As we family business advisers know all too well, father-son succession can be a bumpy ride. There are a number of areas where things tend to go wrong. Aging patriarchs often resist letting go or may feel forced out as sons become impatient to take over. In other cases, fathers and sons disagree on important matters like strategic initiatives, capital spending or key decisions. These scenarios often lead to family conflict, while the family business suffers.
Problems seem to occur more often with fathers and sons than with other parent-child pairs. As sons seek authority and legitimacy, they clash with their fathers, who have become accustomed to the power and prestige of the chairman/CEO positions. As Gail Sheehy noted in Understanding Men’s Passages (1998), men often define their manliness by expecting to be eternally strong and able to overcome obstacles alone. Often, they are not prepared to consciously change their lives as they age.
Yet senior-generation business owners who are able to form a true partnership with their sons have few transition problems. One client of mine—Murray Goodman, the second-generation owner of Goodmans Inc. in Phoenix, Ariz.—is a great example. This year, Murray, 64, and his son, Adam, 35, are celebrating the 50th anniversary of Goodmans, which was founded in 1954 as Arizona Office Equipment and today is the largest office furniture dealer in the Southwest, with locations in Albuquerque, N.M., and Tucson, Ariz., as well as Phoenix.
Murray, who is the company’s CEO, and Adam, the president, have an unusual amount of respect and trust for one another. Murray describes the succession plan at Goodmans as a long-distance run, not a relay race or a sprint. “We’re matching stride for stride now,” Murray says, “but, over time, Adam’s stride will get longer, and there will be a natural evolution as my stride gets shorter. As long as I can contribute to the business, I will, but when I no longer contribute and Adam takes on more responsibilities, then the succession will have occurred.”
For his part, Adam says Murray has a lot to add to the business. “There would be a void if he was not there,” Adam says. “I’m not ready for that.”
Like other successful family business owners, Murray has been blessed with the ability to see the big picture and to recognize and cultivate talent. He joined his parents and brother in the business in 1962 and over time bought out their interests. Meanwhile, gross revenues grew from $200,000 in 1962 to $60 million in 2003.
Murray began recruiting Adam to join the company in 1992. Adam was on track to become a publisher at Gannett News, but Murray lured his son by offering him the opportunity to be his own boss. Goodmans’ prosperity had come from the large corporate and government demand for office furniture as the Southwest grew. Murray, who recognized the market potential of small and mid-sized businesses, asked Adam to run a new division of the company that would serve those smaller customers. The division that Adam started in 1993, called G2 Office Furniture, now represents about 20% of Goodmans’ sales.
Adam recalls the first time his dad referred to him as his business partner—the night before his wedding in 1997, in front of 200 rehearsal dinner guests. He remembers thinking, “I better not screw this up.”
Why does Murray and Adam’s relationship work so well? Here are the secrets of their exceptional partnership:
• Shared values. Both Murray and Adam have a strong sense of fairness and a high degree of trust in each other. They both recognize that success comes through the efforts of others, and they work hard to ensure that the people in their organization also succeed.
• Conscious collaboration. Both Murray and Adam are open to the other’s influence. They work to take ego out of the equation when dealing with one another so they can make the right decision. They have recently remodeled their corporate headquarters and now share an office, with no walls between them.
• Common goals. One of Adam’s earliest projects was to draft a “blueprint for change,” outlining how to increase market share, strengthen the balance sheet, project future financial needs, and train and empower employees. He and his father both agree on which initiatives should receive top priority. One key initiative is to better understand how they can help their customers deal with business and workplace changes. Another is for Goodmans to move into an early planning role for new office buildings, alongside the customer and architect.
• Clear boundaries. While at the business, Murray and Adam have mastered the art of focusing only on business issues; they do not discuss family matters. “We have a sixth sense about where the boundaries are,” Adam says.
• Communication. Each week, the Goodmans share a “Tuesday with Murray” lunch, which gives Adam and Murray a chance to discuss the business as well as current challenges and opportunities. They both look forward to these meetings. In such two-sided discussions, father and son practice and enhance their ability to look at issues from different perspectives. There are no sacred cows, and no topics that can’t be discussed.
• Outside advice. Goodmans’ board of advisers, which meets monthly, has two outside members. One has marketing and industry expertise, and the other has a financial background. The outside advisers act as sounding boards for Murray, Adam and the company’s chief financial officer.
Key to all, however, may be Murray’s ability to recognize talents in others and then help them develop their abilities, a skill he says he’s had since childhood. In Adam, Murray says, he saw “a potential racehorse.”
Adam acknowledges that the prospect of taking over a company with a 50-year legacy is a bit daunting. He also recognized that most third-generation businesses don’t survive—only about 3% make it to the fourth.
But because of the solid partnership he’s forged with his father, Adam’s odds of succeeding are much higher than that. The Goodmans have accomplished something that occurs too rarely in family firms. Murray has been able to mentor his adult son and observe Adam’s achievements proudly. And Adam is willing to learn from his father and greatly appreciates the coaching he’s received. Other family business patriarchs and their next-generation successors would be wise to emulate Murray and Adam Goodman and work on mastering partnership skills.
Mike Cohn is managing director of CFG Business Solutions LLC, a family business consulting group based in Phoenix, Ariz. (www.cfgllc.com). He is past president of the Family Firm Institute and co-author of Keep or Sell Your Business: How to Make the Decision Every Business Owner Faces.