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. 

Build your ownership team for long-term success: Family business retreat

Dr. Stephen R. Treat, facilitator

Long term competitiveness in a family business depends on the unity of the family ownership group. Investing time and effort in the shareholder team of the family business is a critical strategy issue.

To help you achieve your goals of family unity and long-term prosperity, the S. Dale High Center for Family Business at Elizabethtown College is offering a two-day retreat for family business owners on Thursday evening, October 13, and all day Friday, October 14, featuring expert facilitators trained in family business dynamics: Dr. Stephen R. Treat and Michael N. McGrann.

This retreat includes sessions to help you build ownership unity while defining the strategies and structures that are necessary for success across multiple generations. The outcome of your investment will be a stronger ownership team and critical tools for strengthening your business.

This seminar will provide you with tools to:

• Manage "difficult conversations"
• Improve your leadership of the family system
• Develop stronger communication skills
• Develop skills for next generation of entrepreneurs
• Strengthen accountability and feedback throughout the organization
• The retreat will also include two facilitated family meetings.

Dr. Stephen Treat is a senior therapist and an ordained minister who maintains his own clinical practice at the Council for Relationships in Philadelphia where he works with individuals, couples, and families. He has counseled companies such as Accenture, ASI, Cigna, as well as many family-business organizations. He received his doctorate from the Andover Newton Theological Seminary in 1976.

Michael N. McGrann is the executive director of the S. Dale High Center for Family Business. He has conducted seminars for family businesses, executive education programs, and personalized educational workshops for family groups around the world. He also provides consulting services to family businesses that need assistance with leadership transitions, developing accountability structures, empowering next generation teams, building unified shareholder groups, and identifying the unique characteristics of a family business that can produce a competitive advantage.

The retreat is on a cost-basis and is open to High Center members ($2,000 for up to four family shareholders) and non-member family businesses ($2,500 for up to four family shareholders). For the retreat schedule and other information, click on the link to the PDF. Or contact the S. Dale High Center for Family Business at Elizabethtown College by emailing fbc@etown.edu or phoning us at 717-361-1275. You may also visit our website at www.centerforfamilybusiness.org

Five Best Family Business Tweets

by Gale Martin, Director of Marketing and Member Relations, S. Dale High Center for Family Business

Many first-rate publications Tweet their content

on Twitter, one article at a time.

Day in and day out, our High Center Twitter feed coughs up some inspired content which is then aggregated into The Family-Business Daily online broadsheet.

Here's five of my favorite content Tweets from the previous week:

• 3 Tips for Leading People Older Than You - from the Harvard Business Review. Because I help facilitate a forum for next generation family business leaders, I know this is an important topic. The workforce is aging, and family businesses are known for valuing longevity with their employees.
• Experience Gained Outside the Family Business Can Be a Plus - from Crain's Cleveland Business, which looks at issues affecting the entrepreneurial economy. 
• How I Nearly Tripled My Blog Traffic - by Ken Mueller at the Inkling Media blog. In the true spirit of social media (which is give more than you get) Ken shares some wonderful tools and what are sure to become best practices for social media marketers.
• Does Entrepreneur Education Have Value? Can It Be Taught? - by Babson College. The Executive Director of the High Center Mike McGrann, formerly a professor at Babson, absolutely concurs that it can and should be taught. That's why he teaches a New Venture Creation class at Elizabethtown College now. For senior execs who want their next generation to exhibit more of their own enterprising spirit, this is an important read.
• Entitlement on Steroids -  by Paul and David Karofsky. This is a bald-faced look at "an attitude of noblesse oblige gone awry" among next generation family business leaders.

So there you have it! Happy reading, and if you aren't following these folks on Twitter, if you don't have time for Twitter, all you need do is subscribe to The Family-Business Daily--it arrives every day in your preferred email Inbox.

Co-Presidency Doesn’t Work for Most Family Businesses

by Mike McGrann, Executive Director, S. Dale High Center for Family Business

Mike McGrann

It’s not uncommon for family businesses to have two rising executives (two siblings, two cousins, etc.,) both of whom feel they are the right person to become the next president.

If that sounds like your family business, should you be thinking co-presidency? It may seem like the easy answer to a tough succession decision.

However, the fact that it is an easy answer does not make it the right approach. There’s a good reason why the United States has only one president. I am reminded of a comment from former U.S. President George W. Bush, the guest speaker at the 2011 Lancaster Chamber dinner, who said, “The President gets lots of input from many sources. My job was to make the call based on the information available.” In this system, there is no ambiguity about who is responsible for making the tough call.

Family businesses, like all organizations, require a clear hierarchy to function effectively…and having one highly qualified individual at the top of the organization is the most effective way to achieve a clear hierarchy. The challenge with co-presidencies is that, by their very nature, they lend themselves to ambiguity about who makes what decision, and when that decision can be made. This kind of ambiguity at the top of an organization is deadly and quickly leads to confusion, organizational inefficiency, lack of productivity, etc.

Is a co-presidency right for you?

Often the decision to appoint co-presidents is often made because of the potential family conflict that would arise if one family member is chosen over the other. The merit of who is really most qualified to lead the company gets lost in the fear of conflict and hurt feelings that one family member “won” and the other “lost” in the succession marathon.

This is not to say that co-presidents cannot work. In fact, Mars and Smuckers, two of the most competitive and successful food manufacturers in world have long history of effective leadership from two brothers who served as co-presidents. Tim and Richard Smucker operate their business based on a clear set of roles for each brother, constant communication between them, and a high of degree of trust in each other.

So if you are leaning toward co-presidents, you’ll need crystal clear roles and a process for resolving disagreements when the roles of the co-presidents overlap (A&B below). A Board of Directors can be effective in this role.

Mike’s Bottom Line: If you are going to appoint co-presidents of a company, it should for the right reasons: you have two highly qualified family members with distinct skill sets whose roles and responsibilities have been clearly delineated—not because it is the easiest way to avoid a family conflict.

Stauffers of Kissel Hill rebranding a triumph (and for good reason)

by Gale Martin, Director of Marketing and Development, S. Dale High Center for Family Business at Elizabethtown College

Last week, one of our Center members, Stauffers of Kissel Hill, detailed their rebranding process at a Breakfast Seminar, an event at the heart of our programming for members, and the last of the 2010-11 series.

Just prior to Stauffers sharing their case, brand expert Kae G. Wagner, president of North Star Marketing, shared the following slide, the Adizes Organizational Lifecycle:

During the case study presented by Stauffers' principals, COO Jere Stauffer and Marketing and Branding Director Debi Drescher, marked their own status on the Lifecycle graph Kae presented as somewhere between "recrimination" and "entrenched bureaucracy."

Stauffers of Kissel Hill's humble origins
as a roadside stand

Following a site visit and no-holds-barred critique from a peer group within the garden center industry, the Stauffers' ownership team knew they needed to change and that they needed to put a plan in place to accommodate wholesale change.

For a family owned and operated business to admit that strategic improvements were necessary to remain competitive is a feat in itself. One reason family businesses succeed against daunting odds is the deep pride owners take in the business. Such extreme pride can make it hard for family business leaders to hear any criticism--period.



Their customer- and quality-focus were hampered
by an outdated look. (Before rebranding)

Eight years ago, Stauffers launched a branding campaign that succeeded, owing to strong personal values that informed their corporate values, a desire to put the health of the business ahead of personal agendas, and sheer pluck and determination.

Listening to and processing feedback

Jere Stauffer mentioned that industry peers gave the ownership team pages and pages of criticisms to chew on. Both the ownership group and the executive management team put their own fears of being criticized aside, which allowed them to really hear the recommendations made, take them into account, see patterns in the various critiques, and emerge with a prioritized list. That's no easy task, listening to critical feedback about the business that you parents or grandparents founded, a business in which most of these folks grew up.

Working toward consensus and a common goal

While everyone charged with rebranding Stauffers of Kissel Hill had their own ideas and opinions about what the new brand should look and feel like, eventually consensus had to be reached to allow the company to move forward. For some, that meant their favorite design or brand tenet wasn't selected. With so many stakeholders involved and no single stakeholder possessing the equivalent of the line-item veto, it is worth repeating that gaining consensus was no easy task. More than one family business has been thwarted at this stage because individual egos loomed larger than the overarching desire to see the family business succeed. Ultimately, Stauffers' stakeholders kept the bigger picture in focus, subordinating personal agendas.

Perseverance



A display from the newly rebranded garden center

 Across eight locations in Central Pennsylvania, reaching hundreds of employees at every operational level, spanning five years and counting, including the worst economic downturn since the Great Depression, Stauffers of Kissel Hill demonstrated the perseverance necessary to successfully roll out a new brand.

"Everybody was on board," Mike McGrann, executive director of the High Center said. "This allowed them to be truly systematic in their roll out, across all aspects of their business. Every manager and every employee was made part of their rebranding."



The new Stauffers of Kissel Hill Rohrerstown store!

In rebranding themselves, Stauffers of Kissel Hill engaged in an awe-inspiring process that other family businesses can learn from and realized jaw-dropping results.

Congratulations, Stauffers of Kissel Hill, and best wishes for continued success!

For more information about Kae G. Wagner's brand presentation, see this post by Scott Heintzelman, the Exuberant Accountant.

Good governance is more than you think . . .

Bill Alexander

Last week Wharton professor and family business advisor Bill Alexander presented a workshop on how family business executives can set up a board of advisors. This post isn't a blow-by-blow account of that presentation because that would be giving away the store--obviously, the High Center would like you to enroll in this executive workshop the next time it is given.

One point Bill Alexander made is worth mentioning and merits your attention: Yes, a board of directors or advisors can provide governance and help a family business leader accomplish your strategic and tactical goals. However, governance is about more than installing a board. Good governance also includes setting up family meetings for the family shareholder group. It requires looping in non-family shareholders. It means doing the necessary work to set up or to preserve a functional family business ownership group--before any outside director you hire steps into the picture.

Never bring in a paid outside director or advisor expecting them to right your vessel. If you have a dysfunctional family ownership group, you must take steps to get that ship sea-worthy first. If you have squabbling and in-fighting within your ownership team beyond what is reasonable and customary, you need to address that dysfunction before bringing in someone to oversee the rest of your operations.

You will do your family business a world of good by establishing a regular communication for non-family shareholders through constructive, focused family meetings and you'll be laying the necessary groundwork for a board of directors or advisors to help you realize your key objectives.

Rejoice, family businesses. Rejoice!

by Gale Martin, Director of Marketing and Member Relations, S. Dale High Center for Family Business

I previously reported on reading the book Managing for the Long Run just as the Generation Next affinity group at the S. Dale High Center began a study of it lasting several months. You can read that post here.

Recently we discussed the final chapter of the book, in which authors Danny Miller and Isabell Le Breton-Miller make the following recommendation (and I quote):

"So if you are a manager of a private or family business, rejoice! You may have at your disposal levers of competitive advantage that most of your rivals will find it hard to access (p. 209)."

These levers were discussed in detail with industry examples in the preceding 208 pages but are also reviewed in the concluding chapter, some of which include the following:

Governance

Executives at family businesses act like stewards instead of careerists. (Substitute opportunist for careerist).  Stewards protect the long-run interests of the company and all its stakeholders as compared to short-sighted executives who put short-term gain, such as quarterly profits ahead of the communities in which they operate, devasting communities and shaking people's faith in executives and corporations.

A meaningful mission

Family business leaders rally their firms around a mission with genuine scope that
can remain relevant for decades. Missions with substance also inspire commitment, such as Hallmark's commitment to social harmony and S. E. Johnson's commitment to add real value to useful consumer products.
 

The capability to deliver more value

The authors contend that a long-term focus allows family business leaders to concentrate their attention on what needs to be done to satisfy both mission and the market. Family businesses can allocated more "skewed, intensive, and long-term resources" than non-family rivals can to bootstrap capabilities and leverage them. An important outcome of focus, say the authors, is that family firms can deliver more value that may be impossible for competitors to imitate.

The book concludes with a hit-list of recommendations tailored for family businesses worth reiterating, many of which have implications for solid and high-performing human resources:

• Nurture the tribe or take care of talented employees whose values jibe with the mission
• Understaff--this reduces the need to layoff people while giving others larger roles
• Design jobs with scope--and provide broader job descriptions to facilitate personnel development
• Develop good relationships with the community to reinforce your image of responsible citizenship

In short, this book is chock full of best practices and research-based recommendations to help long-term leaders like family business executives succeed. It also contains a little blatant cheerleading.

Who in this business climate doesn't need both good counsel and the occasional pat on the back?

Guest post: “The first rule of holes: When you're in one, stop digging."

by Phil Clemens, Chairman and CEO of the Clemens Family Corporation

On Ground Hog Day, Punxsutawney Phil came out of his hole to predict if spring is just around the corner of if winter will still have its grip on us. For groundhogs, a hole in the ground is their home; for leaders a hole takes on a totally different meaning.

If you’re in a hole in generally means that you stuck and can’t move either forward or backward. Sometimes we get into holes that have been dug by others; other holes are ones that we have dug ourselves and then slip into them – or we have spun our tires and created a hole. Either way – you are stuck.

“The first rule of holes: When you're in one, stop digging."
--Molly Ivans 

What is the natural thing to do when you’re in a hole? Start digging yourself out. However, Molly Ivans says we need to stop digging. Why? Making the hole either bigger or deeper does not enhance your chance of getting out – in fact it just makes it worse. What do you need? Help from someone who is willing to come along side of you to either push or pull you out. Rarely can you get out of a hole without help.

Many leaders are often too proud to ask for help and sometimes even too proud to accept help if it is offered. Leaders solve problems – even getting out of a hole. They keep digging thinking that they are the only one that can solve any problem. Pride blinds them from seeing what they really need – HELP. Great leaders know when they need help and don’t mind asking and accepting help. Asking and accepting help is a sign of strength; not weakness.

Are you stuck in a hole today? Are you willing to get and accept help or are you determined to “do it myself”? Or if you see someone else is stuck, do you laugh at them and continue on your merry way – because it’s not your job to help others.

Great leaders know when someone else is stuck (they are constantly looking out for others) and are willing to help get that person back on the path – even if it isn’t their job or if it changes their plans. They are willing to give of their time and resources to help others. It is just the right thing to do.

Leading means asking questions? Inconceivable!

by Gale Martin, Director of Marketing, S. Dale High Center for Family Business

If you asked ten employees what qualities effective leaders should possess, chances are "solid decision-making ability" would be mentioned by at least half of those employees.

And what about "product knowledge" or "knowing the right answers"? Shouldn't good leaders know all the answers, too? Shouldn't they have deep product and business knowledge and wisdom in spades in addition to a refined ability to trust their gut in decision making? 

While no one can deny all those things are attractive when manifest in chief executives, the simple truth is that no leaders will always have all the answers. In fact, a much better skill to have than being a know-it-all is leading by asking questions.

Wait a minute... leaders who ask questions are telegraphing that they don't know things they probably should know, right? Wrong. Leaders who ask questions rather than go about supplying all the answers are, by contrast, demonstrating supreme confidence in their employees as well as an appealing, humbling level of vulnerability.

Business leaders don't have to be gods. And quite frankly, they can't be.

Asking your employees or those in your top management group questions creates more buy-in than does issuing directives. Especially if you are leading a family business from the successor generation--not the god generation. By asking questions, you'll get more information and better information to use in decision-making than if you presumed to believe that you alone were the source of all good answers.

Sum & Substance: The next time you are leading a team of employees, and you feel the urge to bark out orders or answers, try a new model. Try asking questions and see if that doesn't lead you to a better course of action while increasing employees trust in your leadership.

Thoughts for a New Year in Family Business

If your family business is heading into 2011 without a succession strategy, there's simply no way your family business will be able to compete in the long run. Succession planning is a strategic issue.

Give your family business what it deserves in 2011. Resolve to address succession issues this year. If you're ready to work on succession planning, the S. Dale High Center offers personalized consulting services to family firms throughout North American and Latin America.  Email the Center for more information.

Leadership transitions--What could be more vital to a family business to manage well?

Leadership Transitions Panelists: Phil Clemens, Tony Martin, Dana Chryst, and Matt Diller

A diverse family business panel featuring family business principals Phil Clemens, Tony Martin, Dana Chryst, and Matthew Diller will discuss leadership and their views on leadership transitions during the S. Dale High Center's next breakfast seminar on Thursday, January 20, 2011, from 8:15 to 11 a.m.

Leadership transitions in family businesses are potentially volatile events. Typically, there tends to be a serious failure to plan adequately for leadership transitions in family businesses.

Consider these daunting statistics related to family businesses compiled by Key Resources:

• 88% of family owned businesses plan to stay in the family
• 47% expect leadership to change within 5 years
• 42% have not yet chosen successors (of the CEOs 61 years and older, 55% haven't yet chosen a successor)  
• 13% of the family members said the CEO would never retire; 34% said they were not aware of the successors intentions
• 20% have not yet completed estate planning

Is there any process more important than transitioning a company from one senior leader to another?

Because each principal represents a different viewpoint and level of responsibility within their family businesses, the panelists will offer wide-ranging experiences and varied expectations and results regarding leadership transitions in their companies.You'll hear from several generations during the "Leadership Transitions" panel--senior executives, rising executives, and next generation executives.

Moderated by S. Dale High Center Executive Director Mike McGrann, the panelists will be asked about some of the processes and best practices they have employed or are employing to ensure successful leadership transitions, and how their family businesses prepared employees and customers, other family members, and themselves for transitioning senior and executive leadership.

A videotape of this event will be available shortly after January 20th through The Network of Family Businesses website. If you live in Central Pennsylvania, and would like more information on this event, call the S. Dale High Center at 717-361-1275.