Tag Archives: Letting Go

Should I Stay, Or Should I Go?

JoAnne Norton
JoAnne Norton

My nearly ninety-seven year old mother-in-law has an intriguing quote displayed prominently on her refrigerator at her home in Calgary. “One of life’s most important decisions is when to begin middle age,” it reads. My husband’s young-at-heart mother often reminds me on our evening phone calls that we’re only as young as we feel.

Today we can work as long as we want to, especially if we are blessed with good health, a clear mind, and our own business. But how long should we? That’s one of the many questions members of the senior generation sometimes ponder in the middle of the night and sometimes discuss with their spouses in the middle of the day.

Would the business be better off with or without me, they wonder. Do I continue to add value? Are my ideas still relevant? What if I raise the subject of my retirement and then change my mind about leaving?  How do I deal with the pain in my heart as I consider letting go of something so dear?

The next generation grapples with its own set of challenges. How long can they afford to carry someone who they perceive is no longer pulling their weight? How do they bring up the topic of a parent’s retirement without sounding ungrateful or uncaring? How do they ignore the gnawing in their gut as resentment grows and the silence between the generations becomes deafening?

The good news is that we’re living longer, we’re staying healthier, and we’re looking better than at any other time in history. So we must now wrestle with the question of when or even if to begin a new chapter away from work—a better chapter than our parents and grandparents have ever had the opportunity to write. This is new stuff for both generations, and we’re short on role models, experience, and theories.

Barbara Walters was still working at age 84, but could we? Should we? In a family business both generations need to have candid discussions periodically at both the family and the board levels regarding retirement. The decision about when a parent should move on drastically depends on the industry as well as the desires of both generations for the future.

Sometimes these conversations are already taking place, not with family members in the senior generation who are mulling over what they might do next, but among frustrated future owners. Whether they are thinking about grandparenting, golfing, starting a charity, or beginning to play Chopsticks it is crucial for parents to share their plans, so their adult children can make theirs. Both generations will be much more open to this discussion if it is approached with patience, appreciation, and love.

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What’s The Best Way To Say Goodbye?

JoAnne Norton
JoAnne Norton

Barbara Walters was one of my earliest childhood heroes. I remember watching her on our first black-and-white television set very early in the mornings, the only woman in a large cast of men. I cheered when she became the first female anchor on an evening news program, though ultimately that did not turn out well for her, and I was absolutely delighted when she created “The View” featuring strong, articulate, funny women.

Like millions of viewers, I’ve watched her retirement process over a number of years as she slowly cut back the number of hours she worked and the programs she did. Last week, I saw her final regular appearance on “The View,” which featured much fanfare as everyone from heads of state to international celebrities paid homage to Walters, who has changed our world in so many significant ways.

Saying goodbye and thank you to people who have had a profound affect on us is crucial for them and for us because the impact has ramifications on those who are leaving as well as those who are left. Nowhere is this as important as in a family business. When the family leader of a family business retires there most likely will not be appearances from celebrities nor buildings named in their honor, but it is vital that they have a proper send off.

When I began studying Murray Bowen’s Family Systems Theory at the Georgetown Family Center in the late 90s, psychologist Dr. Polly Caskie presented research suggesting that the future health of the retiring leader and the family itself was dependent on the celebration at the end of the career. For that reason, Polly said there should be presentations made from representatives of three specific groups: the business, the community, and the family. Leaders, like all of us, needed to know that their lives mattered, that their many sacrifices had been worth it, that they had made the world a better place, and that their family, especially the spouse and children, appreciated them. She hypothesized that the time, energy, and expense would be more than worth it to the future health and happiness of the retiree.

What reminded me of Polly’s sage advice after so many years was something Barbara Walters said on Friday, May 16th, on “Good Morning America.” She commented that she had remained dry-eyed as she had listened to all of the accolades from state heads and stars until she had received a message from her daughter, Jackie, who had written the night before:  “I just wanted to say I was thinking of you tonight. Tomorrow is a special day. You have impacted this world as very few can. This is a transition towards a new journey. I love you and wanted you to know how proud I am of you.” That’s when Barbara said she finally cried.

At the end of the day, no matter how big our business is, how many lives we’ve touched, how much we’ve changed the world, it is the love of our family that matters most. That’s why it is so important to say goodbye and thank you at the right time at the right place in the right way.

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Pay for Succession?

David Ransburg
David Ransburg

When most family businesses hear the phrase, “you will pay for succession,” they likely think it means that there will be pain associated with the process of transitioning from one generation to the next. I’m here to suggest another, more positive way to think about that phrase… and this new way of thinking comes from some of the world’s largest publicly traded companies.

A recent article in the Wall Street Journal identified a growing trend where publicly traded companies have begun providing outgoing CEOs with compensation that is directly tied to grooming their successors.

For example, outgoing Intel CEO Paul Otellini had the opportunity to earn up to $4 million in extra pay if he successfully met certain criteria associated with preparing his successor, Brian Krzanich. While the company’s Board of Directors determined that Mr. Otellini had met some of that criteria, his performance was not sufficient to earn the full bonus – he received half.

This new approach is, I believe, especially interesting for family businesses because succession is one of the biggest challenges – if not THE biggest challenge – facing many family firms. Succession – or as we at FBCG like to call it, “generational transition” – is an extremely complicated issue that is influenced by many factors (e.g., Is the next generation prepared to take over the family business? Is the business viable?), but one of the common roadblocks to successful transition is often the incumbent’s reluctance to let go. That reluctance alone can be a very challenging knot to loosen, but the publicly traded companies mentioned above have given us another tool with which we can tackle that reluctance “roadblock”: pay.

While extra pay alone is unlikely to be sufficient to get most incumbents to let go, it can certainly be a powerful incentive to increase the likelihood that they will do so. From now on, perhaps, the idea of “paying for succession” will take on a new, more positive meaning.

Have you ever paid an incumbent for grooming their successor? If so, how well did it work? And, can you think of other forms of “pay” that might be even more effective than money?

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Provide Next Generation Experience Without Risking the Entire Enterprise

Otis Baskin
Otis Baskin

So, if as we discussed in our last post next generation “heirs apparent” need real P&L experience how can this happen in a way that helps everyone develop confidence without putting the entire enterprise at risk?

The answer, of course, will be different depending upon the family and the business itself.  But here are a couple of examples:

  • Some family businesses have subsidiaries where the P&L can be judged separately from the main business.
  • When family businesses decide to grow through M&A activity they may have the opportunity to allow a developing leader to take-charge of the P&L of a newly acquired organization for a significant period of time to prepare its operations to be better integrated into the parent company.

One great family I know found an interesting solution to what was becoming a bitter family conflict.  Father and son were simply not able to work together and the tension was becoming unbearable.

The father was a “production guy” who had built great value in his business through innovation.  Son was a “marketing guy” who saw that the national market in which his father had taken the company required a different approach to compete.  The rest of the family believed this son was the right one to succeed his father at retirement but the father could not see that ability in his son.

When an opportunity presented itself to enter a different business in the same market as the family company the son pitched the idea to his dad.  The father saw danger in integrating this new type of business into their proven business model but offered to finance a new start-up if his son would leave the family business and run the new enterprise.

The father’s motives may have been a combination of helping his son and relieving tension in the family and the company but it turned out to be a brilliant strategy.  When the son’s company proved the success of the new business model over the next few years his dad was proud and began to see his skills in a different light.  Today, the two companies have merged and the son has succeeded his father, “just the way dad always dreamed it should be.”

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Your Children Need an Opportunity to Fail

Otis Baskin
Otis Baskin

I am often struck by how difficult it is for brilliantly successful people to achieve their ultimate goal – seeing the business they worked so hard to build continue in their family.  Sometimes the very person who has dreamed so many years that grandchildren and great grandchildren would be part of the enterprise that bears their family name becomes an obstacle to the dream coming true.

Some want to work until they actually die at their desk without considering the devastating impact such a cataclysmic event would have on their family and their company.

Others can’t see the necessary skills and business acumen in their children who are available to succeed them.

Both of these scenarios can sometimes benefit from adopting a form of the Nike slogan, “Just Do It”.  Not to suggest recklessly delivering the keys to a Ferrari into the hands of someone with a learner’s permit.  But it is equally unfair to accuse someone of reckless driving when you have never seen them behind the wheel.  The ability to have the opportunity to prove your mettle in real P&L responsibilities is the crucible that will provide either the confidence for succession or reveal what needs to improve before succession occurs.

Too many apparent heirs to the leadership of their family business have never had the opportunity to develop their confidence and the confidence of others in their ability to assume real responsibility.  When children are protected from the opportunity to fail neither they, their parents nor their siblings have enough data to develop the confidence necessary for successful succession.

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The Ford Family as Owners

by John L. Ward

Friend and colleague Amy Schuman urged me to read American Icon: Alan Mulally and the Fight to Save Ford Motor Company (by Bryce Hoffman, 2012). It’s a compelling and captivating story of a dramatic turnaround. It’s also a great family business story.

The family business topic I want to focus on is the role of the Ford family as owners and governors. There are 13 fourth generation cousins with 30 members of the next generation ascending.

  • For the longest time the G4 cousins have met quarterly – mixing a social and business briefing agenda. They never voted; they always worked for consensus.
  • For decades they believed that their role as owners was to provide unity, stability and long-term commitment.
  • Where there was conflict it was not from company issues but from old resentments over perceived fairness in family matters.
  • In their meetings, as controlling owners, they discussed
    • Confidence in the CEO;
    • Contingency plans if the CEO or strategy didn’t work out;
    • Significant debt decisions;
    • Dividend policy;
    • Maintaining control of the company.
  • Bill Jr., as executive chairman, took on several roles:
    • Emphasizing company innovation
    • Fighting off cultural complacency
    • Providing institutional memory
    • Identifying CEO candidates with the board
    • Managing family owners relations
  • Other family members
    • Served as cultural ambassadors with dealers;
    • Visited locations;
    • Participated in local philanthropy.

Family business owners will find even more value in the book. Founder Henry I was a classic example of “founderitis.” He also had a magnificent vision and social purpose. His son, Edsel II, was overwhelmed by his father’s inability to let go. Subsequent generations had to work hard to earn credibility and fight off perceptions as “rich dilettantes.” Bill Jr., now chairman, received invaluable, trusted coaching from independent directors who themselves understood family business – especially Hocksday of Hallmark.

Then there’s the bulk of the fantastic book telling of Mulally’s turnaround strategy and his philosophy of management.

Enjoy. I’m quite sure you’ll embrace the stories.  Thanks, Amy.

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Spring Cleaning – A Fresh Start

Jennifer Pendergast
Jennifer Pendergast

We’ve devoted the week to spring cleaning. For many people, the process of spring cleaning is not much fun, but they do enjoy the outcome – a more organized, clean and clutter free environment. Family businesses aren’t the best at fresh starts, and indeed getting rid of history, legacy and culture can take away what can be one of a family business’ greatest strengths.  However, we all know of elements in our family businesses that we would be better off leaving behind, inter-personal animosity from prior generations, outmoded business practices, or unhealthy family dynamics.  Families have a difficult time letting these things go, because they represent an important part of the family history or perhaps the family  isn’t even aware of the pattern they are perpetuating.  Whether these unproductive elements of the family are acknowledged or not, they would benefit from spring cleaning.  Consider one of two exercises for your next family gathering –

  1. Ask each family member to write down one thing about the way the family works that they would like to keep and one thing they would like to let go.  (Note that saying “let go” rather than “get rid of” takes the sting out of the process).
  2. Ask the family to think about starting with a clean slate.  If you didn’t have your traditions, history, legacy, what is one thing each person would do differently than what you do today?

Either of these exercises will lead you to a productive discussion of what things your family might want to leave behind so that it can operate in a more organized, clean and clutter free environment.

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Why Do We Wait Until The Last Minute?

Joe Schmieder

“We have a looming transition with no real plan.  Not sure why, but my father has just now decided he would like to get out of the day-to-day operations and sell the business to my brother and me before the end of the year!”  Why do senior family leaders often wait until the last minute to address succession?  Is it simply human nature?  Hard charging family entrepreneurs are more inclined to work on growing and developing the business than to work on family leadership and ownership planning.  Succession is not a topic that people dwell on because it usually only happens once in a generation.  It is tough when a patriarch or matriarch has to select the next leader amongst three children or go outside the family for leadership.   Deciding how to transition ownership is another difficult task – should the stock be sold, gifted or some combination?  Should those family members working in the business get more stock, a controlling interest?  How can this be done fairly? These are tough questions that cannot be addressed quickly.  Thus, they tend to get delayed or avoided.   Yet the keys to successful transitions are communicating and planning.  Most family business leadership and ownership transitions take three to ten years depending on size and complexity of the business and family.   Since succession is long-term, complex and emotionally-tied to family dynamics, a succession task force that includes independent outside board members or othertrusted advisors often works extremely well to keep the process objective and moving forward.   The main goal of a task force is straight-forward:  to ensure an effective leadership and ownership transition.   Members of the task force provide guidance and checkpoints to keep the process moving forward in a positive manner, making adjustments along the way when needed.  This takes a huge burden off the senior family members and greatly improves the probability that both the family and business will continue to prosper in the next generation.

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Setting a Date

Chris Eckrich

In reflecting further about this month’s Family Business Advisor article entitled, “Must the Prince Kill the King?” by Albert Jan Thomassen, I am struck by how easy it sounds to have the senior leader “set a date” for the final transition of leadership to the upcoming leader, and how very difficult it is for so many.  Visions of total disconnection from the business certainly will produce anxiety for many senior leaders, and retrenchment is not uncommon.

A leadership transition is spread out over time (sometimes decades), as upcoming leaders cut their teeth and assume greater responsibility.  Often a time period occurs when both upcoming and current leaders are capable of doing a great job.  A discussion to set a date at that time is likely to cause frustration to both sides.

We see healthy senior/junior generation leaders build clear role descriptions, and then lay out a timeline for when a particular role is passed from one leader to the next.  This allows both to see that the transition will take place over time, and may reduce the anxiety that both would otherwise feel about the pace of progress when it is left undefined.  It also allows the junior leader to plan for the assumption of greater responsibility and authority, acquiring the experience needed to succeed in each newly acquired role.  This clarity also allows both senior and junior leader to see the differences between the senior leader’s management roles, and ownership roles.  [Note that typically management responsibilities and authorities are transitioned before ownership responsibilities and authorities.]

Setting a series of dates for transitioning roles will often create more progress than worrying about the final date of all authority transfer.  In fact, if Thomassen’s recommendations are headed and the two leaders support and respect each other, the working relationship between the two leaders may be such that the final date becomes more of a celebration than a power shift.  The power would have already been transferred by then.

Read the September issue of The Family Business Advisor.  Click Here.

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Is leadership earned or is it granted?

Chris Eckrich

This month’s Family Business Advisor article entitled, “Must the Prince Kill the King?” by Albert Jan Thomassen strikes at the heart of the question, “Is leadership earned or is it granted?”

Those who believe it is granted do their very best to accomplish assigned roles and responsibilities to please the senior leader, hoping that more authority will be granted.

Those who believe it is earned do their very best to do the right thing for the company, sometimes believing that ousting the senior leader is necessary regardless of the fall out.

Thomassen’s article offers a glimpse of what true leadership can look like in a family business, where the love of the  senior leader by the junior leader is shown by doing what is best for the company (earned leadership), while seeking to please the senior generation leader by involving him or her in the big decisions (thus being granted trust and authority).  In this way, the business is able to capitalize on the wisdom of both leaders, and the family is stabilized by the mutual respect felt between the two leaders.

The key leadership question family business owners must ask is, “What is best for our business and our family?”  Then, plans can be made to drive towards that answer.

 Read the September issue of The Family Business Advisor.  Click Here.

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