Christie Ernst called her family’s kitchen the “bored room” growing up.
There, around the dinner table, her parents, Craig and Pat Lloyd, would talk strategy for their growing Sioux Falls, South Dakota-based full-service real estate firm, Lloyd Companies.
“It was essentially a board meeting that they would have when they got home,” Ernst remembered.
For a young Ernst, those talks didn’t kindle any interest in joining the family business. Neither did the jobs her father gave her—painting curbs, picking up cigarettes and sweeping construction sites. Ernst left Sioux Falls for college, studied international business and IT, and pursued a corporate career.
“Because of the jobs I would get as a younger person, it was like I felt like that’s where my worth was within the company,” she said. “I never visualized anything more than painting curbs, and I knew I wanted to do more than that. I didn’t see a path.”
But, 15 years ago, Ernst returned to Sioux Falls and Lloyd Companies, where she is now part of a second generation of its leadership team. Ernst serves as executive vice president of property management, while her cousin, Chris Thorkelson, is the CEO. Craig retired about six years ago.
The way back required some difficult conversations. Ernst admits to being “disrespectful” at times during early family meetings about the business that began when she was in high school. The path forward came thanks in large part to a company retreat and the help of a third-party facilitator to wade through those hard conversations.
To family businesses, Ernst recommends doing the same—spending money on a facilitator and the time to map out the company’s future. “We tried to do it on our own. [But] when a fight breaks out, people are going to walk away, and you’re going to spend more trying to repair that relationship,” Ernst said. “Find the right facilitator, spend the money, create a roadmap and commit the resources to fulfill that roadmap.”
One house, then many
Craig Lloyd’s first job out of college in 1972 was managing low-income apartments in Sioux Falls. The job required a lot of paperwork, something he admits he wasn’t good at—but thankfully his wife Pat was, and together they worked in building the early business.
Craig soon got bored managing property after six or seven months, so he waded into construction. “I’d never built a house before, so I built a house and moved into it,” he said. “I thought it wasn’t that bad to build a house.”
So, Craig built another. And another. When the 1980 recession hit, the business survived thanks to Pat’s work in property management. The husband-and-wife team began renting out their spec homes and eventually started building apartment projects and malls.
Today, the company manages about 8,000 apartments, 2.2 million square feet of commercial space and continues to build across the region. When Craig retired in 2016, the company had 105 employees. Under the leadership of Ernst and Thorkelson—who joined as a framer in 2003 after graduating from college with an engineering degree—it now has 250.
“They’ve really done a great job expanding the business,” Craig Lloyd said.
Not all ‘fun and games’
But the transition—one many family-run enterprises must confront—to the second generation wasn’t easy. The Lloyd family’s first discussions about the future of the business began around the time Ernst was in high school. “One Christmas, after we were done opening gifts, [my dad] was like, ‘I just died. What are you going to do?’” she remembers. “And we were like, ‘Where did this come from?’ … We started crying.”
After asking the same question the following Christmas, one of Ernst’s sisters suggested having the conversation on any day other than the holiday. The family eventually set aside a day during their annual family vacation in Florida to talk about the future of the business.
“We definitely had some difficult conversations,” Ernst said. “I was not having any plans to ever work for my dad. … That started quite a rift at one time. It wasn’t all fun and games.”
When she returned to Lloyd Companies, Ernst knew there was a need for diplomacy and improved governance. The company found both when her mom Pat dragged the family to a retreat offered through the Prairie Family Business Association, an outreach program of the Beacom School of Business at the University of South Dakota.
During the retreat, the facilitator ensured that all voices in the family were heard, and encouraged them to survey the company’s employees to find out what they feared if Craig couldn’t continue in his role. Employees detailed worries about bankers losing faith in the business and calling loans.
That opened Craig’s eyes to the need for more formal business planning, Ernst said. Ensuring employees are cared for has always been a priority for him.
With the help of the facilitator, the family created an owners’ plan and spelled out their vision, values and goals for the business. They set up the roles of the owner and managers. And they established what is now a board of directors with outside experts who help guide company leaders. It was indispensable amid the uncertainty of the COVID-19 pandemic.
“It gives you a sense of security that they are there for you,” Thorkelson said of the board. “Not only do you have your executive and management team that’s there, but you also have this advisory board of gifted individuals who have many years of experience of ebbs and flows and ups and downs.”
Strong business, strong family
The next generation of the business is already on everybody’s minds. Including Thorkelson’s children, there are six young people—ages 8 to 15—among their ranks. Already, the family has taken personality assessments to see how the kids might work together. Lloyd Companies is a big supporter of the community. To help teach the importance of giving back, the Lloyds give each child money to donate to charity, and the children must present their reasons why the charity is deserving.
Ernst’s 15-year-old niece recently shared that she planned to study personal finance and business in high school next year. “She’s like, ‘Just in case I want to start my own business or decide if I want to work at Lloyd Companies,’” Ernst said. “She was talking about it in those terms.”
With its policies and processes in place, Lloyd Companies also has set specific rules on when the next generation can join. Among the stipulations, family members seeking permanent employment must have a college or trade school degree and at least two years of work experience outside the family business. And generally, positions won’t be created to maintain the employment of a family member.
Rules like these are important for the future of the business—and the strength of the family.
“When people go to their deathbed, all the things that cross your mind, oftentimes, are around relationships and, more often than not, relationships with family,” Thorkelson said. “If there is a failed relationship there, then it’s something that you lost out on that. And, honestly, a business is not more important than a relationship with family.”