Abe and his son Junior were at odds. Junior, 42, was doing a great job as general manager of the family Chevrolet dealership. He was a natural salesman who focused on the goal line, not the yard markers, and he sold a lot of cars. But otherwise, Junior could do nothing right in the perfectionist eye of his father, the CEO. Abe, 65, was an impulsive stickler for minute detail. After several years of frustration, Junior told Abe, with as much respect as possible, to keep his job and the dealership to himself.
The impulsive father wished Junior good luck as he took a similar job in another community. Junior maintained an amicable relationship with his father as he prospered in his independent career. They compared notes regularly and grew in mutual respect as both businesses did well. Four years and five sales managers later, Abe recognized that although Junior was not perfect, he was better than anyone else he had seen.
To my amazement, Abe ate humble pie and asked Junior to return. Junior called me and asked what he should do. He said he would like to operate and someday own the family dealership, but he was happy with the job he had. Moreover, he said he could not handle his father standing over him and second-guessing his management decisions. His concern was that if everything disintegrated a second time, their relationship would suffer irreparable damage.
I told Junior that having his last name on the sign out front was not a fair tradeoff for being miserable and creating family division. I further pointed out that he had shown his character when he had withdrawn a few years earlier. He had since proved his abilities. This was not the time to compromise back to frustration. I urged him to spec out the “deal” he would like to have from his father and hang tough until Abe met his terms. I told him that if he came back under terms less than ones that were genuinely acceptable to him, it would just be a matter of time until Abe would run him off again. I told him to be prepared for his father to laugh at what he would probably see as ridiculous demands, but to hold his ground regardless.
A few days later Abe called me, flabbergasted. He explained what his “brash, ungrateful son” had said and asked what I thought he should do. I responded that it was clearly evident that Junior had the necessary skills to succeed in the family business or somewhere else. I further pointed out that Junior appeared to like his current job, and suggested Abe should not waste his time calling his son names. Abe responded with a frantic cry: “He said he will not come back unless I move my office out of the dealership.” He asked if I would call his son and tell him to be reasonable.
I said “No.” Then I pleaded for him to examine his priorities. I did not feel that I could call his son and try to convince him to do something that I would not do. I would have no credibility. I further explained that I felt life was too short to spend the better part of a career under the thumb of a micromanager parent. No doubt Abe was enjoying running the dealership, and no doubt he was good at it. However, Junior was a “chip off the old block,” and at his age he was not about to be second-guessed by an overactive, compulsive father.
I explained that I believed Junior was demanding that Abe move his office out of the dealership because there could only be one dealer, and that was the only job Junior wanted. I continued to explain that Junior was doing everyone a big favor by facing the reality of his priorities. It was simply time for Dad to do the same.
Abe did not like hearing all this, so without any small talk he said goodbye. I did not receive follow-up calls from Junior or Abe for about three weeks. I figured Abe had told Junior to “forget it” and had written me off because I would not lobby his son. But then Abe called saying, “Loyd, I need you to come up here and work out a buy-sell agreement with Junior. Incidentally, I have a new phone number.”
“Does that mean you moved your office?” I asked. He responded sheepishly with, “Yes, Junior moved his old man out into the street and is taking over the dealership.”
“Hold on,” I said. “He is not taking anything. No one has ever taken anything from you, so stop feeding me the sympathy routine. But let me offer my congratulations. You have just made probably the toughest decision of your life. It was the right thing to do and you should not lament giving Junior the opportunity to do what you have always dreamed would happen.”
He chuckled, “Yes, I may have had to give up control of my ‘baby,’ but I can always find other things to do.” And Dad did just that. While Junior took the family’s auto dealership to new levels of profitability, Abe opened a chain of used-car lots that became fabulously successful.
Learn and earn
The case of Abe and Junior provides a lesson for all successors whose time has come. The successor assumed responsibility for his career and made the tough decision to leave the business because he could no longer play second fiddle. He also made the tough decision to return and force his father either to let him take over or to wave goodbye for good. With an undeniable track record of independent success under his belt, the successor gained confidence, respect, and power over his destiny.
The rewards of being an owner’s kid are substantial. But you have to earn them. If you take shortcuts that will enable you to avoid the steps of learning and maturing, you will not be adequately prepared when your time does come. Moreover, even if you think you are hot stuff, you will pay for those shortcuts because you will not have the respect necessary to force the issue of your taking control.
Being ambitious, aggressive, and to some degree impatient are good attributes of a future family business owner and leader. But none of these traits is an excuse for failing to learn the various jobs and skills that will be required to operate your business. There are no elevators to the leadership position. Taking steps to learn each phase of your business requires patience and submission to the guidance and judgment of supervisors and parents. In most cases, submission is a great challenge, but heed one of family business’s golden rules: A family member can never learn to be a good manager until he or she learns how to be a good employee. Being held accountable as a rank-and-file employee is fundamental. Your parents, older sibling, or employees have been where you are going and deserve your respect. If you are not prepared to maintain or improve such an attitude, effort, and humility, choose another career.
If you are compelled to “take the elevator,” or stubbornly do things “your way,” you will make very expensive mistakes and feel the pain of nasty falls. You only get one chance to go through training. Be grateful that others are taking the time and effort to give you their greatest resource: knowledge. Your parents or the experienced key people you depend on are not going to be around forever.
As you progress up the steps to learn your family’s business, you may come under unreasonable pressure from your parents to make you a model employee, and then a perfect manager. They may expect you to be “Super Successor.” All they may want you to do is work 70 hours per week, be everywhere on time, read their minds, perform perfectly, and be the perfect citizen. And when you do not act like Super Successor they may pick, pick, pick. If you think you can never live up to your parents’ expectations, consider yourself a typical owner’s kid. If you feel that you are perfect in the eyes of your parents, you had best be careful, because you may be grabbed and put in a museum as a one of a kind. In varying degrees, all parents feel their children never live up to their potential. Although they mean well, parents’ desire for children to be the best they can be usually comes forth as unreasonable criticism. The fact is that very few parents ever lived up to their potential, either.
There is only one reasonable solution to being the object of your parents’ overzealous, critical desire for you to succeed: communication. You must show your parents you are doing your best and then convince them that you have heeded their advice and they no longer need to pick at you constantly. Unfortunately, this is usually easier said than done. If your father or mother has made a second career out of finding fault with what you are doing, then they may not respect you as someone trying to accomplish their dream of what you should be. Consequently, you will probably need someone else to argue your case, such as a succession planner or a family adviser whom they respect, who can convey that you are trying and that their criticism is not helping you get better.
Your first strategic goal in the family business is to come under operational authority, physically and spiritually. This means not only doing what you are told but also accepting the instruction as the proper organizational methodology. As I recently told a young man who was struggling in a subordinate role to his brother, “If he tells you to do cartwheels in the parking lot, get to it, because he is the boss.” You do not have to accept the instructions as being right. You can talk about right or wrong in family strategy discussions if you are asked, but on the job, there is no place for any response other than, “You can count on me.” Your burden is being a team player and role model for respecting authority. Your challenge is not only to do as requested, but also to avoid the facial expressions, sarcasms, and general attitudes that reflect rebellion and defiance. If you show rebellion, you will be planting the highly predictable seeds for some employees to react the same way. The rest of the employees will conclude you are a jerk.
Take the lead
Once you have learned and earned respect, and if it is time to begin addressing succession, you may well have to lead the process. An insecure or ignorant parent may want to keep you on the outside of the planning circle and in the dark. It is inappropriate and profoundly unwise for you to be passive and wait for your parents to thrust the business into your lap. Succession is like a relay race. You, the successor, must take the baton and run with it. Do not assume that Dad or Mom will take care of succession planning. The reality is that Dad and Mom may not be concerned about it. Left to their own devices, they may never address it.
Also, do not expect the family attorney or accountant to push the subject or represent your best interest. They will not risk a client relationship by pushing what might seem like an unpopular subject. And don’t lose sight of the fact that attorneys get paid more for resolving problems than for preventing them.
Show an interest in succession planning and encourage your parents to do the same. Take advantage of every opportunity to discuss the subject with parents or family advisers. Advise your parents that addressing succession planning is admittedly difficult, but not addressing succession planning is unmercifully disastrous. You must get involved whether you are an active member of the planning team or simply a cheerleader on the sidelines.
Your first effort should be to evaluate how your parents make decisions. A small category of parents are bold, aggressive planners and make decisions before problems surface. You don’t hear much about this group because they actively address planning needs and rarely encounter problems that are not resolved before they make the newspapers or the gossip circuit.
In the much larger category are parents who make decisions only when they have no other evasive course of action. They will find ways to change the subject or get sidetracked on more “productive” topics. When they die, their succession planning is typically a mess. An unfair amount of succession planning responsibility will fall upon you.
If you are mature enough to recognize succession planning problems, and your parents are unwilling to discuss or address them, then recognize that your parents are your biggest problem. Focus on their fears or insecurities that are compelling them to avoid this subject. Maybe it’s you, a sibling, or an in-law they are concerned about. Or they could be worried about control or income security. Or they might fear death.
Whatever the cause, the result is potentially catastrophic to you, so throw yourself into the job of relieving your parents of the burden that is preventing them from addressing succession planning. Ask them why they are not ready to address it. If they will not give you a straight answer, you can assume one of two possible situations. Either you are the problem or they are embarrassed to admit what the problems are. Regardless, go fishing. Over a period of time, ask specific questions as to the “cause of their planning reluctance.” It may take them a while to reveal their true feelings; however, if you are sensitive to the circumstances and gently persistent, they will ultimately tell you what they are thinking.
Be prepared to make the needed changes. Do not argue with your parents about their feelings. They may respond by closing down and excluding you from the planning process. Show respect for their feelings while asking them to consider yours. You will reap what you sow. Express your feelings to the adviser team and have faith that good judgment will prevail. Then think about your parents’ feelings, the feelings of other family members, and the general situation—before you act. This is tricky terrain. You do not want to alienate anyone, and you do not want to embarrass your parents.
With solid forethought, you can usually figure out ways to make your points and deal with an issue that your parents are afraid to address. If and when your parents confess, do not try to force them to deal with their concerns. They do not necessarily want your solutions. But they do want your understanding and your respect for their feelings and concerns. Simply ask how you can help. If they give you an opportunity to work on one of their concerns, do it. Respond promptly in hopes that planning momentum can be achieved.
Do not volunteer or assume responsibility for any task or project that you are not fully prepared to follow through on with all your might and resources. You are far better off being known as cautious or reluctant than being known as someone who will not follow through with a project. Your parents and colleagues, above all, want to be able to count on you. If they give no feedback, do not stop. Give solid thought to how you can make something in the succession planning process happen. You can do a lot behind the scenes. Only, when dealing with fears or concerns of your parents, proceed delicately.
On the other hand, if after great patience, deliberation, and offers to help, nothing happens, doing something wrong can be better than doing nothing. Consider the motto of a friend and highly successful client, Mason. Mason is a genuine go-getter who will find a way to succeed regardless of the obstacles. He does business by the philosophy that has made him an acclaimed leader in the marine industry: “It is better to apologize than ask permission.” If you get checked for taking the initiative or making an assumption, you can always apologize; however, an opportunity missed to promote succession planning is an opportunity lost. Furthermore, you can be confident that among the various traits tagged onto prospective successors, aggressiveness will speak well for you.
Assume responsibility
The majority of parents make decisions based upon the evaluation of circumstances within a reasonable time frame. They are generally conservative and more concerned about not making the wrong decision than with making the right decision. The average parents could be a little late or a little early, but they are generally sensitive to succession planning issues and take care of business at the right time. If they postpone action, there will be a logical reason from their perspective. You may think it is silly, but they will have defined circumstances, such as “your age,” “business is bad,” or “the partners are preoccupied.” When these issues are resolved, the door will open for more significant action.
While they meditate, you can make progress on other fronts, such as identifying the planning issues. It is your future, so you should make the effort to understand the issues and, equally important, the action options available to deal with these issues. You may even need to do your own research to get good information because your parents’ advisers may be unwilling to discuss the issues. It will do you good to improve your knowledge of estate and business structuring. You can also make sure that you and your siblings or cousins have discussed intrafamily succession issues. If you work out resolutions to the tricky questions that frustrate parents, you will have, indeed, promoted the succession process. You can discuss and even decide such questions as career path, management structure, pay plans, and stock transfer restrictions.
Being prepared with well-thought-out questions when your parents do become involved will speed up the succession process. It is important that you prepare yourself to react when your parents say the magic words and give you an opportunity to take major steps in the succession process. When you hear, “Let’s get going with this succession planning,” have an action plan ready. With their subsequent blessing, get the job done before they get cold feet, become preoccupied, or even worse, die. As the one who has the most to gain, take the responsibility; be willing and prepared to take the initiative.
On a similar front, if your family has made succession planning advances in the past, do not assume that the plans remain up-to-date. Complacency can become very costly. Parents have a tendency to throw themselves at estate and succession planning and then close the book. They look at the project like emotional surgery and feel greatly relieved when their mortality is not the primary planning topic. The truth is that you must continually update your plans or run the risk that you have not adapted to a changing environment. Feelings, finances, federal tax law, and family circumstances are constantly changing. It will be costly if you, the successor, do not remain sensitive to the need for constant review.
Cop the right attitude
The most important aspect of being an owner’s child is attitude. Your attitude will set the stage for how you interact with your parents, siblings, in-laws, key personnel, customers, and competitors. Your attitude will speak for you when you are not around or when no one is willing to defend you. Keep in mind that forgiveness is very common in a family business, but forgetfulness is not. Everything you say and do has a lasting impact on the attitudes of those around you. When you don’t understand why people treat you in strange ways, recollect your attitude in earlier years and you may gain insight. The people you work with on the bottom of the business may one day be the people you are going to depend upon to help you run the business. Everything you do, or don’t do, counts. Everyone you deal with is important. Build bridges and never think that you have the luxury to burn one.
With the right attitude, employees will rally behind you, giving your parents more confidence in you. Employees will never miss a chance to reflect your behavior in their work. Unfortunately, you will get credit for more of the negative than the positive. Consequently, it is essential that you create a high volume of good things that can be said about you. You can be sure that a good word to parents about you offered by an employee is more valuable than any pearl of wisdom that you can personally display to them.
As you push for succession planning, recognize that the president’s office has only one desk and chair. Leadership and input are expected of everyone, but one person must operate as the business leader. If it’s you, give it all you’ve got. Get all the help you can from your brothers, sisters, parents, and key personnel by always having the attitude of the servant. If you are not the designated leader, respect that your parents created and built the business, and they have the right to decide on succession.
You, however, have the right and the responsibility to make your own career decisions. If you have a problem because you are not the designated leader, don’t let resentment spoil your attitude. Try to achieve peace as to where you should be and what you should be doing. If you cannot achieve peace, protect your family relationships. Move on to another career where you can achieve gratification. You will always be well served to remember another family business golden rule: The family business is not a golden spoon, it is a golden opportunity.
Loyd H. Rawls, a financial planner, is president of The Rawls Co. in Maitland, FL, and founder of The Family Business Resource Center. Excerpted with permission from Seeking Succession: How to Continue the Family Business Legacy, by Loyd H. Rawls, (c) 1999 The Family Business Resource Center.
WHO’S THE DUMB ONE ?
You only get one chance to train for succession. Your parents are an invaluable resource. But too often, potential successors scoff at their parents’ advice. You should harvest it, or suffer the consequences.
I thought my mother and father were “double dumb” when I was in high school, when I was in college, during four years in the military, and up until I was about 30 years old. I loved them and tolerated what I saw as their ignorance because they did not have formal education, and because they really had not seen what was happening outside of our small North Carolina community. They would infuriate me by suggesting that I slow down and stop looking for short cuts. My dad sounded silly to me when he said that what employers and customers valued the most was dependability and character.
Amazingly, as I grew older, Dad began to seem smarter. When I got married and had children, I started feeling embarrassed at some of the costly screw-ups I had earlier perpetrated by going against my parents’ advice. As I reflect, it is obvious that I was the dumb one. I thank God that my mom and dad maintained patience with me during what must certainly have been a discouraging time for them.
—L.H.R.
PATIENCE AND PAY
As you try to push succession planning with your parents, show patience regarding compensation decisions. Your parents probably did not achieve economic success until late in their careers. A new business is an endless pit for cash. Rather than enjoying the good life, your parents probably reinvested profits to minimize the risks of a volatile economy, and so you could come into a business with a strong capital base. Your parents now want to enjoy their prosperity.
They also want to ensure their financial security before they start dividing assets between their children and giving up control of the business. Their greatest fear is that, in their old age, they may become dependent upon you. Therefore, your parents will be deliberate and dedicated in their efforts to build retirement security. Do not expect to equal their lifestyle unless you also sacrifice to grow the business. Do not expect any significant transfers of assets or control until you convince them that they are secure and you are responsible.
—L.H.R.