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. 

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.

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.

An Ounce of Prevention

By Joe Molony, Elizabethtown College professor of accounting and senior advisor to the S. Dale High Center

As one who still reads the local papers on a daily basis, I am astounded to see the frequency with which a trusted, loyal employee has been caught stealing hundreds of thousands of dollars from their employers who often are family-owned and operated businesses.

Why does this happen. Are employees just not trustworthy? Well, maybe they are or maybe they aren’t, but even the best of us often succumb to temptation especially when we are most vulnerable and the temptation so easily available.

The point is we owe it to our employees to avoid putting them in potentially compromising situations.

The appropriate cash controls need to be in place. If you haven’t got the right checks and balances in your accounting system, you are inviting that employee to dip into the till should they run into financial difficulties such as unexpected medical expenses, loss of spouse’s employment, or mounting personal debt. Of course, some may be motivated to raise their standard of living with access to easy money. And who can blame them if no one seems to know or care? If you really cared, you would be monitoring the flow of cash.

The saddest part of all is that it isn’t very hard to do. Here are a couple of recommendations for your consideration:

1. Have an accountant perform an annual audit. Just the idea that someone will be checking their work is often sufficient to deter an employee from dishonest acts.

2. Have someone who was not involved with the transaction being paid be the check signer. They should review the documentation and question anything that appears unusual. Involving more than one person in the transaction will require the dishonest employee to gain the cooperation of another employee thereby creating a road block that may also deter them.

These two simple suggestions just might save you enough money to retire early! ( And keep your employees out of jail).

You, too, can learn from politicians...

by Mary Beth Matteo, Founding Director of the S. Dale High Center

Nothing like a real life example to bring “bad leadership” into focus. In your view, what mistakes are our politicians currently making?
• Failure to listen

• Failure to think strategically—planning for the long haul

• Refusal to give up some of their power

• Following their agenda, despite criticism, because they know “they’re right”

• Assembling the facts selectively

• Failure to bring constituents together: dividing people instead of unifying them

• Failure to set an example, leading with integrity

Sum & Substance: If you’re like the rest of us—not quite perfect yet—you may have a few of these failing in common with our politicians! Some of these failings, when made by people in the government, seem arrogant and blatant. But these practices are easy to slip into, even when we’re so close to perfect!

Quote of the week

“Leadership is the art of getting someone else to do something you want done because he wants to do it.”
--Dwight Eisenhower

The challenge of finding good leaders

by Joe Molony, senior advisor to the S. Dale High Center for Family Business and professor of business at Elizabethtown College

Why is it so hard to nail down the qualities needed to be a good leader?

Maybe it’s because under different circumstances different qualities are needed. Sure, there are some common elements like visionary, ethical, steadfast, decision maker, etc. But aren’t military leaders different from political leaders? And aren’t CEOs of public corporations different from the heads of family-owned businesses? And how about the demands of various industries--don’t they require different skill sets given the employment make-up and a whole host of other differences like service versus manufacturing enterprises?

Perhaps we should explore these differences of leadership requirements and include CEO’s of public corporations in these discussions to expand our understanding beyond the family business perspective. Or will we be content to just feel our way along and rely on an occasional inspirational quote from some leader of a different time and place which may or may not have any relevance to our situation?

In the case of family businesses, by establishing a board of advisors, executives of family-owned firms can have the best of both worlds--retaining the autonomy and intuitive approach to running their business that allowed them to be successful in the first place combined with the suggestions and perspectives from other business leaders serving in an advisory capacity.

quote of the week...

"The best leader is the one who has sense enough to pick good men to do what he wants done, and the self-restraint to keep from meddling with them while they do it."

 — Theodore Roosevelt, American President

Leadership is listening . . . to employees

by Mary Beth Matteo, Founding Director of the S. Dale High Center

Knowing what your employees want and need from you sounds like the soft stuff, doesn’t it? In reality, understanding employee needs directly impacts the bottom line.

In a recent study, “Working in America: What Employees Want,” 82 percent of employees who are satisfied with their employer said that it motivated them to go above and beyond their responsibilities. A Deloitte study in 2004-2005 found that while “stock performance annual return of the SP 500 was 9%, the return for Best Companies to Work for was almost double, at 16 percent.”

Furthermore, as the economy begins to come back, baby boomers start to retire, and more jobs become available, the issue of recruiting and retention will again become huge. Understanding what employees are looking for is fundamental.

What employees expect from you:

• Clear goals and objective measurements for their success: companies that work on “whims,” murky goals, and favoritism are in trouble;

• Resources to do the task well and a reasonable time to do it in;

• Respect: the right to never be publically humiliated; tactful discipline is key;

• A vision: studies show that employees want their leader to inspire them and make them proud to be part of the organization, a team, or even a product;

• Autonomy: once the parameters have been set, working adults need freedom to achieve; micromanagement destroys initiative;

• Fairness: reward those who achieve; discipline workers and colleagues who are out of line; provide fair and reasonable compensation; and

• Productive and satisfying work environment; in most surveys, this trumps the salary issue.

Sum and Substance: research shows that there is a huge disconnect between what employers think their employees want, and what employees actually want. Narrowing that gap by looking at the research—and asking your people—will improve recruiting, retention and the bottom line.

Leadership is paying attention to trends and knowing if and when to follow them...

Quote of the week

“There is no such thing as a perfect leader, either in the past or present, in China or elsewhere. If there is one, he is only pretending, like a pig inverting spring onions into his nose in an effort to look like an elephant.”
—Liu Shao-Chi, Chinese politician

Leading in Turbulent Times

by Mary Beth Matteo, Founding Director of the S. Dale High Center

Leading in good times can feel effortless. Leading in turbulent times is taxing (no pun intended.)

Check out Rosabeth Moss Kanter on the Harvard Business Review Blog, “13 Mistakes leaders make in Turbulent Times and How to Avoid Them.” Mistakes range from acting too quickly to being too controlling to neglecting key stakeholders.

Sum and substance: Tough times demand excellent communication and keeping your finger on the pulse of the organization. Doing what you always did well, and better!

Best Models of Leadership for the Next Generation

by Mary Beth Matteo, Founding Director of the S. Dale High Center

Who best models leadership for the next generation? Not (usually) another family member. Leadership is something best learned from others.

There are many options for young successors.

1. Work in another businesses: working outside the family business can be a tremendous opportunity, especially the experience of watching a leader who is not Mom or Dad. Even when the employment has not been entirely positive, we learn from negative examples as well as positive ones. Knowing what NOT to do can be just as useful as knowing WHAT to do.

2. Find a mentor: nothing is better than the tutelage of a seasoned pro. Shadowing and coaching reap tremendous benefits. Louis Whitehead has a good article on finding a mentor.
3. Seek volunteer leadership opportunities: chairing committees, serving on volunteer boards, and organizing special activities provide great opportunities for leadership. These are particularly useful for the next generation, because they’re away from the “spotlight” shone on family members. Kent Blumberg has a great article outlining the benefits of volunteer leadership, which includes finding opportunities that help you define your leadership style and getting things accomplished with few resources. Take a look.

Sum  and Substance: A final thought: identifying opportunities to learn leadership is the responsibility of both generations. The founding generation needs to think strategically about leadership training for the next generation and often knows, for instance, great mentors who are peers, or managers in the family business. But the younger generation is often very creative in developing their own leadership training ideas—only they know their passion and what will sustain it!

Quote of the week

Don’t tell people how to do things, tell them what to do and let them surprise you with their results.

--George S. Patton

Leadership: Firing the “Marginal” Employee

by Mary Beth Matteo, Founding Director of the S. Dale High Center

Most of us have had to fire employees. We consider ourselves lucky when the case is clear cut: an employee commits an illegal act or exhibits egregious behavior that cannot be tolerated.

But most cases where firing is required are much more difficult. Any of the following lies in a gray area that frequently makes us put off the decision or avoid it altogether. A loyal, long-time employee who has contributed to the organization but can no longer make the grade. A family member who is not up to the task. A high achiever who creates dissention in the company. A well-liked employee who is coasting. The list goes on.

There are no simple answers to these cases but good leadership requires that we first focus on the organization and its people. No matter how nice, or well-liked, or loyal an employee has been, his or her failure affects everyone. It brings down morale. It destroys the idea of meritocracy. And most important: it requires other employees to pick up the slack. Favoring one person punishes the rest. When we focus on the rest, the decision becomes easier.

We know the options:
• Counsel the person out and assist him or her in a job search; or
• Move the person to another job in the organization to which he or she is more suited

And, lastly, don’t forget: you need a paper trail that documents the employee’s failure. This is one of the biggest mistakes we make. Especially with a likeable employee, or employee who seems to be trying, we tend to slide him a break with a decent evaluation. Needless to say, this will cause enormous problems down the road!

Sum and Substance: Being a good leader means making tough decisions in the best interest of the company. As the old adage goes, one bad apple spoils the bunch. A problem employee can be a bad apple who must be removed in order for the business system to thrive.

Can we measure leadership?

by Mary Beth Matteo, Founding Director of the S. Dale High Center

All of us want to hire “leaders” in key positions in our companies. Most of us want to train future leaders, either in our business, or our family.

How do we recognize leaders, or potential leaders? Usually we focus on the personality attributes of leaders and then look for these characteristics in specific individuals. There are a plethora of tests and training methods to identify and strength leadership characteristics whether employees or family members.

This is only one half of the picture, so let’s back up and look at the definition of leadership. A leader’s responsibility is to establish the conditions (the culture, the climate, the incentives) to enable others to take the right actions to succeed. If the top executive achieves the results himself/herself, the top executive is not a leader but simply a high achiever. If the top executive enables his/her employees (or family) to succeed, that is a leader!

Sum and Substance: So, how do we measure leadership? We measure follower behavior and the achievements of followers. Leaders get results through people!

Leading your lawyer (and when your lawyer should lead)

by Kim Decker, Partner, Barley Snyder, LLC, a corporate partner of the S. Dale High Center

Dealing with a lawyer - or any professional for that matter - is a mix of leading and following for both parties. Although the client is the “boss” in the relationship, there are times when, because of a lawyer’s special knowledge or skills or because of the needs of a particular situation, the boss needs to let the lawyer take the lead. The real trick is to figure out when you need to play the lead role, and when you need to let your lawyer forge ahead.

There are no black and white answers to who ought to lead on legal matters. A lot depends on your relationship with your lawyer and level of trust as well as your own personal leadership style. For instance, its often better to let your lawyer be the lead negotiator on adversarial matters where you want to preserve a related business relationship - let the lawyer be the bad guy and avoid any bad blood between the business people.

Similarly, where you have a good business relationship, but the legal issues don’t appear to be resolving between the lawyers, you may want to step in with your business partner to break through the impasse. The long and the short of it is, whether you are leading or following your lawyer, you should be the one setting the destination. Use your lawyer (and other professionals) - whether as advance guard or rear guard - to help you get there.

Steve Treat Seminar Really a Treat

Senior therapist, CEO, and ordained minister Steve Treat was the featured presenter on Thursday, November 12. According to the evaluations of those attending, Treat's presentation on participatory leadership was our highest rated seminar to date.

Scott Heintzelman, a Partner with McKonly & Asbury, one of the S. Dale High Center's Corporate Partners, reviewed the session on his blog "The Exuberant Accountant." Click here for Scott's post on the Treat Seminar.

Book Pic: Flight of the Buffalo

Flight of the Buffalo, by James Belasco and Ralph C. Stayer, is a great read for anyone who wants to think about employees and leadership in a different way. The authors describe how to change the old paradigm, the “lead buffalo and the herd” and move to a new kind of organization. They discuss employees’ need for more responsibility and ways to empower them. The authors also describe how hardworking, top-down managers can get outmaneuvered in today’s marketplace.

Tim Peters writes, “These are crazy times in the world’s marketplace. They call for bold efforts on the part of business and political leads. No business leader has been more bold and few have been more successful than Ralph Stayer.”