Rick Johnson 2013-05-06 06:59:54
The next CEO is… I don’t have a lot of memories of my dad since he left the family when I turned six years old and passed away when I was only nine. However, there is one memory that seems to be burned into my brain. It was a day when just he and I were together. I was only five and he decided it was time to teach me to swim. We didn’t have a swimming pool; in fact, we lived in the woods in an abandoned trailer about three miles away from a lake. Somehow he managed to find an old rowboat he kept hidden in the woods. My older brothers tell me he was an avid fisherman and used to take that boat out almost every day. We got to the lake and as he started uncovering the boat from the brush it was hidden under, I started getting a little nervous. Up to that point I had been so excited about going out on the lake with my dad that I had nearly wet my pants; the anxiety of the situation hadn’t set in yet. When I finally realized I was going to be in this huge, deep lake, that’s when I started to worry a little. But not too much. After all, I was with my dad and he was going to teach me how to swim. He rowed that old boat out to the middle of the lake, put down the oars, looked me right in the eye and said: “Are you ready? You can do this!” I heard the “You can do this” as I was flying through the air over the side of the boat. He must have thrown me 15 ft. Away. It was sink or swim time. Obviously, since I am still here I learned to swim, but not without swallowing several mouthfuls of water and seeing angels dancing in the clouds. I finally figured it out. That is one of the few memories I have of my dad. I wish I had more. Learn to swim You are probably wondering why I started this article with a story about how I learned to swim. If you are an owner who has a son or daughter working in your business, ask yourself this question. What are you doing to teach your son or daughter about how to run your business? Do you have an actual plan or are you just going to throw them over the side of the boat? If that’s your plan, remember the lake you are throwing them into is filled with alligators. If it is your true desire to keep the business in the family and pass it on to the next generation, you have an obligation to yourself, to the business, to your employees and to your son or daughter to make sure you are doing everything you possibly can to help them prepare to take over the business. I can offer one simple piece of advice; when they are ready, back off and get out of the way. Of course, that in itself is quite a challenge. How do we, as first- or second-generation owners, get our sons and daughters ready to take over the helms of the business? Do they really want to Are they competent enough to do it? Do they have a passion for it? Which child should be company president? These questions and many more often dominate your thoughts as you contemplate stepping aside and allowing the next generation to take over. There are numerous issues and challenges facing the privately-held, familyowned business when it comes to succession. If you fall into that category, email firstname.lastname@example.org and receive a sample guide on leadership succession in the family business. Sidestep the chaos How can you turn the business over to your children without creating chaos? This probably is the toughest question any owner who has family working in the business will ever face. The answer is simple: it depends. It depends on how well you (the owner) have prepared yourself and your child for this transition.Have you planned this out? Has your successor been trained, developed and prepared for the transition? This is pretty easy if you only have one child in the business and he/she just happens to be the next Jack Welch of wholesale distribution. This child has worked outside the business for someone else for a minimum five years.He/she has completed his/her MBA and has worked his/her way up in your organization starting in operations or customer service. He/she doesn’t walk around with a silver spoon visible and doesn’t wear the family title on the sleeve. Piece of cake! Time to face reality That scenario, although it certainly does exist, is the exception and not the rule. In most cases, privately-held businesses generally have several family members working in the business. When the president has more than one child in the business, things start to get more complicated. Before we dive into that challenge, let’s review a few published statistics: Family business is the driving force behind the U.S. economy providing more than 50% of our employment; 59% of family-owned businesses have only one or two owners; and; 25% of family-owned businesses surveyed state they would seek nonfamily member CEO’s for succession. Who should be the next? If you are not one of the lucky few described in the opening scenario and you have multiple family members working in the business, your stress level is already at a high point. First, many if not all family members working in the business have feelings of entitlement to some degree. This is generally true of at least one if not all the president’s kids. Choosing the next president becomes even more difficult if the children use their name as a title instead of the actual title of the job function they perform and the position they hold in the company. This is often unintentional and some kids don’t even realize it. This difficulty increases exponentially if none of the kids have demonstrated a high level of competence, respect for all employees, leadership skills that pattern the servant style and at least some promise of potential to fill the president’s shoes. Although the majority of parents would prefer their children take over the business and carry on the family legacy, this is not always the best available option. I know it is difficult for any parent to admit their child may not possess the skill sets necessary to take over as company president. However, that situation actually does exist in many family businesses. What if Junior isn’t ready? The first two questions to ask are, “Will Junior ever be ready? And “Does Junior have the ability to learn how to become company president?” As difficult as it is to accept, your answers to these questions alone are not good enough. If you have a board of directors, you should solicit its input and recommendations. Hire a human resource consultant to do an assessment of not only Junior but other executives in your organization who may be qualified for the presidency. Conduct 360° reviews to get input from peers and subordinates. Precisely define the president’s role and responsibilities and match these requirements to Junior’s skill sets.If you don’t have a board, create one before the transition. Include the following action items as part of the transition plan: Create a development transition training program for the new president. This should be designed as an internship. Clearly define the former president’s role after the transition.Will he remain and come into the office? Will he become chairman of the board? What responsibilities will the former president retain? Manage the expectations of other family members. Do not allow family tension to create tension in the business. This could lead to employees taking sides. Use your attorney to cover all legal issues. Create a real board of directors. Expert speaker and wholesale distribution’s “Leadership Strategist” Dr. Rick Johnson is the founder of CEO Strategist, a firm that helps clients create and maintain competitive advantage. Email Rick at email@example.com.
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