Starting the Conversation
This is a story about a family business called AnyOnes Company, a fourth-generation family business. AnyOnes Company is an aviation parts manufacturing business located in the Midwest with annual revenues of $50 million. In our first, second, and third newsletters, we have detailed how John, the CEO, is 66 years old and is struggling to stay focused and passionate about his business. Meanwhile, his son Patrick, who is working in the business, is wanting to know the succession plan his father has in mind.
Karla’s Café, a popular local place had great food and the ambiance was conducive to conversations. As John settled into the booth just before his noon meeting with Connor, he took out his paper with the questions on it and his pad of paper, so he could take notes of what he hoped would be key pointers from Connor on how he transitioned leadership of his business. Since the golf outing, John had been compiling questions for this meeting. While not knowing why, John had a sense Connor was going to help him sort through this leadership and management succession planning quagmire which he found himself in—between his son Patrick, vice president of sales, and his long-term, highly-competent COO non-family employee, Greg, who joined the business 15 years ago.
Connor found John sitting in the booth and said with confidence, “I recommend the salmon salad, it’s delicious!”
Upon ordering lunch and pointing to the papers on the table, Connor asked:
“What are you working on, John?”
Sheepishly, John explained, “well, while I did want to thank you again for filling in on short notice at the chamber’s annual golf outing—we all enjoyed your company and your golfing ability—I was hoping you could answer some questions about your retirement and business succession planning. You see, I’m having a bit of a struggle with mine and thought you could share your plan with me.”
“We don’t have enough time today for me to explain what went into my plan but I’m happy to share. I’ve seen so many of my business owner friends struggle with succession planning that I want to help as many as I can.” Connor replied.
Connor continued. “Remember though, my plan is unique to me, my business, and my family. Which means you will need to adapt, or not, what I tell you to your personal situation and to your business situation. It is not a one-size-fits-all. And, when I talk about business succession planning, I looked at it through a bigger lens, not just a tax or estate planning lens. First, let me ask you about your company’s management team, and whether there are any family members in your business.”
As John explained and raved about his COO, Greg, and about his son, Patrick, Connor looked around the restaurant, leaned in and asked in almost a whisper, “So who are you thinking has the competencies to be the future CEO?”
Pushing his salad away from him, John replied, “That is what keeps me up at night. I have been struggling because I feel a sense of loyalty to them both. When I hired Greg 15 years ago, Patrick wasn’t in the business nor did he even act like he wanted to work in the business with me. During his hiring, Greg and I discussed the potential of him getting equity and maybe one day becoming the CEO. Heck, I even thought about having him buy it all or doing an ESOP. Then 5 years ago, Patrick joined the business. Don’t get me wrong, he’s great at sales, but he doesn’t have a feel or the knowledge about how we get the products manufactured and how we manage and operate the entire business. He really hasn’t expressed interest in knowing about other facets of the business which concerns me if he thinks he is going to take over for me one of these days.”
Connor was listening intently and had leaned back against the booth obviously contemplating what he was about to say. He wanted to ask why John hadn’t been more intentional with Patrick about developing as a leader but decided that wasn’t the approach he should use.
“John, I respect your integrity. You could have done what lots of business owners do in this situation and default to the family for leadership succession. I know you haven’t decided what you’re going to do, but that really is a good thing for everyone.”
“Not sure I follow what you mean, Connor. I’m sure my son is wondering and Greg, God Bless him, he has been more than patient. And not sure about me, my angst over this is causing me excruciating pain!”
Connor chuckled. “What I mean is you have an opportunity to explore alternatives. Greg may be the guy. Patrick may be the guy. Maybe they both are the guy. In my situation, I didn’t have a family member working in or interested in working in the business. So, I had to set a plan in motion making sure my management team was top-notch and had the competencies to grow and sustain the business, which would allow me to move on. I started by looking at the business and developing a strategic plan with growth in mind. Then, as a component to that strategic plan, I assessed the management team and had them develop competencies intentionally aligned to the strategic goals. Once they had the competencies, the team was able to deliver on the strategic goals and operate without me there on a day-to-day basis.
In your situation, I’d recommend that you take a similar approach.”
“How or where do I start?” John queried.
“Well, I’d start with your son, Patrick. Ask him what he thinks about the business. Is he in it for the long-haul and does he see himself as replacing you someday. If he is, I’d ask him what he thinks he needs to learn to do that.”
“Wow, I’m embarrassed to admit this, but I have never asked Patrick this,” John admitted.
“Talk to your wife, too, and get her ideas. Amazing how my wife helped me think through a lot of this. My wife helped me clarify my personal transition plan. You are going to need one of those too, John. That is a plan for what you do in your next chapter. I worked on that while I worked on the business transition plan but found that to be challenging.
You know, I had my team go through some work/leadership assessments and leadership development. It was invaluable. We used a consultant which was valuable in providing an independent and objective viewpoint. The team really enjoyed the process. This could be invaluable for you to assess both Greg and Patrick to determine who has the capacity to become the future CEO. Oh, yeah, the consultant helped me with my personal transition plan. It was the best thing for me to do because I still feel very satisfied with my decisions about the business and what I am doing today. I feel a sense of purpose and value about myself.”
John glanced at his watch and couldn’t believe it was almost two o’clock. “Hey, Connor, I need to go to a meeting back at the office.” As he got up and gathered his things, he reached out to shake Connor’s hand he said, “Can’t thank you enough for helping me get my head around this. I owe you, man.”
As they walked outside, Connor’s parting words to John were “look, don’t keep this stuff to yourself. I’m here for you in case you want to talk more. But you need to share what you’re thinking with your family.” With a grin, Connor continued, “Don’t worry, they won’t think you are a wimp, or anything. In fact, believe me, they will be happy to offer their opinions!”
In our next newsletter, find out what John learns from Patrick and others.