existence depends on this school, we put our heart, soul, passion, and lifeblood into it,” Roland stressed. “When I leave in the evening, it’s my own decision. I never look at my watch.”
They Will Survive
Perhaps the biggest test for families and businesses are times of crises, one of the most devastating of which we are all facing right now. In these situations, resilience, stability, and long-term planning are more valuable assets than ever before.
One of the hardest-hit industries has been tourism, which also happens to be the most common type of family business in Austria, accounting for 70% of the sector, according to the WKO.
Wolfgang Kremslehner represents the fourth generation of the Kremslehner Hotel Group in Vienna. Their establishments are quiet for now, all effectively closed. But the company has taken the proper measures; Wolfgang submitted the very first application for the coronavirus relief loan for tourism businesses.
In the meantime, he doesn’t seem all that worried. He’s taken time to reflect, looking through old family photos. If anything, he says, recalling how his family held their company together through two world wars seemed to put things in perspective.
He related a family story about his great grandmother, watching the sunset from the window overlooking Vienna’s Votivkirche, of the same apartment where he and his family now live: “There must be a way to capture sunshine and bottle it,” she had reflected. “That way we could make use of it in the winter.”
Even back then, she seemed to be thinking ahead.