Developing the Next Generation of Leaders

By Jonathan Habbershon, High Center research associate

Phil Clemens, Chairman & CEO, Clemens Family Corporation
spoke to High Center members on May 10

Why train a next generation of leaders?  That was the question presented by Phillip Clemens, the Chairman and CEO of the Clemens Family Corporation and the keynote speaker at the May 10^th event for members of the S. Dale High Center for Family Business at Elizabethtown College.  Clemens began with a sobering truth that all business owners need to remember: “None of us has a guarantee of how long we’ll be around.”  Being prepared is the only way to ensure that when tragedy strikes your business and your family, both will rise from the ashes to find success. 

The value of solid leadership

Phil described the importance of solid leadership within the family.  The existing generation needs to develop leaders in the next generation.  Many businesses name a successor but don’t give much thought to the person’s ability to lead.  Developing adequate leadership can allow a succession to go smoothly and equip the successor with necessary skills to maintain the family business.  Through the course of leadership development for the next generation, a successor will hopefully become apparent to all and thus can have “buy in” from other family members.  The “buy in” from the rest of the family can support and encourage the successor spurring them towards success within the family and the business.

The timing of transitions

a slide from Phil's presentation

After the next generation’s development was discussed, Phil turned to the current generation of family leaders.  He emphasized the importance of timing with the transitions.  Family business owners can stay too long or not long enough -- both are a hindrance to the growth of the business.  When family members openly dialogue about what the current generation of leadership wants for their life and the business, these conversations help to avoid this problem.  The incoming generation can learn what the current generation’s wishes are for the business, their retirement and the future generation’s involvement.  No family members should ever assume anything about the succession plan.  When family members make assumptions about who will take over, when, how, and what will become of the business, they soon realize that someone else had a different idea than they did and friction turns into fighting.  Open communication is the only way to avoid the issue of assumptions and the possible fighting that could ensue.

Both generations involved in the handoff

The current generation has to establish what a smooth transition would look like for succession.  According to Phil families essentially have one good shot at a transition. After that any attempts will be uncomfortable and could possibly cause more problems for the family or the business than if proper preparations were made at the outset.  Honest and open conversation allows for all expectations to be understood and heard by all family members.  True investment in the next generation of leaders will help ensure that a transition is being made smoothly and to the right candidate.  The future of the family business rests with the next generation;  it is critical for the current generation to be thinking about how to make a smooth handoff. 

Keystone Custom Homes a Leader in CSR



Panelists discussing Corporate Social Responsiblity included Jeff Rutt, president of Keystone Custom Homes and founder of Hope International. The panel was led by E-town alum and Fulton Bank executive Jim Shreiner, Class of 1973.

Corporate Social Responsibility (CSR).

Keystone Custom Homes President Jeff Rutt and founder of Hope Internationational joined an esteemed roster of speakers including Muhammed Yunus for Elizabethtown College's Carper Lecture Series on April 4 and 5. Keystone Custom Homes became a member of the S. Dale High Center for Family Business in 2012.
For some companies CSR is a department, an office to be staffed--a cost of doing business in a socially responsible age. For Rutt, CSR is a missional way of life.

He talked about how Hope International, a network of microfinance institutions operating in 16 countries around the world, in a moving PowerPoint presentation with students, administrators, and distinguished campus guests including other High Center members.

A Hope International microloan recipient

Through some early experiences in church-directed mission, Rutt and his family learned that in the world many creative, intelligent people are mired in poverty because they lack access to capital. Microfinance services can make the difference between economic entrapment and the realization of their dreams. HOPE believes that microfinance can be a powerful force in changing the world for the better and that people of God should be called to care for both physical and spiritual needs of others.

The panel offered a truly enlightening perspective on one family's desire to help those in need, how Rutt was inspired by the example of Muhammed Yunus and the Grameen Bank, and how Hope International became not merely a relief agency but an agency to help marginalized people around the world rebuild lives for themselves and their families.

 

The Power of being a little bit BETTER

by Jonathan Habbershon, High Center Associate

Jay Goltz, serial entrepreneur

Great employees make a company great; they can even differentiate you from your competition.  The first part of having great employees is bringing them in.  Interviewing and following up on references are critical to determining the excellence of an employee before they even begin working for you.  According to Jay Goltz 75% of management is hiring the right person from the beginning.  Start with writing a detailed job description in order to attract the right people, advertise well and perhaps you will attract a competitor’s best employee away, have the RIGHT person interview and always check references. 

Managing great employees that are competent, work hard and are loyal is much easier than constantly trying to coach someone to learn those skills.  After an employee has been properly checked train them very well.  Create lists of all possible adverse scenarios that can happen and train your new employees on how to handle each one.  Teach employees to practice how to interact with customers before they ever interact with a customer; by doing so you are diminishing the risk of a newer employee turning away a potential client.  One bad employee can ruin the appearance of an entire organization to a customer and not only will they never come back to you but they’ll only give you bad press when your name does come up.

Despite hiring great employees there comes a time when some need to be let go.  The most productive employee in your company can be one of your worst personalities and can negatively impact the work lives of the rest of the company.  Jay Goltz made a critical point regarding nurturing environments and family businesses; you can be the most nurturing environment in business but at the end of the day that does not mean you keep employees that create hostile work environments.  This becomes especially difficult in a family business because at times that employee can be a family member.  The duty of the business owner is to protect the business and if anything you’d be doing a disservice to the rest of your work force and the company as whole by keeping the difficult employees.  Jay offered up a good test to determine if a company has any employees like that: “Is there anyone in your company that if they walked in to your office Monday morning and quit your first instinct would be to sigh in relief?”    It is Jay’s opinion that you as the business owner need to begin the process of letting that employee go.

Releasing employees is never an easy task and never fun.  There are three ways to handle a difficult employee.  You can “Fix” the issue with coaching and teamwork and hopefully they’ll respond well.  You can “Fire” the employee perhaps after a warning or two, or even after the “Fix” stage.  Firing an employee can be tough simply because you will have to pay unemployment; this is a factor to be considered but should not be a deterrent from firing someone.  Finally “Flee” is the process of encouraging an employee to look elsewhere.  Do not bully employees out the door, or make their situation uncomfortable but let them know their behavior is not going to be tolerated and perhaps they should look elsewhere.  Ultimately your focus should always be towards making your business just a little bit better and remembering that you’re only as good as your worst employee. 

 

 --adapted from serial entrepreneur and columnist Jay Goltz’s presentation to the High Center for Family Business membership and guests on March 22, 2012.  Jay can be found at www.jaygoltz.com

High Center offers family business advisor program

Family businesses are complicated. The normal challenges of advising businesses are tough enough, but providing professional advice to a family business involves additional dynamics that can impact their competitiveness as well as your effectiveness as a family business advisor.

Besides serving as advisors to family businesses for decades, experts at The S. Dale High Center for Family Business are now offering a program to help professionals who work with family businesses to help you be more effective in as an advisor to family enterprises.

As a trusted advisor to Family Businesses you’ve probably experienced the complexities we’re talking about. We’ve been working with Family Businesses exclusively for more than 20 years and have insight and experience into their unique challenges and capabilities that we want to share with you.

This intensive two-day workshop is a truly unique professional development opportunity offering information, education, case studies, role playing, and other dynamic experiences for professionals serving family businesses.

The Family Business Advisor Program, designed expressly for you, will help you:

• Develop a deep understanding of the complexities of family enterprises and how a company’s “Familiness” can be a competitive advantage.
• Apply a new set of tools for effective management of the interactions between the family and the business.
• Strengthen your relationships with your family business clients – becoming a trusted advisor for both the senior and successor generations of family business owners.

View the program itinerary here or download a PDF that includes the complete two-day itinerary for the event. Or click on the button below:

As an attendee, you will bring a real-life case study to the workshop and obtain expert feedback from our instructors and your peers. In addition, you’ll receive individual feedback and follow-up with our highly-skilled facilitators after the event, so you can further increase your expertise with your family business clients.

Expert facilitators include Michael N. McGrann, executive director of the S. Dale High Center for Family Business and Dr. Steven K. Moyer, principal of SKM Associates LLC, a full-service family business consulting firm.

Register today for our two-day workshop:

Dates: June 6 and June 13, 2012 (both are Wednesdays)

Times: 8:00 a.m. – 6:00 p.m.

Location: The S. Dale High Center for Family Business, Hoover Center, Elizabethtown College campus

1 Alpha Drive
Elizabethtown, PA 17022
(717) 361–1275
Email: FBC@etown.edu

Cost: $1,000.00 (includes program materials, three meals and an evening reception).

*Who should attend: Anyone providing products or services to family businesses will benefit from this program. Attendees should have 5 – 7 + years of experience and are committed to growing the family business sector of their business.

If interested, please email the FBC@etown.edu or call 717-361-1275.

New survey shows PA family businesses confident for 2012

Results from a new regional report, The Family Business Confidence Survey, reveal optimism among family business owners for 2012, according to researchers at the Department of Business and the S. Dale High Center for Family Business at Elizabethtown College.

The survey is the first ever to examine family businesses in PA. It was designed to assess family business confidence in the future from an economic and hiring perspective; to document best practices in succession planning, strategic planning, and human resource management; and to understand how family businesses view and respond to the current economic and regulatory environment.

Dr. Cristina Ciocirlan, project principal, explains
the scope of the research at the presentation of
findings on February 29

"This report is unique in several ways," said Dr. Cristina Ciocirlan, assistant professor of management and project principal. "It is timelier than national- or state-level surveys. It also alerts state policymakers to the specific concerns of family businesses."

Key findings from the report suggest that two-thirds of the 72 respondents are upbeat about their own prospects, expecting increases in sales revenues and profitability in 2012. More than one-third of family businesses plan to hire more employees next year, while about 40 percent plan to increase their capital expenditures. A majority of respondents plan to increase spending on technology investments and upgrades.

Moreover, PA family businesses realize the importance of investing in human capital and innovation. Ninety-seven percent of family firms plan to keep constant or increase their training and development expenses, while a very large number (85 percent) intend to maintain or increase their research & development expenses.

While slightly less than half of family businesses indicated that they are pessimistic about the future of the U.S. economy, they are more confident in their individual ability to grow and prosper.

Mike McGrann, executive director of the
S. Dale High Center and co-presenter

"Family businesses are confident about their future," said Michael N. McGrann, executive director of the High Center, who assisted with the project, "because they have a significant control of their own destiny. In the long term, they have proven themselves to be flexible, more innovative, and more competitive than non-family businesses."

The report also offers good economic news for customers of family businesses. "Moving forward, they will be buying," McGrann said. "They are ready to put their money where their mouths are, so to speak."

Dr. Sanjay Paul, chairman of the Department of Business, was the third scholar working on the project. "Family businesses are of crucial importance to our economy. Yet, they face unique challenges. We hope these findings will help family businesses make timely decisions as well as capture the attention of lawmakers and regulatory agencies," Paul said.

The report also includes data on the internal challenges and external challenges facing family businesses in addition to ways that PA can make the regulatory environment more business friendly.

In late November and early December 2011, an anonymous survey was emailed to High Center members and other family businesses. Respondents included family businesses from the following PA counties: Lancaster, Dauphin, Allegheny, Luzerne, Indiana, Bucks, and Montgomery. Five interviews were also conducted with randomly selected family businesses.

On average, the age of businesses responding was 50 years, more than two generations have held control or ownership of the business, and they employ 74 full-time equivalent employees.

The 26-page report includes an executive summary and key findings are available in a downloadable report from the High Center website.

For more information, contact the S. Dale High Center at FBC@etown.edu or call 717-361-1275.