Success is relative: with 46 of the state's top 100 private companies family-owned, what should be a seamless transition in leadership can get split by the generation gap.

• Author: Row, Steve
• Position: FEATURE - Company rankings

In the television series Father Knows Best, patriarch Jim Anderson often served up the wisdom of his experience to solve some problem caused by the inexperienced youth of his three children. Lawson Williams must know how the kids felt. He had a moment like that this past summer with his father. He had become president of M.R. Williams Inc., a Henderson-based food and merchandise supplier for convenience stores, in spring 2009. His dad, Mike, retired from day-to-day management but remained chairman of the company he had founded in 1976.

Last year, it started a construction project, one stage of which involved moving tobacco products into a mezzanine in the main distribution center. "One day, my dad said to me, 'Remind me again why we are moving the tobacco products into the mezzanine.'" Williams replied that he thought it would reduce labor costs and speed up the process, but he needed to quantify it. "Give me a day or two," he told his father. After mulling the move, Williams concluded it wouldn't produce the efficiency gains he originally thought it would. "And by not doing it, we probably saved a total of $100,000 in equipment and labor costs."

But even Jim Anderson didn't always know best. In the same project, Williams suggested changes in how products are loaded off a conveyor system in the warehouse. His father balked but eventually went along. "My way," Williams says, "proved correct."

M.R. Williams Inc. is going through a process common in family businesses, and that makes it a frequent occurrence among the companies on the annual ranking of the state's 100 largest closely held companies that Grant Thornton LLP compiles for Business North Carolina. This year, 46 are family-owned, and though not all of them are undergoing a generational change in leadership, many have or will. M.R. Williams apparently is handling it well; it moved up five places on the list, based on the latest fiscal year's revenue, to 33rd. The company at the top, Charlotte-based Belk Inc., is run by the grandsons of its founder.

To be successful, such transitions should clearly delineate the responsibilities each person has for the company's future. The older executive, in particular, must figure out how quickly he will relinquish power. "One of the first things that must be decided is what he wants to do, what role he wants to play in the family business, especially when the next generation comes in and wants to make the business more modern, more competitive," says Kathy Baker, director of the Family Business Center at Wake Forest University.

One company still trying to sort that out is Barnhill Contracting Co., a 60-year-old construction company based in Tarboro that has built, among many other things, the Raleigh Convention Center and, a few blocks away, the Progress Energy Center for the Performing Arts. It ranks 20th on the list, down from 11th in a tough year for its sector. Robert E. Barnhill Jr., the 63-year-old son of the company founder, named...